nep-reg New Economics Papers
on Regulation
Issue of 2021‒01‒04
nine papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. The governance of regulators in Latin America: Evidence from the 2018 Indicators on the governance of sector regulators By Alexis Durand; Anna Pietikäinen
  2. Zero Rating, Content Quality and Network Capacity By Emmanuel LORENZON
  3. New insights on the energy impacts of telework By Hannah Villeneuve; Ahmed Abdeen; Maya Papineau; Sharane Simon; Cynthia Cruickshank; William O’Brien
  4. The Effect of Climate Policy on Productivity and Cost Pass-Through in the German Manufacturing Sector By Beat Hintermann; Maja Žarković; Corrado Di Maria; Ulrich J. Wagner
  5. EU Sustainable Finance Taxonomy – What Is Its Role on the Road towards Climate Neutrality? By Franziska Schütze; Jan Stede
  6. Imperfect Competition, Border Carbon Adjustments, and Stability of a Global Climate Agreement By Soham Baksi; Amrita Ray Chaudhuri
  7. On the Provision of Excludable Public Goods - General Taxes or User Prices? By George Economides; Apostolis Philippopoulos
  8. From Regulation to Deregulation and (Perhaps) Back: A Peculiar Continuity in the Analytical Framework By McColloch, William; Vernengo, Matías
  9. Firms and households during the pandemic: what do we learn from their electricity consumption? By Olympia Bover; Natalia Fabra; Sandra García-Uribe; Aitor Lacuesta; Roberto Ramos

  1. By: Alexis Durand (OECD); Anna Pietikäinen (OECD)
    Abstract: Using data from the 2018 OECD Indicators on the Governance of Sector Regulators, this paper analyses the governance of economic regulators in seven Latin American economies (Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico and Peru) and across five critical network sectors (energy, e-communications, rail transport, air transport and water). The indicators allow for direct comparison of thirty economic regulators and provide a snapshot of the governance arrangements designed to preserve independence, practices to promote accountability, and the functions of the regulators. After describing key institutional characteristics of the regulators in the sample, the paper uses the indicators to identify patterns in governance. Evidence from in-depth performance reviews of regulators complements the indicators, shedding light on cost recovery fees, budgetary processes, and the use of advisory bodies in Latin American regulators.
    Keywords: accountability, economic regulators, governance, independence, Latin America, network sectors, regulation, regulatory policy
    JEL: N46 L98 L50 K23 D73
    Date: 2020–12–17
  2. By: Emmanuel LORENZON
    Abstract: We consider a departure from net neutrality by an Internet service provider (ISP) that financially discriminates among content providers through bilateral zero rating contracts. Zero rating is an instrument to distort competition between content providers and the way in which consumers value content. We analyze its implications for the incentives to provide quality in the market for content and to invest in broadband infrastructure. Zero rating makes content more expensive for consumers to access and implies a downward distortion of quality by increasing downward vertical differentiation. Content providers move from a minimal differentiation equilibrium to a downward vertical differentiation outcome. Next, we find that while zero rating happens to reduce congestion, a profit-maximizing ISP always underinvests in the broadband infrastructure in the discriminatory network. We highlight that this underprovision comes from a standard rent-extraction argument and a new cost-alleviation channel, which relates to the complementarity between network capacity and content quality. Finally, the ISP always implements zero rating, which is welfare reducing and detrimental to consumers.
    Keywords: Internet; Net-Neutrality; Zero-Rating; Network capacity; Content quality; Congestion; Three-part tariff
    JEL: D21 L12 L51 L96 R41
    Date: 2020
  3. By: Hannah Villeneuve; Ahmed Abdeen; Maya Papineau (Department of Economics, Carleton University); Sharane Simon; Cynthia Cruickshank (Department of Mechanical & Aerospace Engineering, Carleton University); William O’Brien (Department of Civil and Environmental Engineering, Carleton University)
    Abstract: Quantifying the energy impact of teleworking has been challenging due to the low prevalence of telework. The COVID-19 pandemic and the associated widespread shift to telework provides a new opportunity to study the energy impact of teleworking. Within two months of the lockdowns we surveyed 297 knowledge-based workers who started primarily working from home to investigate their energy-related behaviours and attitudes. The survey’s major themes are energy- saving actions taken in the office, equipment used for telework, impacts on home energy usage, and both awareness of and response to electricity pricing. Given trends towards increased teleworking in the future, these results can inform public policy related to teleworking and energy.
    Keywords: telework, household energy consumption, occupant behaviour, electricity policy, COVID-19
    JEL: Q41 Q48 H31 L94
    Date: 2020–12
  4. By: Beat Hintermann; Maja Žarković; Corrado Di Maria; Ulrich J. Wagner
    Abstract: We investigate productivity and cost pass-through of German manufacturing firms using administrative data from 2001 to 2014. Our framework allows for the estimation of quantity-based production functions for multi-product firms while controlling for unobserved productivity shocks and unobserved input quality. Using our parameter estimates, we can compute total factor productivity, markups and marginal costs. We find no effect of the EU ETS on firm productivity or profits for the whole sector, and a positive effect for some industries. Firms pass on shocks to materials costs completely, or even more than completely, whereas pass-through of energy costs is around 35-60%. Although pass-through of energy costs is incomplete, it nevertheless allowed firms to recover more than their total carbon costs due to generous free allocation of allowances. Our results add to the recent literature concerning the causal effects of climate policy on firms and are relevant for policy makers when defining the level of free allowance allocation to industry.
