|
on Regulation |
| By: | Eicke, Anselm; Khanna, Tarun; Hirth, Lion |
| Abstract: | The location of new power generation capacity has a significant effect on the need for transmission infrastructure. Newly constructed power plants that are located far from consumption centers increase network losses, investment, and potentially congestion. In addition, lack of public acceptance for transmission extension may increase the relevance of geographical steering of generation investments. The primary objective of this paper is to compare the regulatory instruments that provide locational investment signals. We cluster these instruments into the five groups locational electricity markets, deep grid connection charges, grid usage charges, capacity mechanisms, and renewable energy support schemes. We discuss properties of these instruments and then review their use in twelve major power systems, including a quantitative estimate of their strength. We find that most power systems use multiple instruments in parallel and that there is a lack of consensus regarding how to steer generation capacity. The results also indicate that the efficacy of many instruments is reduced due to a lack of credibility, low levels of transparency, and insufficient spatial and temporal granularity. |
| Keywords: | Investment signal,Generators,Network infrastracture,Locational steering,Regulation,Locational electricity market,Grid usage charge,Grid connection charge,Capacity mechanism,Renewable energy support scheme |
| JEL: | Q48 Q41 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:205237&r=all |
| By: | Carolyn Fischer; Leonie Reins; Dallas Burtraw; David Langlet; Åsa Löfgren; Michael Mehling; Stefan Weishaar; Lars Zetterberg; Harro van Asselt; Kati Kulovesi |
| Abstract: | When it was launched in 2005, the European Union emissions trading system (EU ETS) was projected to have prices of around €30/ton CO2 and to be a cornerstone of the EU’s climate policy. The reality was a cascade of falling prices, a ballooning privately held emissions bank, and a decade of low prices providing inadequate incentive to drive investment in the technologies and innovation necessary to achieve long-term climate goals. The European Commission responded with administrative measures, including postponing the introduction of allowances (backloading) and using a quantity-based criterion for regulating future allowance sales (the market stability reserve); although prices are beginning to recover, it is far from clear whether these measures will adequately support the price into the future. In the meantime, governments have been turning away from carbon pricing and adopting overlapping regulatory measures that reinforce low prices and further undermine the confidence in market-based approaches to addressing climate change. The solution in other carbon markets has been the introduction of a reserve price that would set a minimum price in allowance auctions. Opponents of an auction reserve price in the EU ETS have expressed concern that a minimum auction price would interfere with economic operations in the market or would be tantamount to a tax, which would trigger a decision rule requiring unanimity among EU Member States. This Article reviews the economic and legal arguments for and against an auction reserve price. Our economic analysis concludes that an auction reserve price is necessary to accommodate overlapping policies and for the allowance market to operate efficiently. Our legal analysis concludes that an auction reserve price is not a “provision primarily of a fiscal nature,” nor would it “significantly affect a Member State’s choice between different energy sources.” We describe pathways through which a reserve price could be introduced. |
| Keywords: | emissions trading, auction reserve price, carbon tax, price floor, EU law |
| JEL: | Q54 Q58 K32 K34 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7903&r=all |
| By: | Kantola, Raimo |
| Abstract: | EU has adopted a law on Net Neutrality (NN) ruling that Internet access providers should treat all traffic equally irrespective of sender, receiver, content, service, application or device in use. The 5G community is developing a network that can be tailored to a use case, meaning that it intends to treat traffic differently for each use case. Tailoring can be at least in terms of traffic management, allocated types and amount of resources, redundancy, particular forms of security etc. Moreover, 5G network uses network function virtualization, i.e. cloud technology is applied to run the network itself while the law on NN does not mention the concept of the cloud. The interpretation is that if a cloud platform is owned by the Internet access provider, the cloud is just a part of the network and under the NN regulation. At the same time if a cloud-based computer is owned by a cloud or content provider, it is a terminal and thus not regulated. 5G introduces the idea of edge computing (EC) that can use virtualization and allows special treatment for some applications or services. This paper explores how significant is this controversy between the new concepts of networking in 5G and the EU regulation and what is its possible impact on the network providers. The paper studies to what extent and how the 5G ideas can be applied under the EU law and whether something should be done about the law and in particular the Guidelines that have been published by the Body of European Regulators for Electronic Communications (BEREC) to clarify the implementation of the law. Finally, we discuss the possible impact of the law on industry structure. |
| Keywords: | Net neutrality,5G,slicing,traffic treatment,traffic management,security,specialized service |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse19:205187&r=all |
