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on Regulation |
| By: | Brevik Wangsness, Paal (School of Economics and Business, Norwegian University of Life Sciences); Proost, Stef (Department of Economics-KULeuven); Løvold Rødseth , Kenneth (Institute of Transport Economics) |
| Abstract: | We observe a rapidly rising share of the passenger car fleet becoming electric as policy makers keep making the purchase and use of electric vehicles (EVs) more favorable in the pursuit of reducing pollution. The electrification of transport will make the transport and energy systems more intertwined: EV-friendly transport policies increase the demand for power, thus challenging the distribution grid’s capacity, while electricity policies immediately impact on the generalized costs of driving EVs. This paper develops a stylized economic model for passenger transport in the greater Oslo area where the agents’ endogenous choice of car ownership, transport pattern and EV home charging is determined jointly in equilibrium. If enough EV-owning agents charge during power peak hours, costly grid expansions may be needed. We examine how the distribution grid company can respond in order to mitigate these costs with different pricing schemes and how this in turn affects the transport equilibrium. We find that applying peak tariffs for the grid will help strike a better balance between investment costs and EV-owners’ disutility of charging during off-peak hours. |
| Keywords: | electric vehicles; climate policy; urban transport policy; transport modeling; electricity distribution costs |
| JEL: | H71 Q41 Q48 Q54 Q58 R41 R48 |
| Date: | 2019–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nlsseb:2019_001&r=all |
| By: | Chirakijja, Janjala (Monash University); Jayachandran, Seema (Northwestern University); Ong, Pinchuan (Northwestern University) |
| Abstract: | This paper examines how the price of home heating affects mortality in the US. Exposure to cold is one reason that mortality peaks in winter, and a higher heating price increases exposure to cold by reducing heating use. It also raises energy bills, which could affect health by decreasing other health-promoting spending. Our empirical approach combines spatial variation in the energy source used for home heating and temporal variation in the national prices of natural gas versus electricity. We find that a lower heating price reduces winter mortality, driven mostly by cardiovascular and respiratory causes. |
| Keywords: | weather-related mortality, winter mortality, energy prices, energy poverty, fuel poverty |
| JEL: | I1 J14 Q41 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12195&r=all |
| By: | Philipp M. Richter; Marco Runkel; Robert C. Schmidt |
| Abstract: | The loss of international competitiveness of domestic industries remains a key obstacle to the implementation of effective carbon prices in a world without harmonized climate policies. We analyze countries’ non-cooperative choices of emissions taxes under imperfect competition and mobile polluting firms. In our general equilibrium setup with trade, wage effects prevent all firms from locating in the same country. While under local or no pollution countries achieve the first-best, under transboundary pollution taxes are inefficiently low and lower than under autarky where only the ‘standard’ free-riding incentive distorts emissions taxes. This effect is more pronounced when polluting firms are mobile. |
| Keywords: | strategic environmental policy, firm location, carbon leakage, general equilibrium |
| JEL: | F12 F18 H23 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7566&r=all |
| By: | Izabela Jelovac (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Samuel Nzale (AMU - Aix Marseille Université) |
| Abstract: | We study optimal contracts in a regulator-agent setting with joint production, altruistic and selfish agents, and uneasy outcome measurement. Such a setting represents sectors of activities such as education and health care provision. The agents and the regulator jointly produce an outcome for which they all care to some extent that is varying from agent to agent. Some agents, the altruistic ones, care more than the regulator does while others, the selfish agents, care less. Moral hazard is present due to the agent's effort that is not contractible. Adverse selection is present too since the regulator cannot a priori distinguish between altruistic and selfish agents. Contracts consist of a simple transfer from the regulator to the agents together with the regulator's input in the joint production. We show that a screening contract is not optimal when we face both moral hazard and adverse selection. |
| Keywords: | regulator-agent joint production,altruism,moral hazard,adverse selection |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01618043&r=all |
| By: | Adrien Fabre (Paris School of Economics and University Paris 1 Panthéon Sorbonne); Mouez Fodha (Paris School of Economics and University Paris 1 Panthéon Sorbonne); Francesco Ricci (CEE-M, Univervité de Montpellier, CNRS, INRA, SupAgro, Montpellier, France) |
