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on Regulation |
| By: | Briglauer, Wolfgang; Gugler, Klaus |
| Abstract: | The literature on the effects of telecommunications infrastructure investments find positive macroeconomic effects, however, it is severely constrained because it could hitherto only analyze investment up to "basic" broadband but not up to the newer generations of "fast" and "ultra-fast" broadband; in particular there is no such evidence available at the EU level so far. Utilizing a comprehensive panel dataset of EU27 member states for the period from 2003-2015, we estimate a small but significant effect of fiber-based ultra-fast broadband over and above the effects of basic broadband on GDP. Adoption of hybrid-fiber fast broadband is incrementally to basic broadband insignificant. Our cost-benefit analysis implies that policy intervention - as foreseen by the European Commission in its public policy targets - is only justified for coverage and adoption levels of around 50% of fast or ultra-fast broadband, whereas for 100% coverage levels we find net losses to society. Thus, it appears that - for the time being and according to the policy principle of "technological neutrality" - a combination of basic broadband, fast and ultra-fast broadband entails the largest economic net benefits to society. |
| Keywords: | new broadband networks,broadband speed,economic growth,EU-panel data |
| JEL: | O47 L96 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:18020&r=reg |
| By: | Niko Jaakkola; Rick van der Ploeg |
| Abstract: | Global warming can be curbed by pricing carbon emissions and thus substituting fossil fuel with renewable energy consumption. Breakthrough technologies (e.g., fusion energy) can reduce the cost of such policies. However, the chance of such a technology coming to market depends on investment. We model breakthroughs as an irreversible tipping point in a multi-country world, with different degrees of international cooperation. We show that international spill-over effects of R&D in carbon-free technologies lead to double free-riding, strategic over-pollution and underinvestment in green R&D, thus making climate change mitigation more difficult. We also show how the demand structure determines whether carbon pricing and R&D policies are substitutes or complements. |
| Keywords: | climate policy with breakthrough technology |
| JEL: | D62 D90 H23 Q38 Q54 Q58 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6977&r=reg |
| By: | Thomas Eichner; Gilbert Kollenbach; Mark Schopf |
| Keywords: | Demand Side Policy, Supply Side Policy, Climate Change, Deposit, Fossil Fuel |
| JEL: | F55 H23 Q54 Q58 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:sie:siegen:185-18&r=reg |
| By: | Gomes, Renato; Tirole, Jean |
| Abstract: | Firms often sell a basic good as well as ancillary ones. Hold-up concerns have led to ancillary good regulations such as transparency and price caps. The hold-up narrative, however, runs counter to evidence in many retail settings where ancillary good prices are set below cost (e.g. free shipping, or limited card surcharging in countries where the "no-surcharge rule" was lifted). We argue that the key to unifying these conflicting narratives is that the seller may absorb partly or fully the ancillary good's cost so as not to miss sales on the basic good. A supplier with market power on the ancillary good market then takes advantage of cost absorption and jacks up its wholesale price. Hold-ups occur only when consumers are initially uninformed or naïve about the drip price and shopping costs are high. The price of the basic good then acts as a signal of the drip price, since a high markup on the basic good makes the firm more wary of missed sales. Regardless of whether consumers are informed, uninformed-but-rational, or naïve, mandating price transparency and banning loss-making on the ancillary good leads to (i) an efficient consumption of the ancillary good, and (ii) a reduction of its wholesale price, generating strict welfare gains. |
| Keywords: | add-ons; drip pricing; give-aways; hold-ups; missed sales |
| JEL: | D83 L10 L41 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12832&r=reg |
| By: | Ruddell, Keith (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Market power in electricity wholesale markets arises when generators have incentives to mark up their offers above the cost of production. I model a transmission network with a single line. I derive optimality conditions for supply functions for generators who supply energy at both ends of the line, and also for generators who hold financial derivatives on the locational prices. These financial derivatives include contracts for differences as well as financial transmission rights. One way that generators can manipulate prices in their favor is by inducing congestion in the network. I find that dispersed ownership and financial transmission rights are both effective ways to reduce strategic congestion of the line. I also fid that certain portfolios of contracts for differences can lead to multiple supply function equilibria. |
| Keywords: | Supply function equilibrium; Electricity markets; Market power; Financial transmission rights |
| JEL: | C62 D43 L13 L94 |
| Date: | 2018–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1209&r=reg |
| By: | Heczko, Alexander; Kittsteiner, Thomas; Ott, Marion |
| Abstract: | Combinatorial auctions, in particular core-selecting auctions, have increasingly attracted the attention of academics and practitioners. We experimentally analyze core-selecting auctions under incomplete information and find that they perform better than the Vickrey auction. The proportions of efficient allocations are similar in both types of auctions, but the proportions of stable (core) allocations and the revenue are higher in the core-selecting auctions. This is in particular true for an independent private values setting in which theory does not predict this better performance of the core-selecting auction. We trace the causes of the performance differences back to patterns in bids. The core-selecting auctions provide incentives for overbidding the own valuation and - under certain conditions - also for bid-shading, which can hamper performance. In the experiment, bidders react in the predicted direction to these incentives, though less pronouncedly than predicted. |