| By: | Barua, Bidushi; Matinmikko-Blue, Marja; Latva-aho, Matti |
| Abstract: | Local 5G networks in specific geographical areas can satisfy local capacity, coverage needs, and offer context specific services to complement Mobile Network Operator's (MNOs') offerings. For enabling the emergence of these networks into the future mobile communication market, it is necessary to determine the contractual relationships possible for different deployments of these networks. We define the features of such contracts and the factors such as competition, level of differentiation in services offered, price structure, price transparency, and the role of regulation, that will influence these contracts, taking into account the characteristics of 5G and beyond networks. A mathematical model of a pricing mechanism is proposed to determine the optimal price the local network deserves to get from the MNO and the optimal price which the MNO demands from its customers that were served by the local network. Finally, the impact of competition in the retail market, fraction of MNO customers served by the local network, on these prices are analyzed and presented using simulations. The results indicate that lower the share of MNO customers served by the 5G local network, the stronger is the incentive of the corresponding local network to increase its optimal wholesale price. Moreover, the local 5G network gains from a greater competition between MNOs as it leads to the rise in demand without the local network having to reduce the prices they demand from the MNOs for their services. |
| Keywords: | Competition,contracts,micro operator networks,pricing mechanism,regulation |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse19:205166&r=all |
| By: | Briglauer, Wolfgang; Dürr, Niklas; Gugler, Klaus |
| Abstract: | There is still hardly any empirical evidence on how divergent broadband technologies, and, by extension, bandwidth levels, influence GDP growth, or on the extent of spatial externalities at a regional level. Our study aims to assess the economic benefits of high-speed broadband networks within and across neighbouring counties in Germany. Utilizing a balanced panel dataset of 401 German counties with data from 2010-2015 as well as different panel estimation techniques, we find that the availability of high-speed broadband (which enables transfer rates of 50 Mbit/sec and higher) has a small but significant positive effect on regional GDP growth in the average German county, when compared to normal broadband availability. Furthermore, we find that broadband deployment in German counties induces substantial economic benefits in terms of direct effects and regional externalities. According to our main estimation results, an increase in bandwidth coverage of 50 Mbit/sec and higher by one percentage point induces a rise in regional GDP of 0.05%. This effect is almost doubled if we also take regional externalities into account and is of particular relevance for urban counties. Furthermore, our cost-benefit analysis suggests substantial efficiency gains, as the total economic benefits of subsidy programs to encourage broadband expansion substantially exceeded their associated costs. |
| Keywords: | High-speed broadband infrastructure,economic growth,spatial externalities,German counties,panel data |
| JEL: | H23 H54 L96 L98 R11 R58 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse19:205171&r=all |
| By: | Basaure, A.; Finley, B. |
| Abstract: | Deployment of 5G networks is often described as a disruptive phenomena. Specifically 5G should enable new emerging Internet of Things (IoT) applications. However, such applications require new regulation and business models to incentivize costly infrastructure investments. Currently, no clear consensus exists on the appropriate regulatory regime for 5G urban deployment. This work explores two alternative regulatory scenarios for a connected vehicles scenario to analyze how the most important regulatory decisions affect an urban network deployment. One alternative is to maintain the current scheme of spectrum assignment while facilitating additional flexibility for infrastructure sharing (ex-post competition). The other alternative is to define local areas for monopoly 5G provisioning and define the conditions for competition ex-ante. Through agent-based simulations, this work shows that a local licensing scenario may achieve a better performance than a coopetition scenario. Additional sensitivity checks also help detail the existing trade-offs. Finally, the work discusses the implications and limitation of the findings. |
| Keywords: | 5G,IoT,connected cars,regulation,local licensing,coopetition,ex-ante versus ex-post competition |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse19:205167&r=all |
| By: | David BENATIA (CREST (UMR 9194), ENSAE, Institut Polytechnique de Paris.); Etienne BILLETTE de VILLEMEUR (LEM-CNRS (UMR 9221), Université de Lille.) |
| Abstract: | This paper investigates the incentives to manipulate sequential markets by strategically reneging on forward commitments. We first study the behavior of a monopolist in a two-period model with demand uncertainty. Our results deliver guidance for identifying manipulations and evaluating its market impacts. We then test the model's predictions using occurrences of reneging on long-term commitments in Alberta's electricity market. We implement a machine learning approach to identify and evaluate manipulations. We find that a dominant supplier increased its revenues by $35 million during the winter of 2010-11, causing Alberta's electricity procurement costs to increase by above $330 million (20%). |
