|
on Regulation |
| By: | Volker Nocke; Patrick Rey |
| Abstract: | We develop a model of within-firm sequential, directed search and study a firm’s ability and incentive to steer consumers. We find that the firm often benefits from adopting a noisy positioning strategy, which limits the information available to consumers. This induces consumers to keep searching but discourages some of them from visiting the firm. This occurs even though the firm and the consumers have in common the interest of maximizing the probability of trade. Because of such noisy positioning, an increase in the size of the product line further discourages consumers from visiting the firm—consistent with choice overload. |
| Keywords: | Consumer Search, Sequential Search, Directed Search, Product Variety, Coice Overload, Multiproduct Firm, Platform, Steering |
| JEL: | L12 L15 D42 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_42x&r=reg |
| By: | Camille Megy (CentraleSupélec, IFPEN - IFP Energies nouvelles - IFPEN - IFP Energies nouvelles, IFP School); Olivier Massol (IFPEN - IFP Energies nouvelles - IFPEN - IFP Energies nouvelles, IFP School, CentraleSupélec, City University London) |
| Abstract: | Power-to-gas (PtG), a technology that converts electricity into hydrogen, is expected to become a core component of future low-carbon energy systems. While its economics and performance as a sector coupling technique have been well studied in the context of perfectly competitive energy markets, the distortions caused by the presence of large strategic players with a multi-market presence have received little attention. In this paper, we examine them by specifying a partial equilibrium model that provides a stylized representation of the interactions among the natural gas, electricity, and hydrogen markets. Using that model, we compare several possible ownership organizations for PtG to investigate how imperfect competition affects its operations. Evidence gained from these market simulations show that the effects of PtG vary with the multi-market profile of its operator. Producers of fossil-based hydrogen tend to make little use of PtG, whereas renewable power producers use it more to increase the electricity prices. Although PtG operations are profitable and can be welfare-enhancing, the social gain is either very tiny or negative when PtG is strategically operated in conjunction with variable renewable generation. In that case, PtG also raises environmental concerns as it stimulates the use of polluting thermoelectric generation. |
| Keywords: | Power-to-Gas, Sector Coupling, Hydrogen, Renewable Energy Sources, Multi-Market Oligopoly, Mixed Complementarity Problem |
| Date: | 2023–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-04087442&r=reg |
| By: | Karsten Neuhoff; Fernanda Ballesteros; Mats Kröger; Jörn C. Richstein |
| Abstract: | Renewable energy installations are rapidly gaining market share due to falling technology costs and supportive policies. Meanwhile, the energy price crisis resulting from the Russian-Ukrainian war has shifted the energy policy debate toward the question of how consumers can benefit more from the low and stable generation costs of renewable electricity. Here we suggest a Renewable Pool (“RE-Pool”) under which the government passes the conditions of Contracts-for-Difference on to consumers who thereby benefit from reliably low-cost electricity supply. We assess the effect on financing costs, scale, and system friendliness of wind investments, as well risk hedging for consumers’ volume risks and hedging incentives. |
| Keywords: | Contracts-for-Difference, renewable policy, electricity markets, financing, PPA |
| JEL: | D44 D47 G32 L94 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp2035&r=reg |
| By: | Gutiérrez-Meave, Raúl; Rosellón, Juan; Sarmiento, Luis |
| Abstract: | The analysis of local environmental policies is essential when evaluating the consistency of national public policies vis-Ã -vis the compliance of global agreements to reduce climate change. This study explores one of these policies; the 2021 Mexican reform to change electric power dispatch from a marginal-cost-based to a command and control physical system prioritizing power generation from the state power company. The new law forces the dispatch of the state company power facilities before private power producers. We use the GENeSYS-MOD techno-economic model to determine the reform’s effect on the power system’s generation mix, cost structure, and anthropogenic emissions. For this, we optimize the model under three distinct scenarios; a business-as-usual scenario with no changes to the merit order, a model with the new physical order dispatch, and an additional case where in addition to the shift to the physical dispatch, we reduce the price of fuel oil below natural gas prices to simulate the current behavior of the power company. It is relevant to note that we optimize the energy system without any assumption regarding renewable targets or climate goals because of political uncertainty and the need of pinpoint the effect of the merit order change while avoiding possible variations in the state-space arising from other constraints. Our results show that by 2050, the new dispatch rule increases the market power of the state company to 99% of total generation and decreases the share of renewable technologies in the generation mix from 72%to 51%. Additionally, cumulative power sector emissions increase by 563 Mega-tons of CO2, which with the current cost of carbon in the European Emissions Trading System translates to around 36 billion Euros. |
