nep-reg New Economics Papers
on Regulation
Issue of 2020‒06‒08
fourteen papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. The Effects of Wind Power on Electricity Markets: An Evaluation Using the Swedish Electricity Market Data By Hu, Xiao; Jaraitė , Jūratė; Kažukauskas , Andrius
  2. Airport Competition in Two-sided Markets By Xi Wan; Benteng Zou
  3. The Contribution of Cohesion Policy to Digitalisation: an Adequate Approach? By Julie Pellegrin; Louis Colnot
  4. Voluntary opt-in provision and instrument choice in environmental regulation By Nikula Harri
  5. Impacts of subsidized renewable electricity generation on spot market prices in Germany : Evidence from a GARCH model with panel data By Thao Pham; Killian Lemoine
  6. Entry, exit, and instrument choice in environmental regulation By Nikula Harri
  7. Instrument choice in the case of multiple externalities By Nikula Harri
  8. The political economy of negotiating international carbon markets By Arvaniti, Maria; Habla, Wolfgang
  9. Policies for on-board crowding in public transportation : a literature review By Svanberg , Lisa; Pyddoke, Roger
  10. Can Social Protection Reduce Environmental Damages? By Garg, Teevrat; McCord, Gordon C.; Montfort, Aleister
  11. The information value of energy labels: Evidence from the Dutch residential housing market By Lu Zhang; Lennart Stangenberg; Sjors van Wickeren
  12. The Welfare Effects of Mobile Broadband Internet: Evidence from Nigeria By Bahia, Kalvin; Castells, Pau; Cruz, Genaro; Masaki, Takaaki; Pedrós, Xavier; Pfutze, Tobias; Rodriguez Castelan, Carlos; Winkler, Hernan
  13. The consequences of treating electricity as a right By Burgess, Robin; Greenstone, Michael; Ryan, Nicholas; Sudarshan, Anant
  14. Managing spatial sustainability trade-offs: The case of wind power By Lehmann, Paul; Ammermann, Kathrin; Gawel, Erik; Geiger, Charlotte; Hauck, Jennifer; Heilmann, Jörg; Meier, Jan-Niklas; Ponitka, Jens; Schicketanz, Sven; Stemmer, Boris; Tafarte, Philip; Thrän, Daniela; Wolfram, Elisabeth

  1. By: Hu, Xiao (CERE - the Center for Environmental and Resource Economics); Jaraitė , Jūratė (Faculty of Economics and Business Administration at Vilnius University, School of Business, Economics and Statistics at Umeå University and Center for Environmental and Resource Economics (CERE) at Umeå); Kažukauskas , Andrius (Faculty of Economics and Business Administration at Vilnius University, School of Business, Economics and Statistics at Umeå University and Center for Environmental and Resource Economics (CERE) at Umeå)
    Abstract: We investigate the process of electricity price formation in the Swedish intraday market, given a large share of wind power in the Swedish electricity system. According to Karanfil and Li’s (2017) approach, if the intraday market is efficient and liquid, with large shares of intermittent electricity in the entire electricity system, the intraday price should send signals based on scarcity pricing for balancing power. Based on this theory, we analyze the Swedish electricity market data for the period 2015–2018 and find that the Swedish intraday market, despite its small trading volumes, is functioning properly. In particular, our results show that intraday price premia respond in an expected way to wind power forecast errors and other imbalances resulting from either supply or demand sides of the electricity market. The results of wind power forecast errors hold for central and southern Sweden, but not for northern Sweden where the share of wind power production is still very small. In addition, we find no effect of unplanned nuclear power plant outages on intraday price premia.
    Keywords: day-ahead market; electricity; forecast errors; intraday market; Sweden; wind power
    JEL: P18 Q40 Q41 Q42
    Date: 2020–05–26
  2. By: Xi Wan (Nanjing Audit University, China); Benteng Zou (CREA, Université du Luxembourg)
    Abstract: This paper examines the importance of commercial revenue on optimal airport charges in Hotelling type duopoly airports under a two-sided market framework with two complementary services-concession and aeronautical operations. Each airport sets commercial and landing charges and serves a single airline. The airport- airline bundle competes for leisure and business passengers. The setting of landing charges under different regulatory regimes is investigated. We demonstrate that in the leisure travel market, which ignores schedule delay cost, the optimal landing fee is invariant to the regulatory scheme, and concession revenue is determined by an airports home market size. In the business travel market, the optimal landing charge is smaller if concession revenue is included in setting the landing fee than if it is not included. In the former case, increasing passenger volume does not guarantee increases in airports’ aeronautical revenue, and a negative impact may exist if the weight of concession profit out of total profit is small.
