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on Regulation |
| By: | ZhongXiang Zhang (Ma Yinchu School of Economics and China Academy of Energy, Environmental and Industrial Economics, Tianjin University) |
| Abstract: | The Chinese leadership has determined to assign the market a decisive role in allocating resources. To have the market to play that role, getting the energy prices right is crucial because this sends clear signals to both producers and consumers of energy. While the overall trend of China’s energy pricing reform since 1984 has been moving away from the prices set by the central government in the centrally planned economy and towards a more market-oriented pricing mechanism, the pace and scale of the reform differ across energy types. This article discusses the evolution of price reforms for coal, petroleum products, natural gas, electricity and renewable power in China, and provides some analysis of these energy price reforms, in order to have the market to play a decisive role in allocating resources and help China’s transition to a low-carbon economy. |
| Keywords: | Energy Prices, Tiered Prices, Differentiated Tariffs, Coal, Electricity, Natural Gas, Petroleum Products, Renewable Power, Desulfurization and Denitrification, State-owned Enterprises, China |
| JEL: | H23 H71 O13 O53 P22 Q41 Q43 Q48 Q53 Q58 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2018.18&r=reg |
| By: | Krekel, Christian; Zerrahn, Alexander |
| Abstract: | Throughout the world, governments foster the deployment of wind power to mitigate negative externalities of conventional electricity generation, notably {CO2} emissions. Wind turbines, however, are not free of externalities themselves, particularly interference with landscape aesthetics. We quantify these negative externalities using the life satisfaction approach. To this end, we combine household data from the German Socio-Economic Panel Study (SOEP) with a novel panel dataset on over 20,000 installations. Based on geographical coordinates and construction dates, we establish causality in a difference-in-differences design. Matching techniques drawing on exogenous weather data and geographical locations of residence ensure common trend behaviour. We show that the construction of wind turbines close to households exerts significant negative external effects on residential well-being, although they seem both spatially and temporally limited, being restricted to about 4,000 metres around households and decaying after five years at the latest. Robustness checks, including view shed analyses based on digital terrain models and placebo regressions, confirm our results. |
| Keywords: | SOEP |
| JEL: | N0 |
| Date: | 2017–11–29 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:68708&r=reg |
| By: | Brännlund, Runar (CERE - the Center for Environmental and Resource Economics); Vesterberg, Mattias (CERE - the Center for Environmental and Resource Economics) |
| Abstract: | In this paper, we explore subsistence levels and price elasticities for residential electricity demand in Sweden. Using a Stone-Geary functional form and unique Swedish data on residential electricity usage, we estimate demand Equations for peak and off-peak demand. We find that the subsistence levels are larger during peak than off-peak, and that there is a substantial variation in these subsistence levels across months. As a result, price responsiveness varies across hours and seasons. This has important policy implications, not the least with respect to effects of real time pricing, as it suggests that there are limits to households’ price responsiveness. |
| Keywords: | Dynamic price; Structural modeling; Stone Geary; Real time pricing |
| JEL: | D10 D12 Q41 |
| Date: | 2018–05–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2018_005&r=reg |
| By: | HuiHui Liu (Academy of Chinese Energy Strategy, China University of Petroleum); ZhongXiang Zhang (Ma Yinchu School of Economics and China Academy of Energy, Environmental and Industrial Economics, Tianjin University); ZhanMing Chen (Department of Energy Economics, School of Economics, Renmin University of China); DeSheng Dou (Academy of Chinese Energy Strategy, China University of Petroleum) |
| Abstract: | The regulated price mechanism in China’s power industry has attracted much criticism because of its incapability to optimize the allocation of resources. To build an “open, orderly, competitive and complete” power market system, the Chinese government launched an unprecedented marketization reform in 2015 to deregulate the electricity price. This paper examines the impact of the electricity price deregulation in the industry level. We first construct two-stage dynamic game models by taking the coal and coal-fired power industries as the players. Using the models, we compare analytically the equilibriums with and without electricity regulation, and examine the changes in electricity price, electricity generation, coal price and coal traded quantity. The theoretical analyses show that there are three intervals of the regulated electricity sales prices which influence the impact of electricity price deregulation. Next, we collect empirical data to estimate the parameters in the game models, and simulate the influence of electricity deregulation on the two industries in terms of market outcome and industrial profitability. Our results suggest that the actual regulated electricity price falls within the medium interval of the theoretical results, which means the price deregulation will result in higher electricity sales price but lower coal price, less coal traded amount and less electricity generation amount. The robustness analysis shows that our results hold with respect to the electricity generation efficiency and price elasticity of electricity demand. |
| Keywords: | China, Electricity Deregulation, Reform, Coal Industry, Power Industry |
| JEL: | Q41 Q43 Q48 L94 L98 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2018.17&r=reg |