| Keywords: | Imperfect Commitment, Market Manipulation, Market Power, Electricity Markets. |
| JEL: | D43 L12 L51 L94 |
| Date: | 2019–10–11 |
| URL: | http://d.repec.org/n?u=RePEc:crs:wpaper:2019-19&r=all |
| By: | Matinmikko-Blue, Marja; Yrjölä, Seppo; Ahokangas, Petri; Seppänen, Veikko; Hämmäinen, Heikki; Jurva, Risto |
| Abstract: | Spectrum management decisions made by the regulators aim at maximizing the value of spectrum, its efficient utilization and benefits to the society. A major debate in spectrum management globally is currently focusing on 5G spectrum bands and their awards. In fact, several countries have recently made their first 5G spectrum awards decisions, which will have a long-term impact on the mobile communication market. This paper analyses recent 5G spectrum decisions from the spectrum valuation view point and discusses the emerging role of local 5G networks to serve the needs of different vertical sectors. Special attention is put on the awarding and pricing of 5G spectrum and recommendations are given on new pricing mechanisms that take into account the emergence of local 5G networks by different stakeholders. The results highlight the divergence in the spectrum management approaches that the regulators in different countries have taken where the first 5G spectrum decisions have continued to strengthen the mobile network operator (MNO) market dominance while the most recent planned decision aim at opening the mobile market to new local entry through local spectrum access rights. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse19:205199&r=all |
| By: | Lefouili, Yassine; Toh, Ying Lei (Federal Reserve Bank of Kansas City) |
| Abstract: | This paper analyzes whether a privacy regulation that restricts a dominant firm’s data disclosure level harms the firm’s incentives to invest in service quality and thereby harms social welfare. We study how the regulation affects the privacy and quality choices of a monopoly service provider, who derives revenues solely from disclosing user data to third parties, as well as how those choices in turn affect consumers’ participation and information-sharing decisions. We show that the regulation does not always harm investment incentives; moreover, even when it does, it may still improve social welfare. |
| Keywords: | Privacy Regulation; Data Disclosure; Investment; Quality |
| JEL: | D83 L15 L51 |
| Date: | 2019–07–30 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedkrw:rwp19-05&r=all |
| By: | Hoernig, Steffen; Monteiro, Francisco |
| Abstract: | We consider internet service providers' incentives to zero-rate, i.e. do not count towards data allowances, the consumption of certain services, in the absence of payments from content providers. In a general model with various types of network effects, service substitutes or complements, monopoly and duopoly, we show that ISPs adopt zero-rating and that it increases consumer surplus and total welfare if network effects are strong enough. Capacity investment increases (decreases) with network effects if services are complements (substitutes). Under competition, the decision to zero-rate depends the residual network effect, which includes the impacts of spillovers and brand differentiation. |
| Keywords: | Zero-rating,Network effects,Net neutrality,Capacity Investment |
| JEL: | D21 L51 L96 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse19:205182&r=all |
| By: | Logothetis, Vangelis; Ioannou, Nikos; Tselekounis, Markos; Katsianis, Dimitris; Chipouras, Aris; Varoutas, Dimitris |
| Abstract: | This paper provides a useful guide for telecom regulators on how to calculate the cost of an efficient operator investing in Next Generation Access (NGA) networks under regulatory uncertainty. When the regulator cannot make ex ante credible commitments, operators undertake their optimal investment decisions anticipating an ex post cost-oriented access regulation policy. Α roadmap for estimating the cost of an efficient operator deploying an NGA network under regulatory uncertainty is provided for the purposes of setting copper and NGA wholesale prices where cost orientation is imposed as a remedy. Following a detailed analysis, the most impactful parameters are identified and presented so as to trigger a fruitful discussion among academics, economists and policy makers. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse19:205195&r=all |
| By: | Neuhoff, K.; Ritz, R. |
| Abstract: | To achieve the ambitions of the 2015 Paris Climate Agreement, the decarbonization of energy-intensive industrial sectors is becoming increasingly important. This paper focuses on the economics of carbon cost pass-through: the change in product prices induced by carbon pricing. We provide a theoretical framework to understand pass-through at the sectoral level and a constructive review of the empirical evidence from the EU ETS and other jurisdictions. Our analysis is structured around three key drivers: international trade, market structure, and free allowance allocation. We provide a synthesis of our key findings for policymakers and identify gaps in the literature for future research. |
| Keywords: | Carbon pricing, cost pass-through, free allocation, full carbon price internalization, international trade, market structure |
| JEL: | L11 L70 Q54 Q58 |
| Date: | 2019–10–31 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1988&r=all |
| By: | Henten, Anders; Falch, Morten |