    Keywords: productivity, production function, cost pass-through, EU ETS, climate policy
    JEL: D24 H23 Q52 Q54
    Date: 2020–12
  5. By: Franziska Schütze; Jan Stede
    Abstract: The EU Taxonomy is the first standardised and comprehensive classification system for sustainable economic activities. It covers activities responsible for up to 80 percent of EU greenhouse gas emissions and may play an important role in channelling investments into low-carbon technologies by helping investors to make informed decisions. However, especially in transition sectors much depends on the stringency of the technical performance thresholds that the Taxonomy applies to economic activities that are not yet “green”. This paper shows that for several sectors, the thresholds are not yet on track to support the transition towards climate neutrality. To this end, we analyse a large-scale public consultation with detailed responses to the specific thresholds from a variety of stakeholders. Two distinct use cases of the Taxonomy complicate the use of a single threshold for emission-intensive sectors: For new investments, criteria need to be stricter than for current activities of companies. We also argue that for the sectors not covered by the Taxonomy, there is a need to differentiate between low-emissions activities and high-emission activities that are incompatible with a low-carbon future.
    Keywords: EU Taxonomy, sustainable finance, classification system, green investments
    JEL: G00 G14 G18 Q01 Q54 Q56
    Date: 2020
  6. By: Soham Baksi; Amrita Ray Chaudhuri
    Abstract: We analyze the stability of a global climate agreement to mitigate greenhouse gas emissions when countries choose pollution taxes simultaneously and strategically. Emissions arise from the production of a good, which is traded across countries with segmented markets that are imperfectly competitive. We find that, while a global climate agreement involving all countries is unstable under autarky, a move from autarky to free trade may stabilize the grand coalition between countries. As markets become more competitive, it becomes more likely that the global climate agreement is stable, and the environmental and welfare gains from global cooperation also become larger. Further, we introduce a border carbon adjustment (BCA) mechanism consisting of an import tariff set equal to the pollution tax differential across countries. We find that allowing countries to use a BCA tends to destabilize an otherwise stable grand coalition.
    JEL: Q54 F18 H23
    Date: 2020–12
  7. By: George Economides; Apostolis Philippopoulos
    Abstract: This paper compares some of the most common and debated ways of financing the provision of impure public goods/services in a unified dynamic general equilibrium framework. We study and rank a wide variety of ways ranging from provision without any user charges, to provision with full user charges; we also study mixed systems. In our quest for the best system, we address both efficiency and distribution issues. The focus is on the effects of user prices on individual incentives and choices. We identify circumstances under which a market system of user prices not only enhances aggregate efficiency but is also Pareto improving meaning that makes all types of income groups better off. But we also provide examples of circumstances under which user prices on impure public goods do not make sense.
    Keywords: user prices, taxes, efficiency, equity
    JEL: H40 H20 D60
    Date: 2020
  8. By: McColloch, William (Keene State College); Vernengo, Matías (Bucknell University)
    Abstract: The rise of the regulatory state during the Gilded Age was closely associated with the development of Institutionalist ideas in American academia. In their analysis of the emergent regulatory environment, Institutionalists like John Commons opera-ted with a fundamentally marginalist theory of value and distribution. This engagement is a central explanation for the ul-timate ascendancy of neoclassical economics, and the limitations of the regulatory environment that emerged in the Progres-sive Era. The eventual rise of the Chicago School and its deregulatory ambitions did constitute a rupture, but one achieved without rejecting preceding conceptions of competition and value. The substantial compatibility of the view of markets underlying both the regulatory and deregulatory periods is stressed, casting doubt about the transformative potential of the resurgent regulatory impulse in the New Gilded Age.
    Keywords: John Commons; George Stigler; Regulatory Capture; Deregulation
    JEL: B13 B15 B25 K20 L51
    Date: 2020–12–16
  9. By: Olympia Bover (Banco de España); Natalia Fabra (Universidad Carlos III de Madrid and CEPR); Sandra García-Uribe (Banco de España); Aitor Lacuesta (Banco de España); Roberto Ramos (Banco de España)
    Abstract: We analyze the impact of the COVID-19 pandemic on electricity consumption patterns in Spain. We highlight the importance of decomposing total electricity consumption into consumption by firms and by households to better understand the economic and social impacts of the crisis. While electricity demand by firms has fallen substantially, the demand by households has gone up. In particular, during the total lockdown, these effects reached -29% and +10% respectively, controlling for temperature and seasonality. While the electricity demand reductions during the second wave were milder, the demand by firms remained 5% below its normal levels. We also document a change in people’s daily routines in response to the stringency of the lockdown measures, as reflected in their hourly electricity consumption patterns.
    Keywords: electricity demand, economic activity, COVID, lockdowns
    JEL: L94 Q43 Q54
    Date: 2020–12

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