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on Regulation |
| By: | Oguz, Fuat |
| Abstract: | Electricity pricing models were designed at a time when technology was relatively stable. The natural monopoly model was based on a uni-directional pricing mechanism. Electricity was generated at one end and transferred to the other end. Pollution was not a big issue. There were no solar panels over the houses of consumers. Many contemporary issues of the ecosystem of electricity were not relevant. The tariff model was meant to be a simple one, even though it included many variables. It was not a complex system. This paper argues that a model that was designed within a simple system cannot efficiently adapt to a multidimensional and interdependent system. The use of the old regulatory model within a complex system creates rents and inefficiencies. This paper evaluates the electricity tariff model in Turkey under the light of recent technological advances and changes in the structure of electricity markets. The changes in the institutional environment of the market bring electricity markets closer to a complex system. We argue that the tariff mechanism should also be revised accordingly. We use the Turkish electricity industry as an example, as it reflects the issues in a developing country. |
| Keywords: | Complexity; electricity distribution; electricity tariffs; regulation; renewables; Turkish electricity industry |
| JEL: | K2 L9 L94 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:99261&r=all |
| By: | Argüelles, Pablo (EDP España and University of Oviedo); Orea, Luis (University of Oviedo and Oviedo Efficiency Group) |
| Abstract: | In December 2013 a new electricity law was approved in Spain as part of an electricity market reform including a new remuneration scheme for distribution companies. This remuneration scheme was updated in December 2019 and the new regulatory framework introduced a series of relevant modifications that aim to encourage the regulated firms to reduce their power supply interruptions using a benchmarking approach. While some managerial decisions can prevent electricity power supply interruptions, other managerial decisions are more oriented to mitigate the consequences of these interruptions. This paper examines the second type of decisions using a unique dataset on the power supply interruptions of a Spanish distribution company network between 2013 and 2019. We focus on the effect of grid automatization on the restoration times, the relative efficiency of the maintenance staff, and the importance of its location. We combine a bottom-up spatial model and a stochastic frontier model to examine respectively external and internal power supply interruptions at municipal level. This model resembles the conventional spatial autoregressive models but differs from them in several important aspects. |
| Keywords: | Electricity distribution; Power supply interruptions; Spatial econometrics; Frontier models |
| JEL: | H54 L97 L98 |
| Date: | 2020–03–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cbsnow:2020_007&r=all |
| By: | Houeida Hedfi (UR MASE - Modélisation et Analyse Statistique et Economique - ESSAIT - Ecole Supérieure de la Statistique et de l'Analyse de l'Information - Université de Carthage - University of Carthage); Ahlem Dakhlaoui (LEGI - Laboratoire d'Économie et de Gestion Industrielle [Tunis] - Ecole Polytechnique de Tunisie); Abdessalem Abbassi (Centre de Recherche en économie de l'Environnement, de l'Agroalimentaire, des Transports et de l'Énergie (CREATE) - Université Laval) |
| Abstract: | In this paper, we analyse the effect of an environmental policy that targets to enhance ecosystems integrity as well as air quality in the wholesale electricity market. We developed a dynamic Cournot game between a hydro and a thermal risk adverse electricity producers under demand uncertainty. We demonstrate that while improving air quality necessarily raises the market price, enhancing ecosystems integrity can, under water abundance hypothesis, reduce it. Moreover, in order to establish a statement about the environmental policy efficiency, we examine interactions between both environmental measures and their potential side effects. We show that prioritizing natural flow regime minimises necessarily the taxation efficiency on lowering air pollution and emphasizes the price rise due to the taxation. Nevertheless, the effect of the taxation policy on the efficiency of the ecosystems integrity policy depends on the hydro producer's ability to substitute thermal units. In order to establish a precise environmental statement, the regulation authority needs to compare, using appropriate criteria , the importance of an avoided unit of surrounding ecosystem alteration to an avoided unit of air polluting production, in the whole ecosystem functioning. |
| Keywords: | Electricity generation,Environmental policy,Dynamic modelling,Imperfect competi- tion,Ecosystems integrity,Air quality |