| By: | De Donder, Philippe; Soteri, Soterios |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:32660&r=reg |
| By: | Haber, Hanan |
| Abstract: | This article argues that the European Union (EU) is promoting a liberal model of welfare through social regulation. Focusing on the liberalization and regulation of the electricity sector, the article asks how and for what reasons social protection of vulnerable consumers was introduced into this sector, and what kind of welfare policy this represents. This article shows that social measures grew substantially between the second and third directives on electricity sector liberalization (2005–2009), advanced by the European Parliament and reluctantly adopted by the Commission. This development runs counter to our understanding of electricity sector reform as focused primarily on liberalization, competition and efficiency. It is argued that the introduction of social protection advanced the process of economic reform, even when the measures introduced were in themselves inefficient. This social regulation, however, not only reflects a liberal, targeted and minimal understanding of welfare, but also pushes social policy in member states in this same direction. |
| Keywords: | Electricity; liberalization; regulation; utilities; welfare |
| JEL: | J1 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:87670&r=reg |
| By: | Juan Moreno-Cruz; Gernot Wagner; David W. Keith |
| Abstract: | This paper introduces geoengineering into an optimal control model of climate change economics. Together with mitigation and adaptation, carbon and solar geoengineering span the universe of possible climate policies. Their wildly different characteristics have important implications for climate policy. We show in the context of our model that: (i) the optimal carbon tax equals the marginal cost of carbon geoengineering; (ii) the introduction of either form of geoengineering leads to higher emissions yet lower temperatures; (iii) in a world with above-optimal cumulative emissions, only a complete set of instruments can minimize climate damages. |
| Keywords: | climate change, climate policy, mitigation, adaptation, carbon geoengineering, carbon dioxide removal, solar geoengineering, solar radiation management |
| JEL: | D90 O44 Q48 Q54 Q58 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7059&r=reg |
| By: | Guy Meunier; Jean-Pierre Ponssard |
| Abstract: | We analyze the impact of indirect network effects in the deployment of zero emission vehicles in a static partial equilibrium model. In most theoretical analysis direct and indirect effects are conflated, and relatively few authors have explicitly considered indirect network effects. We also introduce the market power of vehicle producers and scale effects in the production function. The model exhibits a multiplicity of local social extrema and of market equilibria, suggesting a possibility of lock-in. The optimal set of subsidies is derived so that the Pareto dominating market equilibrium would coincide with the social optimum. This framework is applied to the case of the fuel cell electric (hydrogen) vehicles. |
| Keywords: | E-mobility, network effects, joint incentives for infrastructure and car rebates |
| JEL: | C61 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7026&r=reg |
| By: | Paolo Pertile; Simona Gamba; Martin Forster |
| Abstract: | We present a model of the strategic interaction among authorities regulating pharmaceutical prices in different countries and the R&D investment decisions of pharmaceutical firms. Regulators’ decisions affect consumer surplus directly, via prices, and indirectly via firms’ profits and R&D investment policies, which in turn affect patient health. The positive externality of a price increase in one country provides an incentive for other countries to free-ride, and we show how country-level characteristics affect optimal pricing decisions and equilibria. Our theoretical predictions are tested using price data for a set of 70 cancer drugs in 25 OECD countries. We find evidence of behaviour that is consistent with the free-riding hypothesis and which, in line with the theoretical predictions, differs according to country-level characteristics. Countries with comparatively large market shares tend to react to increases in other countries’ prices by lowering their own prices; in countries with comparatively small market shares, regulators’ decisions are consistent with the objective of introducing the product at as low a price as possible. We discuss the policy implications of our results for incentivising global pharmaceutical R&D and the recent proposal to move towards a joint pharmaceutical procurement process at the European level. |
| Keywords: | quality; |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:18/04&r=reg |
| By: | Doda, Baran; Taschini, Luca |
| Abstract: | We propose a theory of the economic advantage (EA) of regulating carbon emissions by linking two emissions trading systems versus operating them under autarky. Linking implies that permits issued in one system can be traded internationally for use in the other. We show how the nature of uncertainty, market sizes, and sunk costs of linking determine EA. Even when sunk costs are small so EA>0, autarky can be preferable to one partner, depending on jurisdiction characteristics. Moreover, one partner’s permit price volatility under linking may increase without making linking the less preferred option. An empirical application calibrates jurisdiction characteristics to demonstrate the economic significance of our results which can make linking partner match crucial for the effectiveness and success of the Paris Agreement. |
| Keywords: | emission trading; climate change policy; market-based regulation; linking |
| JEL: | H23 Q58 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:68379&r=reg |
| By: | James D. Dana Jr. (Northwestern University); Kevin R. Williams (Cowles Foundation, Yale University) |