| Date: | 2021–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-21-19&r=reg |
| By: | Khanna, Tarun M.; Bruns, Stephan; Miersch, Klaas; Minx, Jan C. |
| Abstract: | Time-varying prices are thought to be critical for increasing economic efficiency of the power system. However, a rigorous assessment of the evidence from field trials that use time-of-use pricing, critical peak pricing, etc. in households is missing. This machine learning-assisted systematic review compiles the largest dataset till date of results from pricing pilots reported in both academic publications and electricity utility reports. This unique dataset enables us to deduce the presence of publication bias in peer-reviewed publications. Employing a multilevel meta-analysis, we estimate an average reduction of 8.7%-10.6% in peak consumption, 1.2%-1.5% in total consumption and no change in off-peak consumption across trials. Our heterogeneity analysis, using Bayesian Model Averaging, finds that a 10% increase in the peak-to-baseline price ratio is associated with a 0.47% reduction in peak consumption with marginal reduction in effects suggesting “scope effect” in household behavior. Overall consumption is not responsive to price ratio. Dynamic pricing thus seems to be effective in managing electricity demand but with limits. |
| Keywords: | Dynamic pricing, Energy demand, Households, Buildings emissions, Monetary incentives, Rebates, Time-of-use pricing, Demand response |
| JEL: | Q41 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:270889&r=reg |
| By: | Taipov Mikhail (Department of Economics, Lomonosov Moscow State University) |
| Abstract: | Net Neutrality imposes many restrictions on the work of Internet service providers, which can significantly affect their profits and the welfare of other economic agents in the ISP market. This article analyzes the following rules established by the Net Neutrality: “zero price” rule and the prohibition of exclusive deals between ISPs and content providers. To study the implications of Net Neutrality, a game-theoretic model of the ISP market is being created, the unique feature of which is that content providers are divided into two following types: one large content provider that creates a large cross-network effect for consumers and is able to strike exclusive deals with ISPs in the absence of Net Neutrality; and many small content providers that create a small crossnetwork effect and aren’t able to influence the prices set by ISPs. This model allowed me to draw the following conclusions about the effects of Net Neutrality: Net Neutrality increases the profits of Internet service providers and reduces the profits of a large content provider; increases the total social welfare if a large content provider joins both ISPs in the absence of Net Neutrality. The impact of net neutrality on consumer surplus and profits of small content providers depends on the exclusivity of a large content provider in the absence of net neutrality. |
| Keywords: | net Neutrality, content providers, exclusivity, platforms, social welfare |
| JEL: | C65 C79 |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:upa:wpaper:0054&r=reg |
| By: | Adrien Nicolle (CentraleSupélec); Diego Cedreros (CentraleSupélec); Olivier MASSOL (IFPEN - IFP Energies nouvelles - IFPEN - IFP Energies nouvelles, IFP School, CentraleSupélec, City University London); Emma Jagu Schippers (IFPEN - IFP Energies nouvelles - IFPEN - IFP Energies nouvelles, IFP School, CentraleSupélec) |
| Abstract: | Carbon Capture and Storage (CCS) is regularly depicted as a crucial technology to reduce the social cost of achieving carbon neutrality. However, its deployment critically depends on the installation of CO2 infrastructures. As the regulatory procedures governing their provision are yet to be clarified, the purpose of this paper is to assess the social and environmental impacts of such regulations. We show how the engineering equations of a CO2 pipeline implicitly define a Cobb-Douglas production function. We then infer that the resulting cost function exhibits economies of scale and verifies the technological condition for a natural monopoly. As the possible exertion of market power is a concern, we evaluate the social distortion of the unregulated monopoly and the average-cost pricing solution, which we compare to the outcomes of the welfare-maximizing solution. While the deadweight loss obtained under average-cost pricing remains lower than 5% compared to the first-best solution, our findings indicate that allocative efficiency is an issue, with more than a quarter of the CO2 emissions not being transported. By providing the first analytically determined cost function of a CO2 pipeline, this analysis will usefully inform the emerging regulatory policy debates on CCS. |
