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on Regulation |
| By: | Alfredo Marvão Pereira (Department of Economics, The College of William and Mary, Williamsburg VA 23187); Rui Manuel Pereira (Department of Economics, The College of William and Mary, Williamsburg VA 23187) |
| Abstract: | We estimate how infrastructure investments affect industrial CO2 emissions in Portugal. Using empirical evidence on the economic effects of twelve types of infrastructure investments at the industry level, we consider twenty-two industries and the respective CO2 emission factors. Our conclusions are as follows. First, given the current emission factors for each industry, almost all types on infrastructure investments help the emissions intensity of the economy. Only for investments in airports and in health facilities are such positive effects absent. Second, the relevance of the economic effects of the different types of infrastructure investments on the electrical power industry is central in determining the overall effects on emissions. This is not surprising, given that electric power accounts for nearly 35% of CO2 emissions in Portugal and the extremely high emissions factor of this industry amplifies even small economic effects. Third, under an alternative scenario in which the emissions from the electric power industry have been eliminated – due to the use of renewable energy in production, for example – , or are otherwise ignored, we still see that most infrastructure investments lead to a decline in the CO2 emissions intensity. In this case, however, investments in national roads leave the emissions intensity essentially unchanged, while investments in health infrastructure have adverse effects on emissions. There are several important policy implications of these results when we consider infrastructure investment strategies that are mindful of their CO2 emission effects. Consider, for instance, transportation infrastructures. Given the present electric power generating mix, investment in national roads would be an appropriate policy recommendation from an environmental perspective, while investments in airport infrastructure should be avoided. Under a scenario of aggressive use of renewable energy sources in the production of electricity, however, the best investments would be in railroads and airports, two industries highly dependent on the use of electricity |
| Keywords: | Infrastructure Investment, CO2 Emissions, Industry-level Economic Effects, Industry-level Emission Effects, VAR, Portugal |
| JEL: | C32 E22 H54 L90 O52 Q43 Q58 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:mde:wpaper:0081&r=reg |
| By: | Balazs Egert |
| Abstract: | This paper investigates the relationship linking investment (capital stock) and structural policies. Using a panel of 32 OECD countries from 1985 to 2013, we show that more stringent product and labour market regulations are associated with less investment (lower capital stock). The paper also sheds light on the existence of non-linear effects of product and labour market regulation on the capital stock. Several alternative testing methods show that the negative influence of product and labour market regulation is considerably stronger at higher levels. The paper uncovers important policy interactions between product and labour market policies. Higher levels of product market regulations (covering state control, barriers to entrepreneurship and barriers to trade and investment) tend to amplify the negative relationships between product and labour market regulations and the capital stock. Equally important is the finding that the rule of law and the quality of (legal) institutions alters the overall impact of regulations on capital deepening: better institutions reduce the negative effect of more stringent product and labour market regulations on the capital stock, possibly through the reduction of uncertainty as regards the protection of property rights. |
| Keywords: | aggregate investment, capital deepening, structural policy, product market regulation, labour market regulation, policy interaction, OECD |
| JEL: | E24 C13 C23 C51 L43 L51 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6415&r=reg |
| By: | Florian Habermacher; Paul Lehmann |
| Abstract: | To decarbonize the power sector policy-makers need to commit to long-term credible rules for climate and energy policy. Otherwise, time-inconsistent policy-making will impair investments into low-carbon technologies. However, the future benefits and costs of decarbonization are subject to substantial uncertainties. Thus, there may also be societal gains from allowing policy-makers the discretion to adjust the policies as new information becomes available. We examine how this trade-off between policy commitment and discretion affects the optimal intertemporal design of policies to support the deployment of renewable energy sources. Using a dynamic partial equilibrium model of the power sector, we show that commitment to state-contingent renewable subsidies outperforms both unconditional commitment and discretion. The choice between the practically more feasible approaches of unconditional commitment and discretion is analytically ambiguous. A numerical illustration with naïve assumptions suggests that policy discretion may outperform unconditional commitment in terms of welfare. However, extensions to more realistic cases where only a limited fraction of climate uncertainty resolves, where future policy-makers have own agendas, or with risk-averse investors show commitment as favorable. |
| Keywords: | climate change, public policy, subsidies, renewable energy, time inconsistency, uncertainty, commitment, hold-up |
| JEL: | H23 Q42 Q48 Q54 Q58 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6355&r=reg |