| Abstract: | Inventory controls, used most notably by airlines, are sales limits assigned to individual prices. While typically viewed as a tool to manage demand uncertainty, we argue that inventory controls also facilitate intertemporal price discrimination. In our model, competing ?rms ?rst choose quantity and then choose prices in a series of advance-purchase markets. When demand becomes more inelastic over time, as in the airline and hotel markets, a monopolist can easily price discriminate; however, we show that oligopoly ?rms generally cannot. Inventory controls let ?rms set increasing prices regardless of whether or not demand is uncertain. |
| Keywords: | Capacity-pricing games, Intertemporal price discrimination, Oligopoly models, Inventory controls |
| JEL: | D21 D43 L13 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2136&r=reg |
| By: | Richard Dubourg (The Economics Interface Limited) |
| Abstract: | This paper gives an overview of economic assessments of the benefits of the control of emissions of mercury compounds, discusses their completeness from a social cost point of view, and discusses the relative magnitudes of the values attached to mercury compounds in different contexts. The majority of the assessments have been conducted in the context of coal-fired electricity generation and the valuation of human health impacts linked to ingestion of methylmercury. |
| Keywords: | benefits, impacts, Mercury, policy, valuation |
| JEL: | Q51 Q53 Q58 |
| Date: | 2018–06–06 |
| URL: | http://d.repec.org/n?u=RePEc:oec:envaaa:132-en&r=reg |
| By: | Chia-Lin Chang (National Chung Hsing University); Michael McAleer (Asia University, University of Sydney Business School, EUR); Yu-Ann Wang (National Chung Hsing University) |
| Abstract: | The purpose of the paper is to examine latent volatility Granger causality for four renewable energy Exchange Traded Funds (ETFs) and crude oil ETF (USO), namely solar (TAN), wind (FAN), water (PIO), and nuclear (NLR). Data on the renewable energy and crude oil ETFs are from 18 June 2008 to 20 March 2017. From the underlying stochastic process of a vector random coefficient autoregressive (VRCAR) process for the shocks of returns, we derive Latent Volatility Granger causality from the Diagonal BEKK multivariate conditional volatility model. We follow Chang et al. (2015)’s definition of the co-volatility spillovers of shocks, which calculate the delayed effect of a returns shock in one asset on the subsequent volatility or co-volatility in another asset, and extend the effects of the co-volatility spillovers of shocks to the effects of the co-volatility spillovers of squared shocks. The empirical results show there are significant positive latent volatility Granger causality relationships between solar (TAN), wind (FAN), nuclear (NLR), and crude oil (USO) ETFs, specifically significant volatility spillovers of shocks from solar ETF on the subsequent wind ETF co-volatility with solar ETF, and wind ETF on the subsequent solar ETF co-volatility with wind ETF. Interestingly, there are significant volatility spillovers of squared shocks for the renewable energy ETFs, but not with crude oil ETFs. |
| Keywords: | Renewable Energy; Latent Volatility; Granger Causality; Co-volatility Spillovers; Solar; Wind; Water; Nuclear Power. |
| JEL: | C32 C58 G12 G15 Q42 |
| Date: | 2018–05–25 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20180052&r=reg |
| By: | Porcher, Simon; Maziotis, Alexandros; Molinos-Senante, Maria |
| Abstract: | The evaluation of the economic efficiency of regulatory schemes is essential for regulators and utilities. In this study it is analysed for the first time the welfare costs of non-marginal cost pricing in the water supply in England and Wales, by computing the deadweight loss of the water only companies (WoCs) that existed over the period of 1993–2009. The results indicate that the current price schemes can have substantial efficiency costs. Our estimates show that the loss of efficiency for the WoCs lies between 15 and 60 million GBP over the period 1993–2009. These amounts could have been redistributed either to the companies in terms of profits or to the consumers via price reductions. The methodology and results of this study are of great interest for both regulators and water utilities managers to evaluate the effectiveness of price regulation and make informed decisions. |
| Keywords: | profits; deadweight loss; water industry |
| JEL: | J50 |
| Date: | 2017–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:82898&r=reg |
| By: | Antonia Díaz (Universidad Carlos III de Madrid); Gustavo A. Marrero (Universidad de La Laguna); Luis Puch (Universidad Complutense de Madrid); Jesús Rodríguez-López (U. Pablo de Olavide) |
| Abstract: | This paper explores how changes in energy intensity and the switch to renewables can boost economic growth. In doing so, we implement a dynamic panel data approach on a sample of 134 countries over the period 1960 to 2010. We incorporate a set of control variables, related to human and physical capital, socio-economic conditions, and policies which are widely used in the associated literature. According to our results, and given the current state of technology, improving energy intensity is an approach that could reconcile growth and the environment at the worldwide level. Moving to conventional renewables (biomass and hydro) may reduce CO2 emissions, consistent with the related literature, although we do not find evidence that supports a growth enhancing effect. However, moving to frontier renewables (wind, solar, wave or geothermic) does reconcile the reduction of CO2 emissions with economic growth. Our results are robust to the specification of the dynamic panel with respect to three alternative methods, namely, the pooled OLS regression, the regression under fixed effects, and the GMM estimation. |
| Keywords: | Economic growth, energy intensity, renewable energy, dynamic panel data models. |
| JEL: | C23 C33 O5 Q2 Q3 Q41 Q43 Q42 Q48 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpaper:18.08&r=reg |