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on Regulation |
| By: | Jonathon E. Hughes (Department of Economics, University of Colorado at Boulder); Ian Lange (Division of Economics and Business, Colorado School of Mines) |
| Abstract: | The movement to deregulate major industries over the past 40 years has produced large efficiency gains. However, distributional effects have been more difficult to assess. In the electricity sector, deregulation has vastly increased information available to market participants through the formation of wholesale markets. We test whether upstream suppliers, specifically railroads that transport coal from mines to power plants, use this information to capture economic rents that would otherwise accrue to electricity generators. Using natural gas prices as a proxy for generators' surplus, we find railroads charge higher markups when rents are larger. This effect is larger for deregulated plants, highlighting an important distributional impact of deregulation. This also means policies that change fuel prices can have substantially different effects on downstream consumers in regulated and deregulated markets. |
| Keywords: | Deregulation, Price Discrimination, Electricity Markets, Procurement Contracts |
| JEL: | L11 L51 Q48 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:mns:wpaper:wp201806&r=all |
| By: | Ilya Stepanov (National Research University Higher School of Economics); Johan Albrecht (National Research University Higher School of Economics) |
| Abstract: | The issue of instrument choice is vital for climate policy. Carbon pricing is used next to a range of traditional energy taxes and renewable energy policies such as feed-in tariffs and minimal renewable generation targets. Several countries introduced carbon taxes alongside existing energy taxes such as excise duties on vehicle fuels. Since 2005, the EU Emissions Trading Scheme (EU ETS) has attached a direct price to the GHG emissions of ETS companies. The combination of multiple instruments and explicit and indirect carbon price signals created a complex and frequently changing institutional landscape that blurs the contribution of each policy instrument. Can the decarbonization of the European economy be attributed to carbon price instruments or to renewable energy policies together with other fiscal instruments? This paper clarifies the relative impact of explicit carbon price instruments (carbon taxes and EU ETS) compared to other instruments, namely renewable energy policies and indirect carbon price signals (general energy taxes). The methodology is based on the calculation of the implicit carbon price in existing fiscal systems. On the basis of panel data for 30 European countries 1995–2016, several fixed-effect regression estimations were performed. The results indicate a greater but decreasing impact of price instruments on carbon intensity compared to renewable energy policies and a greater but decreasing relative impact of indirect price signals compared to explicit ones. |
| Keywords: | energy taxes, carbon tax, cap-and-trade, renewable energy policy, climate change, climate policy |
| JEL: | Q52 Q58 Q48 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:211/ec/2019&r=all |
| By: | Andrea Geraci (European Commission JRC); Mattia Nardotto (KU Leuven); Tommaso Reggiani (Masaryk University); Fabio Sabatini (Sapienza University of Rome) |
| Abstract: | We study how the diffusion of broadband Internet affects social capital using two data sets from the UK. Our empirical strategy exploits the fact that broadband access has long depended on customersâ position in the voice telecommunication infrastructure that was designed in the 1930s. The actual speed of an Internet connection, in fact, rapidly decays with the distance of the dwelling from the specific node of the network serving its area. Merging unique information about the topology of the voice network with geocoded longitudinal data about individual social capital, we show that access to broadband Internet caused a significant decline in forms of offline interaction and civic engagement. Overall, our results suggest that broadband penetration substantially crowded out several aspects of social capital. |
| Keywords: | ICT, broadband infrastructure, networks, Internet, social capital, civic capital |
| JEL: | C91 D9 D91 Z1 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:mub:wpaper:2018-01&r=all |
| By: | Grant Allan (Department of Economics, University of Strathclyde); Kevin Connolly (Department of Economics, University of Strathclyde); Andrew G Ross (Department of Economics, University of Strathclyde); Peter McGregor (Department of Economics, University of Strathclyde) |
| Abstract: | Two key pillars of the energy quadrilemma (which measure the sustainability of energy policy) are a reduction in greenhouse gas emissions and economic development. Recent worldwide energy policy has focused on the reduction of greenhouse gas emissions to combat climate change, which will influence, and in turn be influenced by, economic activity and energy use. As such, it is critically important to identify and incorporate emissions into macroeconomic models. Typically, emissions are linked to economic activity via the level of output, both calculated at a sectoral level. However, this approach - while consistent with linear models such as Input-Output - assumes that emissions per unit of output remains constant, which can be problematic with more complex economic systems. In this paper we detail a method for incorporating sectoral and aggregate CO2 emissions into a macroeconomic model (CGE) of the UK through the use of sectoral primary energy use. |
| Keywords: | Emissions, macroeconomic models, primary use energy |
| JEL: | Q43 O13 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:str:wpaper:1818&r=all |
| By: | Simon Porcher (IAE Paris - Sorbonne Business School) |