| By: | Tedi Skiti (Fox School of Business, Temple University) |
| Abstract: | In this article, I present causal effects of institutional entry barriers to new firms on incumbents’ technological innovation. In particular, I investigate the effect of entry barriers to municipal providers on incumbents’ technology deployment in the U.S. broadband industry. I use a spatial regression discontinuity design for private incumbents’ investment behavior and different entry regimes as sharp cutoffs for municipal entry threat. I collect and combine unique firm-level data on cable investment decisions and state-level data on legal entry barriers. I find that in markets with these entry barriers incumbents invest less in new technologies. Specifically, I find that the local entry barriers lead to a 20% lower technology adoption rate by cable incumbents because of reduced entry threat. These results imply that institutions that restrict entry of new firms can lead to significantly decreased technological innovation and lower internet quality across local markets, not only by deterring new firms but also by altering incumbents’ strategic investment in broadband networks. |
| Keywords: | Innovation, Entry Barriers, Broadband, Municipal, Spatial Discontinuity |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1711&r=reg |
| By: | T. Tony Ke (MIT Sloan School of Management); Baojun Jiang (Washington University in St. Louis); Monic Sun (Boston University) |
| Abstract: | We consider a platform that matches service providers with potential customers. Ratings of a service provider reveal the quality of his service while ratings of a consumer reveal the cost to serve her. Under a competitive search framework, we study how bilateral ratings influence market competition and segmentation. Two types of equilibria exist under bilateral ratings. In the first type, low-cost consumers only apply to high-quality service providers, who post a higher price, have longer queues and are less likely to accept an application than low-quality providers. High-cost consumers apply to all service providers and have a lower acceptance rate. In the second type of equilibria, both high- and low-quality service providers serve all consumers. Across all equilibria, equilibrium prices may decrease as the fraction of high-quality providers increases, as consumers become more costly to serve, and as the platform's commission rate increases. Compared with a platform with unilateral ratings where only service providers are rated, a platform with bilateral ratings may soften service providers' competition, leading to higher equilibrium prices. Lastly, we find that in the case of incomplete market coverage, high-quality service providers may charge lower prices than low-quality providers in equilibrium, because by charging a lower price, a high-quality service provider attracts more consumer applications, which enables him to cherrypick a low-cost consumer, while a low-quality service provider faces with consumers with higher serving costs and thus charge a higher price to make up the serving cost. |
| Keywords: | Platform; Peer-to-Peer; Competitive Search; Matching; Reviews; Information Disclosure; Segmentation |
| JEL: | D82 D83 M31 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1701&r=reg |
| By: | Roger Fouquet |
| Abstract: | Energy transitions have led to major advances in human wellbeing. How- ever, little evidence exists about the scale of the net benefits. By developing a new method for identifying the demand curve, and by using a unique, his- torical data set, this paper estimates the consumer surplus associated with heating, transport and lighting over more than two hundred years and iden- tifies the gains from a number of key energy transitions. For certain energy transitions, the increase was dramatic, re ecting the transformations in soci- ety and lifestyles that mobility and illumination provided in the nineteenth and twentieth centuries. Yet, the net benefits related to heating technologies only rose modestly. Finally, due to saturation effects of the demand for en- ergy services, future technological developments and energy transitions may benefit consumers (though not necessarily society as a whole) less than those in the past. |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:lsg:lsgwps:wp277&r=reg |
| By: | Marc Ivaldi; Jiekai Zhang |
| Abstract: | This paper empirically investigates the advertising competition in the French broadcast television industry within a two-sided market framework. We use a unique dataset on the French broadcast television market including audience, prices, and quantities of advertising of twenty-one TV channels from March 2008 to December 2013. We specify a structural model of oligopoly competition and identify the shape and magnitude of the feedback loop between TV viewers and advertisers. We also implement a simple procedure to identify the conduct of firms on the market. We find that the nature of competition in the French TV advertising market is of the Cournot type. Further, we provide empirical evidence that the price-cost margin is not a good indicator of the market power of firms operating on two-sided markets. Finally, we provide a competition analysis. The counterfactual simulation suggests that the merger of advertising sales houses would not have significantly affected the equilibrium outcomes in this industry because of the strong network externalities between TV viewers and advertisers. These results provide a critical evaluation of the 2010 decision of the French competition authority to authorize the acquisition of two broadcast TV channels by a large media group under behavioral remedies. |
| Keywords: | advertising, competition, media, TV, two-sided market, market conduct |