| Abstract: | The production of energy from renewable sources is much more intensive in minerals than that from fossil resources. The scarcity of certain minerals limits the potential for substituting renewable energy for scarce fossil resources. However, minerals can be recycled, while fossils cannot. We develop an intertemporal model to study the dynamics of the optimal energy mix in the presence of mineral intensive renewable energy and fossil energy. We analyze energy production when both mineral and fossil resources are scarce, but minerals are recyclable. We show that the greater the recycling rate of minerals, the more the energy mix should rely on renewable energy, and the sooner should investment in renewable capacity take place. We confirm these results even in the presence of other better known factors that affect the optimal schedule of resource use: growth in the productivity in the renewable sector, imperfect substitution between the two sources of energy, convex extraction costs for mineral resources and pollution from the use of fossil resources. |
| Keywords: | Renewable and Non-Renewable Natural Resources, Mineral Resources, Recycling, Energy Transition |
| JEL: | Q3 Q2 Q42 Q54 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:fae:wpaper:2019.06&r=all |
| By: | Jessica Thomsen (Fraunhofer Institute for Solar Energy Systems ISE); Christoph Weber (Chair for Management Sciences and Energy Economics, University of Duisburg-Essen (Campus Essen)) |
| Abstract: | We assess how the design of retail prices, network charges and levies for household prosumers affect the attractiveness and resulting operation of small-scale photovoltaic battery storage systems (PVBSS), using a detailed modeling approach applied to a case study of six households in Germany. The selected pricing schemes and reform proposals are evaluated regarding the investment attractiveness for the prosumer and the impact on system-oriented operation, considering both market and grid integration. We show that currently the business case for PV as well as PVBSS only exists since it allows avoiding grid offtake and thus avoiding paying taxes and levies on consumed electricity. Introducing time-variable pricing schemes or price components increases the value of PVBSS for the customer and the market, but leads to less grid-friendly operation. It is shown that the term “system-oriented operation†should be defined carefully since market value and grid-friendly operation do not necessarily go hand in hand so that one incentive cannot inherently contribute to both objectives at the same time. The tariff design, as well as the design of single tariff components have a considerable impact on the attractiveness and the resulting system integration of PVBSS and should be evaluated thoroughly to avoid unintended outcomes. |
| Keywords: | photovoltaic battery storage systems, tariff design, system integration, grid integration |
| URL: | http://d.repec.org/n?u=RePEc:dui:wpaper:1903&r=all |
| By: | Lee, Henry (Harvard Kennedy School); Clark, Alex (Climate Policy Initiative) |
| Abstract: | Electric vehicles (EVs) have advanced significantly this decade, owing in part to decreasing battery costs. Yet EVs remain more costly than gasoline fueled vehicles over their useful life. This paper analyzes the additional advances that will be needed, if electric vehicles are to significantly penetrate the passenger vehicle fleet. |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp18-026&r=all |
| By: | Sébastien Houde; Erica Myers |
| Abstract: | Quantifying heterogeneity in consumers’ misperceptions of product costs is crucial for policy design. We illustrate this point in the energy context and the design of Pigouvian policies. We estimate non-parametric distributions of perceptions of energy costs in the U.S. appliance market using a revealed preference approach. We show that the average degree of misperception is misleading— while the largest share of consumers correctly perceives energy costs, a significant share undervalues them, and smaller shares either significantly overvalues or completely ignores them. We show that setting a tax based on mean misperception deviates substantially from the optimal tax that accounts for heterogeneous misperceptions. While correctly characterizing misperception is crucial for setting optimal Pigouvian taxes for externalities, it is less important for setting optimal standards. We find that standards can largely outperform taxes. Standards’ advantage is they reduce variance in energy operating costs relative to taxes, which internalizes distortionary effects from misperceptions. |
| JEL: | D12 D83 L15 Q41 Q50 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25722&r=all |
| By: | Ziad R. Ghandour (Department of Economics / NIPE, University of Minho) |
| Abstract: | We analyse the effect of competition on quality provision in mixed markets, such as healthcare and education, where public and private providers coexist. We draw two key assumptions about the public provider in such markets, namely in that it faces a regulated price and is (partly) motivated. We also explore the effects of changes in the state subsidy and co-payment fees. Our main contribution is that, under certain circumstances, more competition leads to lower average quality in equilibrium. Similarly, the effects of higher co-payment fees or larger state subsidies on average quality are also a priori ambiguous. These conclusions hold regardless of whether providers seek profit maximisation or the public provider has altruistic preferences. Furthermore, we characterise the incentives for the private provider to unilaterally relocate towards the public provider. |
