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on Regulation |
| By: | Yamada, Mai |
| Abstract: | Using the model based on Inderst and Irmen (2005), we analyze retail industries with competition in business hours and prices and examine the desirable degree of business hours regulation for policy makers who have objectives to enhance the welfare. We find that the strict regulation of business hours, which business hours are regulated in all regions, enhances the welfare only when the transportation cost parameter is relatively large. This implies that, contrary to some previous studies, the deregulation is not always welfare enhancing. Although some countries have regulated business hours only in some regions, such partial regulation might worsen the welfare because a retail store located at deregulated regions charges a higher price. |
| Keywords: | regulation level of business hours; welfare implications |
| JEL: | D21 L51 L81 |
| Date: | 2020–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101392&r=all |
| By: | Soroush, Golnoush; Cambini, Carlo; Jamasb, Tooraj; Llorca, Manuel |
| Abstract: | It is generally accepted that institutions are important for economic development. However, whether the performance of regulated utilities within a country is affected by the quality of institutions is yet to be investigated thoroughly. We analyse how the quality of regional institutions impact performance of Italian electricity distribution utilities. We use a stochastic frontier analysis approach to estimate cost functions and examine the performance of 108 electricity distribution utilities from 2011 to 2015. This unique dataset was constructed with the help of the Italian Regulator for Energy, Networks, and Environment. In addition, we use a recent dataset on regional institutional quality in Italy. We present evidence that utilities in regions with better government effectiveness, responsiveness towards citizens, control of corruption, and rule of law, also tend to be more cost efficient. The results suggest that national regulators should take regional institutional diversity into account in incentive regulation and efficiency benchmarking of utilities. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:oeg:wpaper:2019/05&r=all |
| By: | Brendan Casey; Wayne B. Gray; Joshua Linn; Richard D. Morgenstern |
| Abstract: | Pricing carbon emissions from an individual jurisdiction may harm the competitiveness of local firms, causing the leakage of emissions and economic activity to other regions. Past research concentrates on national carbon prices, but the impacts of subnational carbon prices could be more severe due to the openness of regional economies. We specify a flexible model to capture competition between a plant in a state with electric sector carbon pricing and plants in other states or countries without such pricing. Treating energy prices as a proxy for carbon prices, we estimate model parameters using confidential plant-level Census data, 1982–2011. We simulate the effects on manufacturing output and employment of carbon prices covering the Regional Greenhouse Gas Initiative (RGGI) in the Northeast and Mid-Atlantic regions. A carbon price of $10 per metric ton on electricity output reduces employment in the regulated region by 2.7 percent, and raises employment in nearby states by 0.8 percent, although these estimates do not account for revenue recycling in the RGGI region that could mitigate these employment changes. The effects on output are broadly similar. National employment falls just 0.1 percent, suggesting that domestic plants in other states as opposed to foreign facilities are the principal winners from state or regional carbon pricing. |
| JEL: | Q4 Q52 Q58 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:20-21&r=all |
| By: | Ajayi, V.; Dolphin, G.; Anaya, K.; Pollitt, M. |
| Abstract: | What accounts for the recent widespread slowdown in the productivity in advanced economies has remained a puzzle. One plausible explanation has been attributable to regulation, particularly anti-competitive regulations and environmental regulations. This paper focuses on the regulated energy network sectors by undertaking three sets of analysis in examining TFP in a sample of OECD countries over the period 1995-2016. First, using the growth accounting method, we find that there is a substantial productivity puzzle for the electricity and gas sectors, which exhibits a lower TFP growth than the whole economy over the period, and falls postfinancial crisis. Second, we identify the impact of regulation on productivity using a panel regression analysis. Our findings indicate that TFP levels seem weakly explained by changes to the competitive environment of the energy sector. Third, we show that energy and climate policy has negatively and significantly reduced energy sector productivity, at the same time as increasing capital input to the sector. We also find that the strength of energy and climate policy is positively correlated with lower aggregate TFP growth. |
| Keywords: | Total factor productivity, growth accounting, regulation, energy networks, climate policy |
| JEL: | D24 O47 H23 |
| Date: | 2020–07–23 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:2073&r=all |
| By: | Newbery, D. |
| Abstract: | Member States have published National Energy and Climate Plans with challenging variable renewable electricity (VRE) targets. As VRE has a high peak to average output, the Single Electricity Market of the island of Ireland (SEM), will need to consider how best to balance the lost value of curtailment against the extra costs of higher Simultaneous Non-Synchronous Penetration (SNSP), more interconnector capacity and/or more storage. The paper develops a simple spreadsheet model to explore these options for the 2026 VRE targets in the SEM and her neighbours. Raising SNSP from 75% to 85% reduces curtailment from 13.3% to 8.1%, saving 1,338 GWh/yr of spilled wind. Adding the Celtic Link of 700 MW at SNSP of 75% reduces curtailment to 12.4% and saves 235 GWh/yr. Adding 100 MW of batteries saves 18 GWh/yr. The marginal spilled wind can be four times the average. |