| Abstract: | The paper aims at analyzing the implications of symmetric telecom regulation on competition and investment in the telecom area. Symmetric regulation, where it is not only the operators with significant market power (SMP) at national or large geographical scales which are subject to special access obligations, has been on the agenda for long. However, emphasis has hitherto been on asymmetric regulation, but during the past few years, symmetric regulation has gradually gained weight in different EU countries, and the new European Electronic Communications Code (Directive 2018/1972) also aims at putting more emphasis on symmetric regulation (de Streel and Larouche, 2016; Briglauer et al., 2017). The paper elaborates on the rules for the implementation of symmetric regulation in the Communications Code and discusses how symmetric regulation can potentially effect competition and investment. The assessment will look at the potential impacts of symmetric regulation on competition and discuss how competition can affect investment. The reason for this sequence of analysis is that it is assumed that the implications of symmetric regulation on investment, to a large extent, will be mediated by the implications of symmetric regulation on competition. However, symmetric regulation will also directly impact investment in the sense that the implementation of symmetric regulation may lower the incentives for physical infrastructure investment by new-coming network operators to a geographical area. It could also limit incentives for additional investment by operators that are already there with physical networks, as they may have to open their networks for other competing operators. But it could also lead to increased investments, which is the hope enshrined in the new European Communications Code of 2018... |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse19:205181&r=all |
| By: | Queder, Fabian |
| Abstract: | The European Union and its Member States have set themselves ambitious broadband targets. By 2025 the EU aims to provide access to at least 100 Mpbs to all European citizens and gigabit connectivity for all main socio-economic drivers such as schools and hospitals (European Commission 2016). Germany even aims for nationwide gigabit-coverage by 2025 (Die Bundesregierung 2017). In the light of massive investments in NGA deployment that are necessary to reach these targets, it is intensively discussed which economic and market conditions foster telecommunications operators' investments in FTTP-infrastructures. With the introduction of DOCSIS, which enabled cable networks to deliver broadband services, European policy makers considered cable networks a potential source for competition in fixed telecommunication markets. In the early 2000s, due to regulatory pressure, European incumbents divested their cable business and sold it to private companies enabling a substantial part of European households to choose between a cable network operator and the incumbent for broadband and telephony provisioning. Today's European telecommunications markets are therefore characterized by inter-platform competition between cable network operators, incumbents, and alternative operators that rolled-out their own infrastructure. In this regard, there is a vibrant debate (yet, barely covered by empirical studies) which effect the presence of cable networks have on the incumbent's as well as on alternative operators' investments in FTTx. On one hand, it is argued that higher cable coverage could increase investments as incumbents and alternative operators upgrade their networks in order to avoid losing market shares to competing cable networks. On the other hand, it is argued that the existence of cable networks hampers investments in FTTx-networks since operators investing in areas with existing coax-cable networks execute these investments against an existing infrastructure and an existing customer base. This penetration risk due to a lower (anticipated and actual) take-up, effectively reduces revenues and the ability to recover investment costs and consequently to invest without governmental subsidies... |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse19:205207&r=all |
| By: | Lin, Chen (The University of Hong Kong - Faculty of Business and Economics); Schmid, Thomas (The University of Hong Kong - Faculty of Business and Economics); Weisbach, Michael S. (Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)) |
| Abstract: | Extreme temperatures lead to large fluctuations in electricity demand and wholesale prices of electricity, which in turn affects the optimal production process for firms to use. Using a large international sample of planned power plant projects, we measure the way that electric utilities’ investment decisions depend on the frequency of extreme temperatures. We find that they invest more in regions with more extreme temperatures. These investments are mostly in flexible gas and oil-fired power plants that can easily adjust their output to improve their operating flexibility. Our results suggest that climate change is becoming a meaningful factor affecting firms’ behavior. |
| JEL: | G30 G31 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:ohidic:2019-26&r=all |
| By: | Peter Kjær Kruse-Andersen; Peter Birch Sørensen |
| Abstract: | We analyze how a country pursuing a unilateral climate policy may contribute to a reduction in global CO2 emissions in a cost-effective way. To do so its system of energy taxes and subsidies must account for leakage of emissions from the domestic to the foreign economy. We focus on leakage occurring via international trade in electricity and via shifts between domestic and foreign production of other goods. The optimal tax-subsidy scheme is based on an intuitive principle: Impose a uniform carbon tax on all additions to global emissions caused by changes in domestic production and consumption of energy, including additions to emissions occurring via shifts in international trade. Emissions from the sector exposed to foreign competition should be taxed at reduced rates to avoid excessive carbon leakage, and a part of the carbon tax on electricity should be levied at the consumer rather than the producer level to ensure taxation of the carbon content of imported electricity. Producers of renewables-based electricity should receive a subsidy to internalize their contribution to the reduction of global emissions. In other sectors emissions should be taxed at a uniform rate corresponding to the marginal social cost of meeting the target for emissions reduction. Simulations calibrated to data for the Danish economy suggest that redesigning energy taxes and subsidies to account for carbon leakage can generate a welfare gain. |