| Keywords: | Carbon Capture and Storage (CCS), CO2 Pipelines, Cobb-Douglas, Regulation |
| Date: | 2023–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-04087681&r=reg |
| By: | Simplice A. Asongu (Yaounde, Cameroon) |
| Abstract: | This study assesses how corporate telecommunication (telecom) policies follow telecom sector regulation in mobile money innovation for financial inclusion in developing countries. Telecom policies are understood in terms of mobile subscriptions, mobile connectivity coverage and mobile connectivity performance while mobile money innovations represent mobile money accounts, the mobile used to send money and the mobile used to receive money. The empirical evidence is based on Tobit regressions. Telecom sector regulation positively influences mobile money innovations. From net influences, mobile subscriptions and connectivity policies moderate telecom sector regulation to positively influence mobile money innovations; exclusively within the remit of mobile money accounts because the corresponding net influences on the mobile used to send money and the mobile used to receive money are negative. The interactive influences are consistently negative and hence, thresholds for complementary policies are provided in order to maintain the positive influence of telecom sector regulation on mobile money innovations. This study has complemented the extant literature by assessing how corporate telecommunication policies follow telecommunication sector regulation in mobile money innovations for financial inclusion. |
| Keywords: | Mobile money; technology diffusion; financial inclusion; inclusive innovation |
| JEL: | D10 D14 D31 D60 O30 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:23/017&r=reg |
| By: | Zlata Sergeeva (King Abdullah Petroleum Studies and Research Center) |
| Abstract: | Long-term natural gas contracts are necessary market instruments that provide supply security for customers and demand security for producers. Nevertheless, the European Commission recently announced a plan to ban long-term contracts for unabated fossil gas after 2049. This study shows that this plan may destabilize the market due to the lack of supply security for customers and demand security for producers. |
| Keywords: | Carbon, Carbon capture and storage, CCS, Carbon neutrality |
| Date: | 2023–04–04 |
| URL: | http://d.repec.org/n?u=RePEc:prc:dpaper:ks--2022-dp15&r=reg |
| By: | Bucksteeg, Michael; Voswinkel, Simon; Blumberg, Gerald |
| Abstract: | Power markets have been gradually integrated to achieve the target of a single European market. A major step was the introduction of the flow-based market coupling (FBMC) in Central Western and Eastern Europe (Core region). FBMC reflects the physical constraints of the underlying transmission grid in detail. However, the European Commission and regulators imposed minimum margins to increase cross-border trade and to foster price convergence between the different bidding zones, neglecting physical constraints and increasing redispatch volumes. Integrating redispatch poten-tials into FBMC allows for moving closer to physical reality while maintaining a high level of cross-border trade. In this study, we develop a multi-stage model covering capacity calculation, market coupling, and redispatch stages. This study is the first to evaluate different options for integrating FBMC and redispatch potentials based on a large-scale numerical analysis of Central Europe. The results reveal that minimum margins effectively increase cross-border trade. However, this comes at a high cost due to additional redispatch needs, which reduce overall welfare. Integrating redis-patch potentials in the market-clearing stage leads to a more efficient increase in cross-border ca-pacities and elevates welfare. In the case of combining both approaches, the analysis indicates improved welfare of roughly 80 M€ per year. |
| Keywords: | Flow-based market coupling, European electricity market, cross-border trade, congestion management, redispatch, market modeling |
| JEL: | Q4 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:270878&r=reg |
| By: | Foarta, Dana (Stanford U); Morelli, Massimo (Bocconi U and IGIER, Bocconi) |
| Abstract: | Legislative and regulatory reforms often contain various forms of complexity--multiple contingencies, exemptions and alike. Complexity may be desirable if it better satisfies the needs of political constituencies, and if these benefits are higher than the potential increase in administrative costs. Both benefits and costs are better understood by a reform drafter than by the other players involved in the reform process. This asymmetric information on the costs and benefits of complexity creates incentives for inefficiently complex policies. We show that reform drafters use complexity to pander to persuade their political principals to adopt reforms, when the latter are less informed about the costs consequences of the proposed complexity. Nevertheless, institutional contexts where reform drafters are overseen by political principals are not always leading to greater complexity than in systems without overseers, as long as the drafters face informational constraints regarding the costs and benefits of complexity. |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:4068&r=reg |