    Keywords: Airport competition; airport regulation; two-sided markets; landing fee; commercial charge.
    JEL: L93 D43 L13 C72
    Date: 2020
  3. By: Julie Pellegrin (CSIL Centre for Industrial Studies); Louis Colnot (CSIL Centre for Industrial Studies)
    Abstract: Academics and policy-makers see digital technologies as a significant driver of growth and innovation, capable of triggering radical transformations in both businesses’ operations and citizens’ life and welfare. Their potential is therefore deemed considerable, yet challenging to assess with certainty. The EU has been a pioneer institution in promoting the digitalisation of its economy. Its main ambition is to harness the potential of Information and Communication Technologies (ICT) for growth and well-being. Its long-lasting support has been delivered through different types of interventions, including regulation and funding. It is critical as the successful development of ICT requires a mixture of top-down (e.g., regulatory framework, broadband networks…) and bottom-up (e.g., demand for digital services by citizens…) initiatives. Despite these efforts, the EU economy is generally considered as remaining below its digitalisation potential. Additionally, large disparities in digitalisation performance are observed both within and between the Member States. This situation prevents the EU from reaping the full benefits linked to ICT. In that context, the regional level is fundamental to address the challenges arising from digitalisation. Indeed, it can help to articulate both bottom-up and top-down initiatives in a way that is consistent with the specific strengths and issues of territories, i.e., in a place-based manner. In particular, EU Cohesion Policy has supported digitalisation for several programming periods, combining a prominent funding mechanism with a relevant territorial approach. Based on a series of case studies and a review of secondary sources, this paper aims at assessing how the 2014-2020 Cohesion Policy framework contributes to the adequate formulation and delivery of regional digital strategies. The analysis suggests that the Cohesion Policy’s ability to steer the development of regional digital strategies is done through specific incentives (e.g., funding concentration, holistic approach). Its contribution also stems from its attention to the development of partnerships and stakeholders’ involvement around specific territorial issues both during the formulation of regional digital strategies and during their delivery on the ground. However, there are some limits to its contribution, e.g. regarding the synergies between EU funding instruments for digital interventions. Further research is needed to ensure the generalisation of findings and estimate the causal role of Cohesion Policy’s framework.
    Keywords: Cohesion Policy, ICT, digitalisation, regional digital strategies
    JEL: H7 O18 O38 R58 Z18
    Date: 2020–05–01
  4. By: Nikula Harri (Faculty of Management and Business, Tampere University)
    Abstract: We study market-based instruments under incomplete participation. Incomplete participation means that the regulation does not cover all emitters that contribute to harmful damages. Our results show that a voluntary opt-in provision should always be incorporated into regulation under incomplete participation as the provision unambiguously increases expected social welfare. Incomplete participation also affects the choice between market-based instruments, tradable permits and environmental taxes, under uncertainty. The impact will depend on whether the voluntary provision is used or not. The voluntary participation does not unambiguously favor one of the instruments, but the advantage is case-specific.
    Keywords: Emission taxation, tradable emission permits, uncertainty, voluntary opt-in
    JEL: D62 D81 H23 Q58
    Date: 2020–05
  5. By: Thao Pham (LEDa - Laboratoire d'Economie de Dauphine - Université Paris Dauphine-PSL, REGARDS - Recherches en Économie Gestion AgroRessources Durabilité Santé- EA 6292 - URCA - Université de Reims Champagne-Ardenne); Killian Lemoine
    Abstract: Electricity generated by renewable energy sources creates a downward pressure on wholesale prices through-the so-called "merit order effect". This effect tends to lower average power prices and average market revenue that renewables producers should have received, making integration costs of renewables very high at large penetration rate. It is therefore crucial to determine the amplitude of this merit order effect particularly in the context of increasing burden of renewable support policies borne by final consumers. Using hourly data for the period 2009-2012 in German electricity wholesale market for GARCH model under panel data framework, we find that wind and solar power generation injected into German electricity network during this period induces a decrease of electricity spot prices and a slight increase of their volatility. The model-based results suggest that the merit-order effect created by renewable production ranges from 3.86 to 8.34 €/MWh which implies to the annual volume of consumers' surplus from 1.89 to 3.92 billion euros. However this surplus has not been redistributed equally among different types of electricity consumers.
