nep-reg New Economics Papers
on Regulation
Issue of 2019‒11‒04
ten papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Optimality of Emission Pricing Policies Based on Emission Intensity Targets under Imperfect Competition By Hiroaki Ino; Toshihiro Matsumura
  2. The Relevance of Wholesale Electricity Market Places: The Nordic Case By Spodniak, Petr; Ollikka, Kimmo; Honkapuro, Samuli
  3. Environmental regulation and innovation in renewable energy technologies: Does the policy instrument matter? By Hille, Erik; Althammer, Wilhelm; Diederich, Henning
  4. Emissions Markets with Price Stabilizing Mechanisms: Possible Unpleasant Outcomes By Paolo Casini; Edilio Valentini
  5. High-speed rail and air transport integration in hub-and-spoke networks. The role of airports By Alessandro Avenali; Tiziana D'Alfonso; Alberto Nastasi; Pierfrancesco Reverberi
  6. Subsidies for Energy Efficient Appliances: Program Design and Consumer Response By Buettner, Thiess; Madzharova, Boryana
  7. Subsidising Renewables but Taxing Storage? Second-Best Policies with Imperfect Carbon Pricing By Helm, Carsten; Mier, Mathias
  8. Market Power in Retail Gasoline Markets By Nguyen-Ones , Mai; Steen, Frode
  9. Local Cost for Global Benefit: The Case of Wind Turbines By Kussel, Gerhard; Frondel, Manuel; Vance, Colin; Sommer, Stephan
  10. Contract Design with Socially-Attentive Preferences By Weinschenk, Philipp

  1. By: Hiroaki Ino (School of Economics, Kwansei Gakuin University); Toshihiro Matsumura (Institute of Social Science, The University of Tokyo)
    Abstract: This study shows the first-best optimality of an emission tax based on emission intensity targets.Emissions are taxed when a firm’s emission intensity exceeds the targeted level. The literature on environmental tax shows that Pigovian tax, which internalizes negative externality, yields the first-best optimum under perfect competition, whereas the same is not true under imperfect competition. We show that even under imperfect competition, the combination of uniform emission tax and nonuniform emission intensity targets leads to the first best. The first-best uniform tax rate is always equal to the Pigovian tax. This principle can also apply to the policy combination of tradable emission permits and emission intensity targets.
    Keywords: optimal taxation, emission intensity regulation, Cournot competition, Bertrand competition, renewable portfolio standard
    JEL: Q58 Q48 H23 L51
    Date: 2019–10
  2. By: Spodniak, Petr; Ollikka, Kimmo; Honkapuro, Samuli
    Abstract: Electricity wholesale markets are undergoing rapid transformation due to the increasing share of distributed and variable renewable energy sources (vRES) penetrating the market. The increasing shares of stochastic wind generation bring along greater deviations between the real time power generation and the day-ahead forecasts of power supply. It is therefore reasonable to assume that trading activity is shifting more from the traditionally dominant day-ahead market into the intra-day and regulating power markets. This is because predicting vRES power generation closer to the actual delivery is more reliable and because power generators are motivated to avoid high imbalance costs. We study price spreads between day-ahead, intra-day and regulating power markets in three Nordic countries (Denmark, Sweden and Finland) during 2013-2017. We estimate vector autoregressive (VAR) models to study the interrelationships between the price spreads and the effects of wind forecast and demand forecast errors, and other exogenous variables, such as transmission congestions and hydrological conditions, on price spreads in different Nord Pool bidding areas. We use the variation in the shares of wind power between bidding areas to analyse the impacts of increased shares of wind power on different market places. We find that wind forecast errors do affect price spreads in areas with large shares of wind power generation. Moreover, demand forecast errors have an impact on almost all price spreads, except in areas with relatively low consumption. Our results indicate that increasing shares of wind power are, indeed, changing the relevance of different market places. Markets closer to real time are playing more important role than in the past.