| By: | Merlin Keller (EDF - Electricité de France); Guillaume Damblin (Université Paris-Saclay); Alberto Pasanisi (Edison); Mathieu Schumann (EDF - Electricité de France); Pierre Barbillon (MIA Paris-Saclay - Mathématiques et Informatique Appliquées - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Fabrizio Ruggeri (IMATI - Istituto di Matematica Applicata e Tecnologie Informatiche - CNR - Consiglio Nazionale delle Ricerche) |
| Abstract: | In this paper, we present a case study aimed at determining a billing plan that ensures customer loyalty and provides a profit for the energy company, whose point of view is taken in the paper. The energy provider promotes new contracts for residential buildings, in which customers pay a fixed rate chosen in advance, based on an overall energy consumption forecast. For such a purpose, we consider a practical Bayesian framework for the calibration and validation of a computer code used to forecast the energy consumption of a building. On the basis of power field measurements, collected from an experimental building cell in a given period of time, the code is calibrated, effectively reducing the epistemic uncertainty affecting the most relevant parameters of the code (albedo, thermal bridge factor, and convective coefficient). The validation is carried out by testing the goodness of fit of the code with respect to the field measurements, and then propagating the posterior parametric uncertainty through the code, obtaining probabilistic forecasts of the average electrical power delivered inside the cell in a given period of time. Finally, Bayesian decision-making methods are used to choose the optimal fixed rate (for the energy provider) of the contract, in order to balance short-term benefits with customer retention. We identify three significant contributions of the paper. First of all, the case study data were never analyzed from a Bayesian viewpoint, which is relevant here not only for estimating the parameters but also for properly assessing the uncertainty about the forecasts. Furthermore, the study of optimal policies for energy providers in this framework is new, to the best of our knowledge. Finally, we propose Bayesian posterior predictive p-value for validation. |
| Keywords: | uncertainty quantification, Bayesian analysis, energy contracts, uncertainty quantification Bayesian analysis energy contracts |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04071903&r=reg |
| By: | Daniel Schunk (Johannes Gutenberg University); Eva M. Berger (German Council of Economic Experts); Henning Hermes (Heinrich Heine University of Duesseldorf); Kirsten Winkel (University of Applied Sciences Saarbruecken); Ernst Fehr (University of Zurich) |
| Abstract: | Children's self-regulation abilities are key predictors of educational success and other life outcomes such as income and health. However, self-regulation is not a school subject, and knowledge about how to generate lasting improvements in self-regulation and academic achievements with easily scalable, low-cost interventions is still limited. Here we report the results of a randomized controlled field study that integrates a short self-regulation teaching unit based on the concept of mental contrasting with implementation intentions into the school curriculum of first graders. We demonstrate that the treatment increases children's skills in terms of impulse control and self-regulation while also generating lasting improvements in academic skills such as reading and monitoring careless mistakes. Moreover, it has a substantial effect on children's long-term school career by increasing the likelihood of enrolling in an advanced secondary school track three years later. Thus, self-regulation teaching can be integrated into the regular school curriculum at low cost, is easily scalable, and can substantially improve important abilities and children's educational career path. |
| Date: | 2022–10–13 |
| URL: | http://d.repec.org/n?u=RePEc:jgu:wpaper:2210&r=reg |
| By: | Taylor, Charles A.; Druckenmiller, Hannah (Resources for the Future) |
| Abstract: | In 2020 the EPA narrowed the definition of ‘Waters of the United States’, significantly limiting wetland protection under the Clean Water Act. Current policy debates center on the uncertainty around wetland benefits. We estimate the value of wetlands for flood mitigation across the US using detailed flood claims and land use data. We find the average hectare of wetland lost between 2001 and 2016 cost society $1, 840 annually, and over $8, 000 in developed areas. We document significant spatial heterogeneity in wetland benefits, with implications for flood insurance policy and the 50% of ‘isolated’ wetlands at risk of losing federal protection.Click "Download" above to read the full paper. |
| Date: | 2021–08–23 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-21-26&r=reg |