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on Regulation |
| By: | Don Fullerton; Chi L. Ta |
| Abstract: | Improvements in energy efficiency reduce the cost of consuming services from household cars and appliances and can result in a positive rebound effect that offsets part of the direct energy savings. We use a general equilibrium model to derive analytical expressions that allow us to compare rebound effects from a costless technology shock to those from a costly energy efficiency mandate. We decompose each total effect on the use of energy into components that include a direct efficiency effect, direct rebound effect, and indirect rebound effect. We investigate which factors determine the sign and magnitude of each. We show that rebound from a costless technology shock is generally positive, as in prior literature, but we also show how a pre-existing energy efficiency standard can negate the direct energy savings from the costless technology shock – leaving only the positive rebound effect on energy use. Then we analyze increased stringency of energy efficiency standards, and we show exactly when the increased costs reverse the sign of rebound. Using plausible parameter values in this model, we find that indirect effects can easily outweigh the direct effects captured in partial equilibrium models, and that the total rebound from a costly efficiency mandate is negative. |
| JEL: | D58 H23 Q48 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25696&r=all |
| By: | Michael Hellwig; Dominik Schober; Luis Cabral |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ste:nystbu:18-03&r=all |
| By: | Berliant, Marcus |
| Abstract: | We examine the fine microstructure of commuting in a game-theoretic setting with a continuum of commuters. Commuters' home and work locations can be heterogeneous. A commuter transport network is exogenous. Traffic speed is determined by link capacity and by local congestion at a time and place along a link, where local congestion at a time and place is endogenous. The model can be reinterpreted to apply to congestion on the internet. We find sufficient conditions for existence of equilibrium, that multiple equilibria are ubiquitous, and that the welfare properties of morning and evening commute equilibria differ on a tree. |
| Keywords: | Commuting; Internet traffic; Congestion externality; Efficient Nash equilibrium |
| JEL: | L86 R41 |
| Date: | 2019–03–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92962&r=all |
| By: | Bellia, Mario; Pelizzon, Loriana; Subrahmanyam, Marti G.; Uno, Jun; Yuferova, Darya |
| Abstract: | Do competition and incentives offered to designated market makers (DMMs) improve market liquidity? Using data from NYSE Euronext Paris, we show that an exogenous increase in competition among DMMs leads to a significant decrease in quoted and effective spreads, mainly through a reduction in adverse selection costs. In contrast, changes in incentives, through small changes in rebates and requirements for DMMs, do not have any tangible effect on market liquidity. Our results are of relevance for designing optimal contracts between exchanges and DMMs and for regulatory market oversight. |
| Keywords: | High-Frequency Trading (HFT),Designated Market Makers (DMMs) Market Making,Adverse Selection,Liquidity Provision |
| JEL: | G12 G14 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:247&r=all |
| By: | Núñez-Sánchez, Ramón; Hidalgo-Gallego, Soraya; Martínez-San Román, Valeriano |
| Abstract: | Airport pricing is considered as one of the most relevant issues for policymakers. According transport policy, pricing schemes should be at least partially based on marginal costs. This article aims at comparing the most relevant aeronautical airport charges with their corresponding marginal costs for the Spanish airports in the period before the partial privatization process. To that end, we have built very detailed airport charge variables, and then, have estimated a flexible short-run variable cost function system using a panel of thirty-five airports over a 6-year period. The results show that the evolution of aeronautical airport charges does not follow the trend of marginal costs. Moreover, these charges are set above the shortrun marginal costs with the exception of the smallest and insular airports. Finally, we find the existence of non-neutral technological change and excess of capacity for the Spanish airports. |
| Keywords: | airport pricing, cost function, airport regulation, Spanish airports |
| JEL: | H54 L93 R48 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92973&r=all |
| By: | van der Ploeg, Frederick; Rezai, Armon |
| Abstract: | A simple rule for the optimal global price of carbon is presented, which captures the geo-physical, economic, and ethical drivers of climate policy as well as the effect of uncertainty about future growth of consumption. There is also a discussion of the optimal carbon budget and the amount of unburnable carbon and stranded fossil fuel reserves and a back-on-the-envelope expression are given for calculating these. It is also shown how one can derive the end of the carbon era and peak warming. This simple arithmetic for determining climate policy is meant to complement the simulations of large-scale integrated assessment model, and to give analytical understanding of the key determinants of climate policy. The simple rules perform very well in a full integrated assessment model. It is also shown how to take account of a 2 °C upper limit on global warming. Steady increases in the efficiency of labour do not affect the optimal price of carbon or the safe carbon budget, but do postpone the carbon-free era. |
| Keywords: | social cost of carbon, climate ethics, prudence, carbon budget, peak warming, end of carbon era, stranded assets, simple rules, energy efficiency |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wus045:6893&r=all |
| By: | Yun Wu; Jas Singh; Dylan Karl Tucker |