| Date: | 2020–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-02523330&r=all |
| By: | Sedai, Ashish Kumar (Department of Economics, Colorado State University, Fort Collins, USA); Nepal, Rabindra (Department of Economics, University of Wollongong, Wollongong, Australia); Jamasb, Tooraj (Department of Economics, Copenhagen Business School) |
| Abstract: | Access to reliable energy is central to improvements in living standards and is a Sustainable Development Goal. This study moves beyond counting the electrified households and examines the effect of the hours of electricity households receives on their welfare. We hypothesize that additional hours of electricity have different effects on the poor, the middle income and the rich, as well as in rural and urban areas. The methods used are panel fixed effects instrumental variables, cross sectional fixed effects instrumental variables, and logistic regression with data from the Indian Human Development Survey 2005-2012. We focus on extensive and the intensity margins, i.e. how access and additional hours of electricity affect household welfare in terms of consumption expenditure, income, assets and poverty status. The results show large gaps between the benefits and costs of electricity supply among consumer groups. We also find that electricity theft is positively correlated with the net returns from electrification. Progressive pricing with targeted subsidies for the poor can increase household welfare while reducing the financial losses of the State Electricity Boards. |
| Keywords: | Reliable energy; Electrification; Household welfare; Panel fixed effects; Instrumental variables approach |
| JEL: | D12 D31 E21 I32 |
| Date: | 2020–03–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cbsnow:2020_006&r=all |
| By: | Sanguinetti, Angela; Alston-Stepnitz, Eli; Cimene, Angelika |
| Abstract: | Consumer education regarding the costs of electric vehicles (EVs), particularly in comparison with similar gasoline vehicles, is important for adoption. However, the complexity of comparing gasoline and electricity prices, and balancing long-term return-on-investment from fuel and maintenance savings with purchase premiums for EVs, makes it difficult for consumers to assess potential economic advantages. Online vehicle cost calculators (VCCs) may help consumers navigate this complexity by providing tailored estimates of different types of vehicles costs for users and enabling comparisons across multiple vehicles. However, VCCs range widely and there has been virtually no behavioral research to identify functionalities and features that determine their usefulness in engaging and educating consumers and promoting EV adoption. This research draws on a behavioral theory, systematic review of available VCCs, and user research with three VCCs to articulate design recommendations for effective VCCs. View the NCST Project Webpage |
| Keywords: | Social and Behavioral Sciences, Electric vehicles, consumer adoption, cost calculators, usability, user experience |
| Date: | 2020–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:itsdav:qt368290kp&r=all |
| By: | Lana Friesen (School of Economics, University of Queensland); Lata Gangadharan (Department of Economics, Monash University, Australia); Peyman Khezr (School of Economics, University of Queensland); Ian A. MacKenzie (School of Economics, University of Queensland) |
| Abstract: | Using an experimental approach, we investigate the new institutional design for the US Regional Greenhouse Gas Initiative (RGGI). The proposed scheme incorporates two allowance reserves that adjust the initial supply of allowances in the event of unexpectedly high or low allowance demand. In particular, allowance supply is increased when the initial clearing price is above a pre-determined upper trigger price, and decreased when the initial clearing price is below a pre-determined lower trigger price. We provide evidence that these two trigger prices act as focal points: the distribution of clearing prices is bimodal and aligns with the trigger prices. We also show that decreasing the range between the two trigger prices increases total revenue but decreases allocative efficiency. Importantly, we find the regulation is more sensitive to changes in trigger prices than reserve quantities. |
| Keywords: | supply reserve; pollution allowances; experiment. |
| JEL: | C91 C92 Q58 |
| Date: | 2020–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uq2004:618&r=all |
| By: | Kenji Fujiwara (School of Economics, Kwansei Gakuin University) |
| Abstract: | This paper examines the effects of a tax reform when final goods are produced in an oligopoly and intermediate goods are produced in monopolistic competition. In particular, we address the effect of a shift from upstream to downstream taxation that leaves government revenue unchanged. This tax reform raises the consumer and producer prices of final goods, lowers the demand price of intermediate goods, and has no effect on the producer price of intermediate goods. Finally, we find that welfare improves with this tax reform. |