    Keywords: German electricity markets,Intermittent generation,Feed-in tariff,Merit-order effect,GARCH,panel data
    Date: 2020–05–08
  6. By: Nikula Harri (Faculty of Management and Business, Tampere University)
    Abstract: We study market-based regulation where a government tries to avoid excessive firm closures by providing reliefs from emission fees for incumbent firms. Regulation is asymmetric as only incumbents, not new entrants are subsidized by the payment reliefs. We ask whether this feature affects the choice between environmental taxes and tradable permits under uncertainty. We find a trade-off between tax-beneficial inefficiency effect and permit-beneficial volume effect. The latter effect arises as the free quotas makes the number of aggregate permits and the aggregate emissions to fluctuate in the quantity implementation. We show that the subsidization of incumbent firms does not unambiguously favor one of the instruments but the advantage depends on policy- and industry-specific factors.
    Keywords: Emission taxation, firm closure, environmental subsidies, tradable emission permits, uncertainty
    JEL: D62 D81 H23 Q58
    Date: 2020–05
  7. By: Nikula Harri (Faculty of Management and Business, Tampere University)
    Abstract: We study market-based regulation in a polluting industry that produces two externalities at the same time. There is a negative externality (emissions) to which every firm in the industry contributes, and a positive externality (technological spillover), so that an additional application of green technology becomes easier as the number of appliers increases. An optimal policy is shown to consist of a uniform emission price across polluting firms and a subsidy to early users of green technology. We also show that the presence of the second externality strongly affects the instrument choice under uncertainty between taxes and tradable permits, and that the influence depends on the design of the instruments. More specifically, it depends on whether early users of green technology are subsidized or not.
    Keywords: Green production, emission taxation, internalizing externalities, spillover effect, tradable emission permits, uncertainty
    JEL: D62 D81 H23 Q58
    Date: 2020–05
  8. By: Arvaniti, Maria; Habla, Wolfgang
    Abstract: International carbon markets are frequently propagated as an efficient instrument for reducing CO2 emissions. We argue that such markets, despite their desirable efficiency properties, might not be in the best interest of governments who are guided by strategic considerations in negotiations. We identify the circumstances under which governments benefit or are harmed by cooperation in the form of an international market. Our results challenge the conventional wisdom that an international market is most beneficial for participating countries when they have vastly diverging marginal abatement costs; rather, it may be more promising to negotiate agreements with non-tradable emissions caps.
    Keywords: cooperative climate policy,political economy,emissions trading,linking of permit markets,strategic delegation,strategic voting
    JEL: D72 H23 H41 Q54 Q58
    Date: 2020
  9. By: Svanberg , Lisa (Swedish National Road & Transport Research Institute (VTI)); Pyddoke, Roger (Swedish National Road & Transport Research Institute (VTI))
    Abstract: Crowding in public transportation is increasingly perceived as a problem in large cities. Public transport authorities strive to develop policies that manage demand and reduce crowding in the best way. This paper reviews studies of policy instruments aimed at crowding and demand management of public transportation, mainly quantitative studies. The most observed policies are adjustments of fare (including differentiation), frequency, capacity, bus size and in some cases road tolls. The reviewed studies either implicitly represent crowding by the willingness to pay for less crowding or by reduction of occupancy levels. We subdivide papers into studies that model transport scenarios and studies that observe passenger demand, often real-world cases. We use social welfare optimization as reference point for analysis of the study contributions. Studies that observe passenger demand present results limited to the effects on overall demand and generally not in terms of social welfare. Some studies report on price differentiating policies that succeed in reducing peak demand, reductions ranging from 1.2 to 10 percent. Most modelling studies find it optimal for occupancy to decrease, however, some studies find that higher occupancy rates are welfare optimal. Few of the reviewed studies present the costs and benefits directly associated with decreasing occupancy. Few studies present both spatio-temporal distributions of occupancy and include a policy for the reduction of crowding. This suggests that a clearer picture of the severity of on-board crowding, together with a policy to manage crowding would be useful.