| Keywords: | Mixed Duopoly, Competition, Quality Provision, Motivated Provider, State Subsidy, Co-payment Fees |
| JEL: | D4 L1 L2 L3 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:02/2019&r=all |
| By: | Kayo MURAKAMI; Takanori IDA |
| Abstract: | This study investigates consumers’ status quo bias against new alternatives after deregulation in the residential electricity market in Japan. We conducted two choice experiments using online surveys before and after deregulation, and analyzed the relationship between consumers’ stated preferences and their revealed switching behaviors. The results indicate that the average Japanese consumer experiences status quo bias in electricity plan choice; consumers preferred to remain with their default provider despite the obvious 5% bill savings that could be gained from switching to a new provider. Moreover, respondents who did not switch in the real market became twice as attached to their default plan after their actual decision. In addition, respondents who switched soon after deregulation had a higher stated preference for renewable energy sources. This implies that new electricity plans that enhance clean energy have more potential to moderate consumer status quo bias in electricity plan choice. By simulating the potential share of new providers in the liberalized market, we found that a 50% renewable-energy plan has a larger potential market share than a plan that offers a 7% bill reduction under price competition. |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:kue:epaper:e-19-001&r=all |
| By: | Javier Bustos-Salvagno (ILADES – Universidad Alberto Hurtado); Fernando Fuentes H. (ILADES – Universidad Alberto Hurtado) |
| Abstract: | One of the main issues in deciding an expansion in power transmission capacity is the effect on generators’ competition. This paper aims to perform an econometric estimation of the main determinants of long-term regulated contract prices from 2006 to 2014 and use the results to estimate the effect on market power reduction of an interconnection of the two main power systems in Chile. |
| Keywords: | Power Transmission, Market Power, Contracts, Prices, Auctions, Chile |
| URL: | http://d.repec.org/n?u=RePEc:ila:ilades:inv309&r=all |
| By: | Grafström, Jonas (The Ratio Institute) |
| Abstract: | An anecdote about the failure of the Soviet economic system tells about a factory which were evaluated based on tons of nails produced – unsurprisingly the nails became heavy. China is currently hailed as the worlds primer wind power producer; however, a closer examination reveals a string of policy failure making the Chinese wind power development resemble the infamous Soviet nail example. From a technological transition perspective, policy failures in China's wind power program from 1980-2016 is documented and analysed. Five overarching topics are analysed including: Conflicting policies, quality problems, underwhelming technological development, lacking technological standards and insufficient grid transmission system. One conclusion is that when the Chinese government set a command and control target of how much new installed capacity that was going to be constructed the state utilities delivered to target but with an abundance of power plants without grid connectivity, severe quality problems and low technological development. |
| Keywords: | China; Wind power; Economic Planning; Soviet; Technology; Energy |
| JEL: | E61 O32 Q28 Q58 |
| Date: | 2019–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ratioi:0320&r=all |
| By: | James D. Dana Jr. (Northwestern University); Kevin R. Williams (Cowles Foundation, Yale University) |
| Abstract: | When ?rms ?rst choose capacity and then compete on prices in a series of advance-purchase markets, we show that strong competitive forces prevent firms from utilizing intertemporal price discrimination. We then enrich the model by allowing ?rms to use inventory controls, or sales limits assigned to individual prices. We show that ?rms will choose to set inventory controls in order to engage in intertemporal price discrimination, but only if demand becomes more inelastic over time. Thus, although typically viewed as a tool to manage demand uncertainty, we show that inventory controls can also facilitate price discrimination in oligopoly. |
| 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:2136r2&r=all |
| By: | Morimoto, Mayo (Institute of Social Science, The University of Tokyo) |