| Keywords: | Final Goods, Intermediate Goods, Oligopoly, Monopolistic Competition, Tax Incidence, Welfare |
| JEL: | D43 H21 H22 L13 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:207&r=all |
| By: | Allen, Keighton R.; Fullerton, Thomas M., Jr. |
| Abstract: | This study employs duality theory to develop a theoretical model for small commercial and industrial (CIS) electricity usage. The CIS production function is posited such that output is a function of three variable inputs (electricity, natural gas, and labor) and one fixed input (capital). A profit function dual to this production function is specified using a normalized quadratic functional form. CIS profits are functionally dependent upon output price, an electricity input price, and natural gas and labor input prices for a fixed quantity of capital. The derived input-demand equation results from differentiating the profit function with respect to the price of electricity. The input-demand equation for electricity is dependent upon the own-price of electricity, the CIS output price, and input cross-prices. The model may be of use to utilities and regulators for the analysis of CIS electricity usage. |
| Keywords: | Duality Theory; Derived Demand; Electricity; Small Industrial and Commercial Customers |
| JEL: | M21 Q47 R15 |
| Date: | 2018–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:98988&r=all |
| By: | Fotis, Panagiotis; Tselekounis, Markos |
| Abstract: | EC’s Notice on the conduct of settlement procedures mentions that if the EC decides to reward a firm for settlement in the framework of its Notice, a reduction of 10% on cartel fine will be granted to that firm. In this paper, we compare the cartel profits with the ones derived when the cartel members decide to settle with competition authority so as to find the optimal reduction on cartel fines that fulfills EC’s Notice goal of inducing all cartel firms to participate in the settlement procedure. We find that such reduction is negatively correlated with the likelihood that the cartel would be detected, meaning that a higher probability of cartel detection is required for a lower reduction to be effective. |
| Keywords: | Antitrust policy; Competition policy; Cartel fines; Settlement Procedure |
| JEL: | K21 L13 L41 |
| Date: | 2020–03–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:99154&r=all |
| By: | Chongwoo Choe; Noriaki Matsushima; Mark J. Tremblay |
| Abstract: | We study a model of behavior-based price discrimination where firms can agree to share customer information that can be used for personalized pricing. We show that firms are better off sharing customer information as it softens up-front competition when they gather information, consumers are worse off as a result, but total surplus can increase thanks to the improved quality of matching between firms and consumers. |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1083&r=all |
| By: | Hiroaki Ino (School of Economics, Kwansei Gakuin University); Toshihiro Matsumura (Institute of Social Science, The University of Tokyo) |
| Abstract: | This study theoretically examines green portfolio standards with monetary penalties in an oligopoly market. We find that green portfolio standards are inefficient policy tools if the purpose of the government is to promote green products, whereas they attain firstbest optimality if the purpose is to restrict non-green products. Green portfolio standards may work well under the mixed aims of promoting green and restricting non-green products. Moreover, by applying the principle of our results, we highlight the inefficiency of an employment promotion program for handicapped workers in Japan. |
| Keywords: | green industrial policy, negative externality of gray products, positive externality of green products, renewable portfolio standards, zero emission vehicle program, employment promotion program |
| JEL: | Q58 Q48 L51 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:206&r=all |
| By: | Iwata, Hiroki |
| Abstract: | This paper analyzes the effects of environmental policy on green innovation. We compare the incentives for green innovation in both the Cournot and Bertrand competition. It is shown that positive incentives for green innovation exist in both competition models. When environmental regulations are imposed, the effects of the probability of success on green innovation incentives differ between the Bertrand and Cournot competition. Additionally, we clarify the conditions necessary for the establishment of the Porter hypothesis in both competition models. |
| Keywords: | Cournot and Bertrand competition, Green innovation, Porter hypothesis |
| JEL: | L13 Q52 Q55 |
| Date: | 2020–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:99305&r=all |