| Keywords: | Variable renewable electricity, curtailment, interconnection, storage |
| JEL: | C63 Q42 Q54 |
| Date: | 2020–07–23 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:2072&r=all |
| By: | Fitiwi, Desta; Lynch, Muireann Á.; Bertsch, Valentin |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb202010&r=all |
| By: | Christoph Boehringer; Knut Einar Rosendahl (Norwegian University of Life Sciences, Ås / Norway, and Statistics Norway, Oslo / Norway) |
| Abstract: | Several European countries have decided to phase out coal power generation. Emissions from electricity generation are already regulated by the EU Emissions Trading System (ETS), and in some countries like Germany the phaseout of coal will be accompanied with cancellation of emissions allowances. In this paper we examine the consequences of phasing out coal, both for the broader economy, the electricity sector, and for CO2 emissions. We show analytically how the welfare impacts for a phaseout region depend on i) whether and how allowances are canceled, ii) whether other countries join phaseout policies, and iii) terms-of-trade effects in the ETS market. Based on numerical simulations with a computable general equilibrium model for the European economy, we quantify the economic and environmental impacts of alternative phaseout scenarios, considering both unilateral and multilateral phaseout. We find that terms-of-trade effects in the ETS market play an important role for the welfare effects across EU member states. For Germany, coal phaseout combined with unilateral cancellation of allowances is found to be welfare-improving if the German citizens value emissions reductions at 65 Euro per ton or more. |
| Keywords: | coal phaseout, emissions trading, electricity market |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:old:dpaper:430&r=all |
| By: | Fitiwi, Desta; Lynch, Muireann Á.; Bertsch, Valentin |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb202014&r=all |
| By: | Argüelles, Pablo; Orea, Luis |
| 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 wasupdated in December 2019 and the new regulatory framework introduceda series of relevant modifications that aim to encourage the regulated firms to reduce their power supply interruptionsusing 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 interruptionsof a Spanish distribution company network between 2013 and 2019. We focus our analysis in the effect of grid automatization on the restoration times, the relative efficiency of the maintenance staff, and the importance of its location. We combinea bottom-up spatial model and a stochastic frontier model to examine respectively external and internal power supply interruptionsat municipal level. This model resembles the conventional spatial autoregressive models but differ from them in several important aspects. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:oeg:wpaper:2020/01&r=all |
| By: | Muehlegger, Erich J. PhD; Rapson, David S. PhD |
| Abstract: | The true net environmental benefit of an electric vehicle is relative to the vehicle that an electric vehicle buyer would have bought and driven had they not opted for an electric vehicle. This “counterfactual” vehicle cannot be observed, but its fuel economy can be estimated. We use quasi-experimental variation in a generous California electric vehicle subsidy program to show that buyers of electric vehicles would have, on average, purchased fuel-efficient gasoline-powered cars had they not gone electric. |
| Keywords: | Engineering, Electric vehicles, user side subsidies, environmental impacts, consumer behavior, market share, automobile ownership, policy analysis, fuel consumption |
| Date: | 2020–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:itsdav:qt8dg237md&r=all |
| By: | Tovar Reaños, Miguel; Lynch, Muireann Á. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp665&r=all |
| By: | Cecilia Bellora (CEPII - Centre d'études prospectives et d'informations internationales); Lionel Fontagné (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics) |
| Abstract: | The new European Commission has announced policies to reduce greenhouse gas emissions drastically. Reaching an ambitious target for a global good – the climate – would require a common price for carbon worldwide. This however clashes with the free-riding problem. Furthermore, unilateral policies are not efficient since they lead to carbon leakages and distort competitiveness. To tackle these issues, the European Union can rely on different policies. Firstly, a carbon pricing of imports can combined with an export rebate to constitute a ‘complete CBA' (Carbon Border Adjustment) solution. Alternatively, a simple tariff at the border can compensate for differences in carbon prices between domestic and imported products. A consumption-based carbon taxation can al so be contemplated. Last, a uniform tariff on imports from countries not imposing (equivalent) carbon policies may help solving the free-riding problem. |
| Keywords: | Carbon Border Adjustment,Climate Change,International Trade,Tariffs |
| Date: | 2020–04–14 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseptp:hal-02880332&r=all |
| By: | David Stern |