| Abstract: | This paper studies how electrification affected the economic performance and industrial relations of the Japanese coal mining industry in the 1900s. We find that electrification considerably improved productivity and increased the number of workers, but had statistically zero effects on miners’ wages and significantly declined the labor income share, using difference-in-differences estimation. We explain this phenomenon by using the “superstar firm†hypothesis, which provides a consistent explanation of the recent declines in labor income share in the US economy. |
| Keywords: | Electrification, labor income share, productivity, industrial revolution, technological change, coal mining. |
| JEL: | D24 L94 O13 O14 Q40 |
| Date: | 2019–03–22 |
| URL: | http://d.repec.org/n?u=RePEc:itk:issdps:f191&r=all |
| By: | Hoffmann, Florian; Inderst, Roman |
| Abstract: | Embedding consumer experimentation with a product or service into a market environment, we find that unregulated contracts induce too few returns or cancellations, as they do not internalize a pecuniary externality on other firms in the market. Forcing firms to let consumers learn longer by imposing a commonly observed statutory minimum cancellation or refund period is socially efficient only when firms appropriate much of the market surplus, while it backfires otherwise. Interestingly, cancellation rights are a poor predictor of competition, as in the unregulated outcome firms grant particularly generous rights when competition is neither too low nor too high. |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13641&r=all |
| By: | Ujjayant Chakravorty; Manzoor H. Dar; Kyle Emerick |
| Abstract: | We use two randomized controlled trials in Bangladesh to study a simple water conservation technology for rice production called “Alternate Wetting and Drying (AWD)”. Despite proven results in agronomic trials, our first experiment shows that AWD only saves water and increases profits in villages where farmers pay a marginal price for water, but not when they pay fixed seasonal charges. The second RCT randomly distributed debit cards that can be used to pay volumetric prices for irrigation water. This low-cost, scalable intervention causes farmers to place more value on the water-saving technology. Demand for the technology becomes less price-sensitive. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7560&r=all |
| By: | Schatzki, Todd (Analysis Group, Inc.); Stavins, Robert N. (Harvard Kennedy School) |
| Abstract: | California’s Greenhouse Gas (GHG) cap-and-trade program is a key element of the suite of policies the State has adopted to achieve its climate policy goals. The passage of AB 398 (California Global Warming Solutions Act of 2006: market-based compliance mechanisms) extended the use of the cap-and-trade program for the 2021-2030 period, while also specifying modifications of the program’s “cost containment†structure and directing CARB to “[e]valuate and address concerns related to overallocation in [ARB’s] determination of the allowances available for years 2021 to 2030.†The changes being considered by CARB will not only affect the program’s stringency, but also its performance by affecting the ability of the “cost containment†structure to mitigate allowance price volatility and the risk of suddenly escalating allowance prices. We address key design issues that were identified by the legislature in AB 398 and have been identified by CARB in its “Preliminary Concepts†white paper, including: (1) Price levels for the Price Ceiling and Price Containment Points; (2) Allocation of allowances between the auction budgets, Price Containment Points, and Price Ceiling; (3) “Overallocation†of GHG allowances; and (4) the program’s administrative and operational rules, such as procedures for distributing allowances to the market from the Price Ceiling or Price Containment Points, procedures for using allowances once distributed, and banking rules. |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp18-025&r=all |
| By: | Lundgren, Berndt (Department of Real Estate and Construction Management, Royal Institute of Technology); Schultzberg, Mårten (Department of Real Estate and Construction Management, Royal Institute of Technology) |
| Abstract: | Smart meters and in-house displays hold a promise of energy conservation for those who invest in such technology. Research has shown that households only have a limited interest in such technology and information is thus often neglected, with rather limited energy savings. Surprisingly few empirical investigations have a theoretical foundation that may explain what is going on from a behavioral perspective. In this study the economic theory of self-control is used to model energy-efficient behavior in middle-income households in Sweden. Our results show that different levels of energy-efficient behavior do not really have any impact on the actual consumption levels of electricity. Instead, different beliefs exist of being energy-efficient, but the households do not act accordingly. Our results suggest that the payment time period should be changed to stimulate the monitoring of bills and to introduce a gaming strategy to change incentives for energy conservation. |
| Keywords: | Energy use; Energy efficient; In-house displays; mediation model; smart meters; two-level time series |
| JEL: | C11 C81 D12 R22 |
| Date: | 2019–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:kthrec:2019_001&r=all |