| Keywords: | Combinatorial auction,VCG mechanism,core-selecting auction,experiment |
| JEL: | D44 C72 D82 C92 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:176842&r=reg |
| By: | Thorsten Heilker (Institute of Transport Economics, Muenster); Gernot Sieg (Institute of Transport Economics, Muenster) |
| Abstract: | Transportation network companies commonly enter the market for taxi ride intermediation and alter the market outcome. Compared to cooperatively organized radio-taxi dispatch service agencies, transportation network companies run larger fleets and serve more customers with lower fares, when the fixed costs of the dispatch office are relatively small. The same holds for private dispatch firms, when the fixed costs of a taxicab are not too small. These results are shown in a two-stage duopoly of fare and fleet size competition with fare- and waiting-time-dependent demand. |
| Keywords: | digitization, regulatory capture, taxi dispatch market, transportation network companies |
| JEL: | L91 R41 D43 L22 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:mut:wpaper:24&r=reg |
| By: | Aurélien Saussay (Observatoire français des conjonctures économiques) |
| Abstract: | Over the past decade, the rapid increase in shale gas and shale oil production in the United States has profoundly changed energy markets in North America, and has led to a significant decrease in American natural gas prices. The possible existence of large shale deposits in continental Europe, mainly in France, Denmark, the Netherlands and Germany, has fostered speculation on whether the U.S. shale revolution could be duplicated in Europe. However, a number of uncertainties, notably geological, technological, regulatory, and relating to public acceptance make this possibility unclear. We present a techno-economic model of shale gas production amenable to direct estimation on historical production data to analyze the main determinants of the profitability of shale wells and plays. We contribute an in-depth analysis of an extensive production dataset covering 40,000 wells and accounting for nearly 90% of shale gas production in the six main plays of the continental United States from 2004 to 2014. We combine this analysis with a discussion of the main differences between the American and European contexts to calibrate our model and conduct Monte-Carlo simulations. This enables us to estimate the distribution of breakeven prices for shale gas extraction in continental Europe. We find a median gross breakeven price before taxes and royalties of $10.1 per MMBtu. This would make extraction unprofitable in Europe in the current natural gas price environment, with |
| Keywords: | Shale gas; Extraction costs; United States ; Europe |
| JEL: | Q31 Q32 Q33 Q41 Q54 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/3vsrea3gla9r5oaa2cle5jrqfh&r=reg |
| By: | Jean Pierre Ponssard (Department of Economics, École Polytechnique, Palaiseau Cedex, 91128, France - affiliation inconnue); Guy Meunier (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique) |
| Date: | 2018–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01777499&r=reg |
| By: | Ian Parry; Victor Mylonas |
| Abstract: | The pan-Canadian approach to carbon pricing, announced in October 2016, ensures that carbon pricing applies throughout Canada in 2018, with increasing stringency over time to reduce emissions. Canadian provinces and territories have the flexibility to either implement an explicit price-based system—with a minimum price of CAN $10 per tonne of carbon dioxide equivalent in 2018, increasing to CAN $50 per tonne by 2022—or an equivalently scaled emissions trading system. This paper discusses the rationale for, and design of, the price floor requirement; its (provincial-level) environmental, fiscal, and economic welfare impacts; monitoring issues; and (national-level) incidence. The general conclusion is that the welfare costs and implementation issues are manageable, and pricing provides significant new revenues. A challenge is that the floor price by itself appears well short of what will be needed by 2030 for Canada’s Paris Agreement pledge. |
| Keywords: | carbon price, price floor, Canada, welfare impacts, incidence, effective carbon price, competitiveness impacts |
| JEL: | Q54 Q58 H23 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6959&r=reg |
| By: | Halac, Marina; Yared, Pierre |
| Abstract: | We develop a simple delegation model to study rules based on instruments vs. targets. A principal faces a better informed but biased agent and relies on joint punishments as incentives. Instrument-based rules condition incentives on the agent's observable action; target-based rules condition incentives on outcomes that depend on the agent's action and private information. In each class, an optimal rule takes a threshold form and imposes the worst punishment upon violation. Target-based rules dominate instrument-based rules if and only if the agent's information is sufficiently precise. An optimal hybrid rule relaxes the instrument threshold whenever the target threshold is satisfied. |
| Keywords: | delegation; mechanism design; Policy Rules; private information |
| JEL: | D02 D82 E58 E61 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12872&r=reg |
| By: | Bourreau, Marc; Sun, Yutec; Verboven, Frank |
| Abstract: | We study a major new entry in the French mobile telecommunications market, followed by the introduction of fighting brands by the three incumbent firms. Using an empirical oligopoly model with differentiated products, we show that the incumbents' launch of the fighting brands can be rationalized only as a breakdown of tacit collusion. In the absence of entry the incumbents successfully colluded on restricting their product variety to avoid cannibalization; the new entry of the low-end competition made such semi-collusion more difficult to sustain because of increased business stealing incentives. Consumers gained considerably from the added variety of the new entrant and the fighting brands, and to a lesser extent from the incumbents' price response to the entry. |
| Keywords: | Entry; fighting brand; Mobile telecommunications; product variety; semi-collusion |
| JEL: | L13 L96 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12866&r=reg |
| By: | Ben Wealer; Simon Bauer; Nicolas Landry; Hannah Seiß; Christian von Hirschhausen |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwddc:dd93&r=reg |