| Keywords: | optimal unilateral climate policy, carbon leakage, optimal energy taxes and subsidies |
| JEL: | H21 H23 Q48 Q54 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7920&r=all |
| By: | Shaheen, Susan PhD; Cohen, Adam; Farrar, Emily |
| Abstract: | Carsharing provides members access to a fleet of autos for short-term use throughout the day, reducing the need for one or more personal vehicles. This chapter reviews key terms and definitions for carsharing, common carsharing business models, and existing impact studies. Next, the chapter discusses the commodification and aggregation of mobility services and the role of Mobility on Demand (MOD) and Mobility as a Service (MaaS) on carsharing. Finally, the chapter concludes with a discussion of how the convergence of electrification and automation is changing carsharing, leading to shared automated and electric vehicle (SAEV) fleets. |
| Keywords: | Engineering, Carsharing, Shared mobility, Mobility on Demand (MOD), Mobility as a Service (MaaS), Shared automated electric vehicles (SAEVs) |
| Date: | 2019–10–23 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:itsrrp:qt2f5896tp&r=all |
| By: | Knieps, Günter |
| Abstract: | Disruption of tradition network industries and the emergence of innovative physical operator platforms provide challenging governance problems of contractual relationships among different actors involved. The problem solution competence of operator platforms (two-sided, multi-sided) is the entrepreneurial search for the required governance structures. Operator platforms need as input a combination of physical networks and network services with complementary (big data) virtual networks. The problem of division of labor between all-IP broadband network providers, virtual network service providers and platform operators arises concomitant with the implementation of adequate governance structures. |
| Keywords: | Internet of things,operator platforms,governance,sharing economy |
| JEL: | L51 L92 L96 O31 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse19:205191&r=all |
| By: | Zhu, Tong; Curtis, John; Clancy, Matthew |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb201918&r=all |
| By: | Aimene, Louise; Lebourges, Marc; Liang, Julienne |
| Abstract: | Does co-investment enhance fiber to the home (FTTH) coverage, adoption and competition? We combine several French municipality-level datasets and use a two-stage control-function approach to answer this question. In the first stage, we estimate an equilibrium model of entry that predicts the number of FTTH investors in a municipality. In the second stage, we insert the correction term derived from the entry model in the FTTH coverage (adoption, competition) regression to correct for endogeneity of investor entry. The two stages make two contributions. First, we find some FTTH demand and cost factors, which are significant determinants of investor entry. Second, we show that the presence of co-investors does not impact coverage dynamics at the municipality-level, which appears to be determined by French regulatory coverage obligations, i.e., full coverage in five years. In addition, we observe that the presence of co-investment, leads to an increase of 7.6% in FTTH adoption during the 2015-2018 study period and also a more intense competition as shown through the decrease in Orange total retail broadband market penetration by 7.8% for Orange, which is the incumbent operator in France. Our findings confirm that co-investment supports the policy objectives of adoption and competition and should be supported by regulation. |
| Keywords: | Entry model,FTTH coverage,FTTH adoption,competition,co-investment |
| JEL: | L43 L51 L96 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse19:205160&r=all |
| By: | Christoph Böhringer; Knut Einar Rosendahl; Halvor Briseid Storrøsten |
| Abstract: | Policy makers in the EU and elsewhere are concerned that unilateral carbon pricing induces carbon leakage through relocation of emission-intensive and trade-exposed industries to other regions. A common measure to mitigate such leakage is to combine an emission trading system (ETS) with output-based allocation (OBA) of allowances to exposed industries. We first show analytically that in a situation with an ETS combined with OBA, it is optimal to impose a consumption tax on the goods that are entitled to OBA, where the tax is equivalent in value to the OBA-rate. Then, using a multi-region, multi-sector computable general equilibrium (CGE) model calibrated to empirical data, we quantify the welfare gains for the EU to impose such a consumption tax on top of its existing ETS with OBA. We run Monte Carlo simulations to account for uncertain leakage exposure of goods entitled to OBA. The consumption tax increases welfare whether the goods are highly exposed to leakage or not, and can hence be regarded as smart hedging against carbon leakage. |
| Keywords: | carbon leakage, output-based allocation, consumption tax |
| JEL: | D61 F18 H23 Q54 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7915&r=all |