| JEL: | D22 K21 L13 L22 L41 M37 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6461&r=reg |
| By: | Baran Doda, Sam Fankhauser |
| Abstract: | This paper simulates the distributional consequences of alternative carbon emission reduction policies on power producers. To that end we propose a simple partial equilibrium model in which power generation takes place at technologyspecific sites which can differ in productivity. We calibrate the model with six technologies. Hydro, wind and solar generation feature site-specific productivity, and combine capital and sites to produce power. The productivity of coal, gas and nuclear generation is constant across sites. We use the calibrated model to analyse effects of alternative tax and subsidy schemes which imply the same reduction in carbon emissions. A carbon tax outperforms all other instruments and does not reduce the profits of carbon-free generators. Technology-specific subsidies are more costly socially, and those directed at output, rather than inputs, imply a larger transfer from the government to the subsidy recipient. Power consumption taxes typically have very high social costs and should not be the instrument of choice to reduce emissions or to finance subsidies aiming to reduce emissions. |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:lsg:lsgwps:wp276&r=reg |
| By: | Fiona Burlig; Christopher Knittel; David Rapson; Mar Reguant; Catherine Wolfram |
| Abstract: | In the United States, consumers invest billions of dollars annually in energy efficiency, often on the assumption that these investments will pay for themselves via future energy cost reductions. We study energy efficiency upgrades in K-12 schools in California. We develop and implement a novel machine learning approach for estimating treatment effects using high-frequency panel data, and demonstrate that this method outperforms standard panel fixed effects approaches. We find that energy efficiency upgrades reduce electricity consumption by 3 percent, but that these reductions total only 24 percent of ex ante expected savings. HVAC and lighting upgrades perform better, but still deliver less than half of what was expected. Finally, beyond location, school characteristics that are readily available to policymakers do not appear to predict realization rates across schools, suggesting that improving realization rates via targeting may prove challenging. |
| JEL: | C14 L9 Q41 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23908&r=reg |
| By: | Paschmann, Martin (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)) |
| Abstract: | In this paper, benefits resulting from the interaction of electric vehicles and photovoltaic generation units are analyzed. In doing so, a bottom-up approach is developed to simulate the driving and charging behavior of electric vehicles. An economic analysis is then performed to determine key findings for households with photovoltaic systems and electric vehicles: First, smart electric vehicle charging concepts may allow households to achieve higher cost-saving potentials by increasing their share of self-consumption by 59% compared to the case of uncontrolled charging. Second, adopting more of a system-oriented perspective, smart electric vehicle charging concepts could react to times of peak load and thereby reduce the average peak-load increase due to electric vehicles to 27%. According to these findings, it may be beneficial for policy makers to encourage peak-load minimizing charging behavior by introducing, e.g., load-sensitive tariff schemes. Technical challenges arising from the peak-load impact of electric vehicles may be regarded as being a coordination problem. Finally, the analysis shows that the potential of electric vehicles to counteract extremes of reverse power lows due to high photovoltaic electricity generation is limited. |
| Keywords: | Electromobility; distributed energy resources; energy storage; electric vehicle charging; sector coupling; energy self-sufficiency |
| JEL: | C15 C61 C63 D14 H20 R20 |
| Date: | 2017–10–18 |
| URL: | http://d.repec.org/n?u=RePEc:ris:ewikln:2017_011&r=reg |
| By: | Bryan Coyne, Sean Lyons, Daire McCoy |
| Abstract: | This research examines the impact of a home energy efficiency upgrade programme on social housing tenants. Employing a quasi-experimental approach we examine a range of objectively measured and self- reported outcomes, including metered gas consumption, for a control and upgrade group, before and after the upgrade. We draw our sample from a large home energy efficiency programme in Ireland, The SEAI Better Energy Communities Scheme, which provides funding for whole communities to upgrade the efficiency of their dwellings. Dwellings are selected for upgrade based on need, allowing us to control for observable dwelling characteristics correlated with selection into the trial. The upgrades undertaken are extensive relative to the average home energy improvement, with many dwellings receiving a number of measures. Households report improvements across a range of outcomes associated with heating-related deprivation and comfort in the home. Panel regression models examine the elasticity of gas demand with respect to the thermal efficiency of the dwellings. Overall, we find that use of natural gas falls much less than 1:1 for each increment to thermal efficiency of the home. For the average household in this study, about half of a marginal increase in thermal efficiency is reflected in reduced gas demand. This result highlights issues with standard engineering models which are commonly used to assess the energy efficiency of dwellings and points to a behavioural response from households, potentially taking back some of the savings as increased internal temperatures. |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:lsg:lsgwps:wp279&r=reg |