| Abstract: | In France, the management of public services such as water or sanitation can be done by the municipal council or contracted out to a private operator. This paper quantifies the impact of the choice of contracting out the management of water public services on price. It uses a unique dataset of utilities with unusual detailed financial indicators, such as debt of the water public service. We find evidence that private management is associated with higher prices on average ceteris paribus but that this difference disappears when we account for the 'hidden costs' of water, i.e. the price taking into consideration debt refunding of the public service which could increase the price in the following years. Indeed, private management is characterized by higher tariffs but lower debt level so that the price ensure the full-costs recovery while under public management, prices are set at a lower level than under private management but with a higher debt of the public service. |
| Keywords: | Public-private partnerships,water,contracting out,debt |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02002309&r=all |
| By: | Guzman, Ivan; Salazar, Ricardo |
| Abstract: | This paper presents a theoretical model for the optimization of the decision-making process of power purchase of the electric utility companies of the Dominican Republic, taking into account the demand of end-users of the service, the short-term marginal cost of energy in the wholesale power market, and the budgetary constraints of the utility companies. This model was applied to estimate the short-term price elasticity of electricity demand for the three largest electric utility companies of the Dominican Republic, during the period 2007-2016; this evaluation was made using time series analysis techniques. The elasticities estimated were in the range of -0.012 to -0.018. It is also explored if these values undergo intraday variations. The paper closes outlining some welfare implications of the results obtained as well as policy recommendations. |
| Keywords: | Power Markets; Economics of Regulation; Electricity Demand; Electric Utilities |
| JEL: | L11 L13 L43 L52 L94 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92083&r=all |
| By: | Nicholas Ryan |
| Abstract: | Weak contract enforcement may reduce the efficiency of investment in developing countries. I study how contract enforcement affects efficiency in procurement auctions for the largest power projects in India. I gather data on bidding and ex post contract renegotiation and find that the renegotiation of contracts in response to cost shocks is widespread, despite that bidders are allowed to index their bids to future costs like the price of coal. Connected firms choose to index less of the value of their bids to coal prices and, through this strategy, expose themselves to cost shocks to induce renegotiation. I use a structural model of bidding in a scoring auction to characterize equilibrium bidding when bidders are heterogeneous both in cost and in the payments they expect after renegotiation. The model estimates show that bidders offer power below cost due to the expected value of later renegotiation. The model is used to simulate bidding and efficiency with strict contract enforcement. Contract enforcement is found to be pro-competitive. With no renegotiation, equilibrium bids would rise to cover cost, but markups relative to total contract value fall sharply. Production costs decline, due to projects being allocated to lower-cost bidders over those who expect larger payments in renegotiation. |
| JEL: | D44 K12 L94 O14 Q41 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25547&r=all |
| By: | Florence TOUYA |
| Abstract: | Socially responsible behaviors represent a growing concern for consumers, employees, investors, firms. Beyond their economic impact, companies are made accountable and responsible for the social, the environmental incidence of their activities. Their governance, their processes, the security of their products and the working conditions they offer are more and more carefully examined. The question of the duty of vigilance concerning company activities seem of particular interest in this context. Public policies, especially through regulation, seek to limit (or even avoid) some of the negative impacts that can be related to firms' activity and choice. Yet, many drawbacks can prevent regulation to succeed : lack of information or of expertise, capture by interest groups... As a by-product it is worth examining whether some decisions must be taken by regulators or should rather be delegated to firms. This paper tries to tackle this issue. Through a mechanism without transfer approach in a setting involving information asymmetries, we will study under which conditions the decision is best assigned to the regulator. We show that for relatively low values of the private parameter, a bonding rule will be preferred, more strongly if asymmetry of information is introduced w.r.t. the knowledge the firm will get from the representative consumer. The divergence between the decision-maker and the firm strengthens and less communication takes place, which corresponds to a lower degree of delegation granted to companies. Thus, the optimal scheme is made of a combination of a rigid policy and a more flexible one over significant values of the private parameter. |
| Keywords: | Corporate Social Responsibility, Mechanism withou transfer, Informational asymmetry, Delegation, Risk, Expertise |
| JEL: | D82 H20 H71 H77 Q54 Q58 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:tac:wpaper:2018-2019_3&r=all |
| By: | Waldemar Marz; Frank Goetzke |
| Abstract: | Climate policy instruments in the transportation sector like fuel economy standards (CAFE) and fuel taxes not only affect households’ vehicle choice, but also the urban form in the long run. We introduce household level vehicle choice into the urban economic monocentric city model and run long-term climate policy scenarios to analyze the welfare effects of this urban adjustment in reaching emission goals. This goes beyond more short-term empirical analyses of the rebound effect in driving. We find that stricter CAFE standards lead to an urban expansion and considerable additional welfare costs for certain emission goals, unaccounted for in the previous literature on welfare costs of CAFE. These welfare costs can be reduced roughly by one half through the combination of CAFE with an urban growth boundary. Fuel taxes, in turn, lead to an urban contraction and additional welfare gains. We analyze the sensitivity of the results to changes in model parameters. |
| Keywords: | Fuel economy standards, fuel tax, monocentric city, rebound effect |
| JEL: | H23 L90 Q48 R40 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ifowps:_292&r=all |