    Keywords: Electricity market, Nordic, Wind forecast, Demand forecast, Environment, energy and climate policy, D47, L94, Q41,
    Date: 2019
  3. By: Hille, Erik; Althammer, Wilhelm; Diederich, Henning
    JEL: H23 O31 Q42 Q55 Q58
    Date: 2019
  4. By: Paolo Casini (KU Leuven); Edilio Valentini (University G. d’Annunzio of Chieti-Pescara)
    Abstract: There is a large consensus that low levels of carbon price cannot provide adequate incentives to invest in cleaner technologies and abate emissions. Since carbon demand and price tend to decrease during recessions, economists and policy makers have proposed different types of price stabilizing mechanisms (PSM) for emissions markets to prevent carbon price from falling too low. We investigate the effects of a PSM on investments and emissions and show that when unfavorable macroeconomic conditions reduce emissions, adjusting the supply of allowances to sustain their price may inhibit investments. Moreover, when firms invest in an integrated abatement technology, not only can emissions increase - an effect previously examined in the literature - but a PSM can exacerbate this effect when an exogenous negative shock curbs the demand of carbon.
    Keywords: Carbon Markets, Price Stabilizing Mechanisms, Macroeconomic Recession
    JEL: Q5 Q55
    Date: 2019–07
  5. By: Alessandro Avenali (Department of Computer, Control and Management Engineering Antonio Ruberti (DIAG), University of Rome La Sapienza, Rome, Italy); Tiziana D'Alfonso (Department of Computer, Control and Management Engineering Antonio Ruberti (DIAG), University of Rome La Sapienza, Rome, Italy); Alberto Nastasi (Department of Computer, Control and Management Engineering Antonio Ruberti (DIAG), University of Rome La Sapienza, Rome, Italy); Pierfrancesco Reverberi (Department of Computer, Control and Management Engineering Antonio Ruberti (DIAG), University of Rome La Sapienza, Rome, Italy)
    Abstract: Air transport and HSR are not simple competitors. Indeed, air and HSR services can be complements on long-haul routes served by connecting flights through a hub airport. This complementarity creates room for cooperation between airlines and HSR operators, particularly relating to international connecting passengers. Airport managers are also interested in such agreements since they affect, among others, air traffic volumes and the demand for slots on the part of the airlines. In this framework, we develop a theoretical model to study transport operators’ incentives to cooperate, and the strategic role of airports in facilitating or dampening airline-HSR cooperation via the airport per passenger fee. In our model, transport operators cooperate to offer a bundle of domestic HSR and international air services via a multimodal hub airport. We show that the scope for cooperation depends on two main factors, that is, the related sunk costs and mode substitution between air and HSR services.
    Keywords: Airline ; high speed rail ; cooperation ; competition ; airport per passenger fee ; sunk costs
    Date: 2019
  6. By: Buettner, Thiess; Madzharova, Boryana
    JEL: H23
    Date: 2019
  7. By: Helm, Carsten; Mier, Mathias
    JEL: H23 Q42 Q58 O33
    Date: 2019
  8. By: Nguyen-Ones , Mai (Dept of Business and Management Science NHH); Steen, Frode (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: We estimate a structural model to uncover the degree of competition in retail gasoline markets using daily station-level data on quantity and price from the Swedish market. The structural model enables us to consider key features on both the demand and supply side that are important when evaluating retailers’ ability to obtain market power. Endowed with station-level information on service level, contractual form and number of nearby stations, we take into account the main drivers of differentiation in the local market. Our findings suggest that retailers in general exercise significant intermediate levels of market power. Further, local station characteristics significantly affect to which extent stations are able to extract market power. Results are robust to different estimation methods.
    Keywords: Gasoline markets; market power; markup estimation; local market competition
    JEL: D22 L13 L25 L81
    Date: 2018–04–13
  9. By: Kussel, Gerhard; Frondel, Manuel; Vance, Colin; Sommer, Stephan
    JEL: Q21 D12 R31
    Date: 2019
  10. By: Weinschenk, Philipp
    JEL: D82 D91 M52
    Date: 2019

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