    Keywords: Crowding; On-board crowding; Occupancy; Public transport; Policy
    JEL: R40 R48
    Date: 2020–05–27
  10. By: Garg, Teevrat (University of California, San Diego); McCord, Gordon C. (University of California, San Diego); Montfort, Aleister (World Bank)
    Abstract: Why do damages from changes in environmental quality differ across and within countries? Causal investigation of this question has been challenging because differences may stem from heterogeneity in cumulative exposure or differences in socioeconomic factors such as income. We revisit the temperature-violence relationship and show that cash transfers attenuate one-half to two-thirds of the effects of higher same-day temperatures on homicides. Our results not only demonstrate causally that income can explain much of the heterogeneity in the marginal effects of higher temperatures, but also imply that social protection programs can help the poor adapt to rising temperatures.
    Keywords: cash transfers, temperature, violence
    JEL: Q50 Q52 Q54 Q58 I14
    Date: 2020–05
  11. By: Lu Zhang (CPB Netherlands Bureau for Economic Policy Analysis); Lennart Stangenberg (RUG); Sjors van Wickeren (EUR)
    Abstract: Do energy labels contain extra information that buyers cannot observe themselves? Which labeling scheme is more effective: a voluntary or a mandatory one? In this paper we examine the information value of voluntary and mandatory energy labels using administrative data on all transactions in the Dutch residential housing market. Employing a combination of hedonic price models, matching and a sharp Regression Discontinuity Design (RDD), we show that voluntary labels introduced in the period 2008-2014 contain limited information value. The information value of mandatory labels that are adopted since 2015 is less clear-cut. We observe that better-labeled dwellings were transacted with significant price premiums before obtaining labels. This implies that at least part of the premiums cannot be attributed to mandatory labels.
    JEL: R38 R58
    Date: 2020–05
  12. By: Bahia, Kalvin (GSMA); Castells, Pau (GSMA); Cruz, Genaro (GSMA); Masaki, Takaaki (World Bank); Pedrós, Xavier (GSMA); Pfutze, Tobias (Florida International University); Rodriguez Castelan, Carlos (World Bank); Winkler, Hernan (World Bank)
    Abstract: This paper estimates the impacts of mobile broadband coverage on household consumption and poverty in Nigeria, the largest economy and mobile broadband market in Africa. The analysis exploits a unique dataset that integrates three waves of a nationally representative longitudinal household survey on living standards with information from Nigerian mobile operators on the deployment of mobile broadband (3G and 4G) coverage between 2010 and 2016. The estimates show that mobile broadband coverage had large and positive impacts on household consumption levels which increased over time, although at a decreasing rate. Mobile broadband coverage also reduces the proportion of households below the poverty line, driven by higher food and non-food consumption in rural households. These effects are mainly due to an increase in labor force participation and employment, particularly among women.
    Keywords: poverty, household consumption, mobile broadband, Africa, Nigeria
    JEL: D12 F63 I31 L86 O12
    Date: 2020–05
  13. By: Burgess, Robin; Greenstone, Michael; Ryan, Nicholas; Sudarshan, Anant
    JEL: N0 J1
    Date: 2020–12–01
  14. By: Lehmann, Paul; Ammermann, Kathrin; Gawel, Erik; Geiger, Charlotte; Hauck, Jennifer; Heilmann, Jörg; Meier, Jan-Niklas; Ponitka, Jens; Schicketanz, Sven; Stemmer, Boris; Tafarte, Philip; Thrän, Daniela; Wolfram, Elisabeth
    Abstract: The deployment of onshore wind power involves spatial sustainability trade-offs, e.g., between the minimization of energy system costs, the mitigation of impacts on humans and biodiversity, and equity concerns. We analyze challenges arising for decision-making if wind power generation capacity has to be allocated spatially in the presence of such trade-offs. The analysis is based on a game developed for and played by stakeholders in Germany. The results of the game illustrate that there is no unanimously agreed ranking of sustainability criteria among the participating stakeholders. They disagreed not only on the weights of different criteria but also their definition and measurement. Group discussions further revealed that equity concerns mattered for spatial allocation. Yet, stakeholders used quite different concepts of equity. The results support the importance of transparent, multi-level and participatory approaches to take decisions on the spatial allocation of wind power generation capacity.
    Keywords: Deliberative methods,equity,Germany,renewable energies,spatial optimization
    JEL: Q01 Q42 Q51 Q57 R12
    Date: 2020

This nep-reg issue is ©2020 by Natalia Fabra. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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