| Keywords: | Energy - Energy Conservation & Efficiency Energy - Energy Finance Energy - Energy Policies & Economics |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:30386&r=all |
| By: | Louis-Gaëtan Giraudet; Anna Petronevich; Laurent Faucheux |
| Abstract: | At least ex ante, energy efficiency improvements increase investor’s solvency. Associated loans should therefore carry lower interest rates than do otherwise conventional loans. We test this hypothesis using unique weekly panel data on posted interest rates scraped from loan simulators made available online by French credit institutions during 2015-2016. On average, we find that lenders charged a green premium in 2015 but offered a green discount in 2016. We also find that, absent green attributes, interest rates are higher for home retrofit loans than for vehicle loans, which suggests that lenders use the loan purpose as a screening device of unobserved borrower characteristics. Our results together imply that loans for home energy renovation were consistently charged relatively high interest rates, with adverse consequences for scaling up home energy renovation. |
| Keywords: | energy efficiency gap, personal consumption credit loan, home energy retrofit, screening, data scraping, online prices. |
| JEL: | D14 G21 Q41 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:716&r=all |
| By: | Ashok Sarkar; Sarah Moin |
| Keywords: | Energy - Energy Conservation & Efficiency Energy - Energy Policies & Economics Energy - Energy Privatization |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:30385&r=all |
| By: | Samuel de Haas (Justus-Liebig-University Giessen) |
| Abstract: | Most of the literature on retail fuel markets find high-frequency and asymmetric price cycles. This is typically explained by the model of Edgeworth price cycles. A key element of this model is that prices fall to marginal costs during a cycle. It seems challenging to address this assumption empirically. However, I use a natural experiment in the German fuel market to analyze the effects of an external cost shock. I find strong evidence that prices do not fall to marginal costs. This is not in line with Edgeworth cycles and thus, should be taken into account when analyzing fuel markets. |
| Keywords: | Edgeworth price cycles, Retail gasoline, Price effects, Natural experiment, Coordination |
| JEL: | L11 L81 L91 K21 Q41 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201913&r=all |
| By: | Andreas Hefti; Peiyao Shen; Regina Betz |
| Abstract: | We study the effects of different information structures (full information, supply uncertainty and demand uncertainty) on equilibrium prices, allocative efficiency and bidding behavior in a (supply-side) uniform-price multi-unit auction, using supply function competition and a novel experimental design. Our setup integrates different types of market power and a varying level of competition. We empirically find that average prices tend to be higher under full information compared to the cases where bidders either have limited information about about the demand level or rivals’ technologies or; the latter even leading to strictly lower average prices as the exertion of market power and bid shading is strongly reduced. We explain this finding with a behavioral equilibrium concept, where bidders behave as if competing against the average market situation. Further, we address the problem of multiplicity of equilibria by exploiting the equilibrium conditions to obtain an empirical selection of the average equilibrium supply function. The respective predictions of the average prices exceed those by standard OLS in all information treatments. |
| Keywords: | Multi-unit auctions, limited information, market power, supply function competition, supply uncertainty, demand uncertainty, restricted least squares |
| JEL: | C92 D43 D44 D82 L11 L94 Q41 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:320&r=all |
| By: | Rosa, Benjamin |
| Abstract: | I study affirmative action subcontracting regulations in a model where governments use auctions to repeatedly procure goods and services at the lowest possible price. Through using disadvantaged subcontractors, prime contractors build relationships over time, resulting in lower subcontracting costs in future periods. I find that regulation in the form of a minimum subcontracting requirement expands bidder asymmetries, favoring prime contractors with stronger relationships over those with weaker ones. Simulations show that the manner in which relationships evolve determines not only the utilization of disadvantaged subcontractors but also the procurement costs attained under affirmative action. |
| Keywords: | Dynamic auctions; affirmative action; procurement |
| JEL: | C6 C73 D44 |
| Date: | 2019–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93065&r=all |
| By: | Schleich, Joachim; Hillenbrand, Thomas |
| Abstract: | This paper econometrically estimates residential water consumption in Germany between 2007 and 2013 based on a panel of almost 3000 supply areas. In particular, the analysis distinguishes periods of rising and falling water and sewage water prices. The short-run (long-run) price elasticity is estimated at around 4.2% (13%), but water demand appears to respond asymmetrically to rising and falling prices. When prices are rising, the short-run (long-run) price elasticity is around 6.5% (18%). When prices are falling, the short-run price elasticity is not statistically different from zero, and the long-run price elasticity is estimated at around 12%. Additional results illustrate that employing average prices instead of marginal prices results in substantially overestimating the price elasticity. These findings are particularly relevant for utilities and regulators planning to alter the tariff structure towards a higher fixed fee and a lower volumetric fee. |
| Keywords: | water consumption,econometrics,rebound,tariff,price elasticity,panel data |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fisisi:s032019&r=all |