| Abstract: | The size of the economy-wide rebound effect is crucial for estimating the contribution that energy efficiency improvements can make to reducing greenhouse gas emissions and for understanding the drivers of energy use. Economy-wide rebound from an energy efficiency improvement includes changes in the use of energy to produce complementary and substitute goods or inputs and other flow-on effects that affect energy use across the economy as well as the direct rebound due to energy users using more of an energy service that has become less costly as result of improved energy efficiency. Jevons first argued in 1865 that improvements in energy efficiency increase total energy use, and in recent decades researchers have argued for and against this “backfire” hypothesis. Theory provides some guidance on the factors affecting rebound but does not impose much constraint on the range of possible responses. Historical evidence suggests that the improved energy efficiency of recent technology has not reduced energy use because consumption has shifted to more energy-intensive goods and services. Simulations and econometric research have produced mixed results. Some recent general equilibrium studies find large rebound, around 100%, but more research is needed to confirm or refute these findings. |
| Keywords: | Energy efficiency, technological change, survey, review |
| JEL: | Q43 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2020-70&r=all |
| By: | Breitenstein, Miriam; Anke, Carl-Philipp; Nguyen, Duc Khuong; Walther, Thomas |
| Abstract: | We assess the value of stranded coal-fired power plants in Germany due to the critical phase- out by 2038. Within a Monte Carlo simulation, the scenarios under consideration (a slow decommissioning at the end of the technical lifetime in 2061, the highly probable phase-out by 2038, and an accelerated phase-out by 2030) are additionally assigned distributions to display the uncertainty of future developments. The results show an overall stranded asset value of €0.4 billion given the phase-out by 2038 and additional €14.3 billion if the phase-out is brought forward by eight years. This study also depicts the impacts of carbon pricing and the feed-in from renewable energy sources on the merit order and eventually the deterioration in economic conditions for hard coal and lignite power plants. Lastly, we illustrate immediate concerns for share prices of affected companies and contributes to closing the research gap between stranded physical and financial assets. |
| Keywords: | Coal Phase-out; Energy transition; Germany; Stranded Assets |
| JEL: | C53 L13 L94 Q38 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101763&r=all |
| By: | Jean-Marc Bourgeon (X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique, ECO-PUB - Economie Publique - AgroParisTech - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | The importance of network externalities affecting technology diffusion in the greening of the economy is analyzed using a simple dynamic model. The socially optimal path of the economy can be implemented by requiring firms to comply to technical standards. As otherwise firms make investment decisions based on their expectations of the magnitude of shocks affecting network effects, using only incentive-based instruments of regulation (emissions taxes and subsidies for green investments) to green the economy leads to efficiency losses due to economic fluctuations. |
| Keywords: | Technology adoption,sustainability,Growth |
| Date: | 2020–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02799535&r=all |
| By: | Atasoy, Ayse Tugba (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)) |
| Abstract: | In distinct decision environments, consumers often fail to financially optimize their decisions. In liberalized electricity markets, consumers frequently do not optimize their electricity choices and stick with the default providers instead, despite the ability to choose among an increasingly large set of electricity suppliers and benefit from lower cost options. In this paper, we study the effect of different contextual features of the choice environment (i.e., default and active choice enforcement) and search costs (i.e., high and low) on the quality of electricity contract choices, with the help of a randomized controlled laboratory experiment. We provide evidence that the default contract rule lowers decision quality compared to the active decision rule in both search cost environments. Default rules lower the quality of contract choices especially for the individuals with lower cognitive ability. Contrary to the expectations, we observe that the number of alternatives has no effect on the quality of electricity contract choices. Our findings have important implications for regulatory rule setting in the electricity market. |
| Keywords: | Contract Switching; Electricity Contracts; Default Rules; Search Costs; Decisionmaking |
| JEL: | C91 D12 D91 Q48 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:ris:fcnwpa:2020_007&r=all |
| By: | Grilli, Gianluca; Mohan, Gretta; Curtis, John |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb202011&r=all |
| By: | Nathan DeMaagd (University of Hawai‘i at Manoa Department of Economics); Michael J. Roberts (University of Hawai‘i at Manoa Department of Economics, University of Hawai‘i Economic Research Organization, University of Hawai‘i Sea Grant College Program) |
| Abstract: | Many homes in Hawai‘i use cesspools and other on-site disposal systems (OSDS) instead of the municipal sewer system. Because bills combine water and waste-water services, and homes with OSDS do not pay for sewer service, OSDS residences have lower monthly bills compared to those with sewer-connected systems. We use this price difference in conjunction with selection on observables and matching methods to estimate the price elasticity of residential water demand. Matching methods indicate that OSDS residences have systematically different characteristics than those with sewer-connected systems, suggesting an imperfect natural experiment. |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:hae:wpaper:2020-1&r=all |