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on Regulation |
| By: | Antweiler, Werner; Muesgens, Felix |
| Abstract: | What happens to the merit order of electricity markets when all electricity is supplied by intermittent renewable energy sources coupled with large-scale electricity storage? With near-zero marginal cost of production, will there still be a role for an energy-only electricity market? We answer these questions both analytically and empirically for electricity markets in Texas and Germany. What emerges in market equilibrium is the 'new merit order'. Our work demonstrates that as long as free entry and competition ensure effective price setting, an efficient new merit order emerges in electricity markets even when the grid is completely powered by intermittent sources with near-zero marginal costs. We find that energy only markets remain viable and functional. |
| Abstract: | Was geschieht mit der Merit-Order, wenn die Stromnachfrage allein durch erneuerbare Energiequellen und große Stromspeicher gedeckt wird? Wenn die Grenzkosten der Erzeugung nahezu null sind, kann dann das bisherige Strommarktdesign des Energy-Only-Marktes noch aufrechterhalten werden? Dieser Artikel beantwortet diese Fragen sowohl analytisch als auch empirisch für die Strommärkte in Texas und Deutschland. Es zeigt sich, dass eine effiziente neue 'Merit-Order" entstehen würdet, wenn es freien Marktzugang und Wettbewerb auf den Strommärkten gibt, selbst wenn die Nachfrage vollständig von volatilen erneuerbaren Energie-Quellen mit Grenzkosten nahe Null bedient würde. Zudem zeigt sich, dass reine Energy-Only-Märkte auch weiterhin funktionieren würden. |
| Keywords: | Renewable energy, energy storage, electricity markets |
| JEL: | D47 Q41 Q42 L11 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:282991&r=reg |
| By: | Tania Babina; Saleem A. Bahaj; Greg Buchak; Filippo De Marco; Angus K. Foulis; Will Gornall; Francesco Mazzola; Tong Yu |
| Abstract: | Open banking (OB) empowers bank customers to share transaction data with fintechs and other banks. 49 countries have adopted OB policies. Consumer trust in fintechs predicts OB policy adoption and adoption spurs investment in fintechs. UK microdata shows that OB enables: i) consumers to access both financial advice and credit; ii) SMEs to establish new fintech lending relationships. In a calibrated model, OB universally improves welfare through entry and product improvements when used for advice. When used for credit, OB promotes entry and competition by reducing adverse selection, but higher prices for costlier or privacy-conscious consumers partially offset these benefits. |
| JEL: | G21 G23 G24 G28 G5 G50 K21 L10 L51 O31 O36 O38 O50 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32089&r=reg |
| By: | David Rios; Alex Perez; Jaime Carabali; Luis Meneses |
| Abstract: | Estudiamos el efecto de los eventos climáticos adversos sobre los precios minoristas de la electricidad. Nos enfocamos en el caso colombiano dado que este mercado se encuentra hidro-dominado y expuesto al fenómeno de El Niño, el cual provoca una reducción notable del componente hidrológico de la generación de electricidad. Diseñamos un modelo estructural para entender la formación de los precios minoristas. Posteriormente, utilizamos el modelo para estudiar cómo responden los precios a eventos climáticos severos. Los resultados muestran que, cuando no hay presencia de El Niño, las firmas minoristas tienden a traspasar de forma más que completa los choques de costos a los precios. Por otro lado, no encontramos evidencia de que el traspaso difiera cuando hay presencia de El Niño. Esto implica que el efecto de El Niño sobre los precios minoristas corre a través de su efecto sobre los costos mayoristas, exclusivamente. Encontramos evidencia de que los precios minoristas incrementan en presencia de El Niño, debido al incremento de los precios spot en el mercado mayorista de electricidad. **** Abstract We study the effect of adverse weather events on retail electricity prices. We focus on the Colombian case given that this market is hydro-dominated and exposed to the El Niño phenomenon, which causes a notable reduction in the hydrological component of electricity generation. We design a structural model to understand the formation of retail prices. We then use the model to study how prices respond to severe weather events. The results show that, under normal conditions, retail firms have control over the pass-through of wholesale cost shocks to retail prices. However, we do not find evidence that the pass-through differs when El Niño is present. This implies that El Niño’s effect on retail prices runs through its effect on wholesale costs exclusively. We find evidence that retail prices increase in the presence of El Niño, due to the increase in spot prices in the wholesale electricity market. |
| Keywords: | Mercados de electricidad, Precios minoristas, Precios mayoristas, Fenómeno de El Niño, Electricity markets, Retail prices, Wholesale prices, El Niño phenomenon |
| JEL: | D43 Q49 L11 L12 L94 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:bdr:borrec:1266&r=reg |
| By: | Celene Ancalle (Central Reserve Bank of Peru); Maria Gracia Garcia (Central Reserve Bank of Peru) |
| Abstract: | Interoperability is the characteristic of a payment service (e.g. digital wallets) to allow its users to pay any person or company, regardless of the financial institution providing services to the payer or payee. On October 7, 2022, the Central Reserve Bank of Peru (BCRP) issued the Payment Services Interoperability Regulation to massify digital payments in the country. The main objective of this research is to study the impact of interoperability, promoted through regulation, on the use of digital payments. We analyzed transactional data provided daily by market participants in the interoperability regulation, and data obtained from digital wallet users through a survey. The results suggest that interoperability has contributed to increase the use of digital payments, but there are other factors such as fees, user experience and quality of service that can impact the adoption and use of interoperable payment services. Furthermore, our analysis shows that interoperability benefited more individuals in regions with a higher degree of financial inclusion, i.e. financial inclusion is key to benefiting from interoperability. These results serve as a basis for validating, adjusting, and reorienting the future regulatory strategies of the BCRP, aimed at fostering greater adoption and use of digital payments; as well as to guide other payment authorities seeking to implement effective digital payments regulations, drawing lessons from the Peruvian experience. |
| Keywords: | Interoperability; regulation; digital payments; financial inclusion; Peru |
| JEL: | E42 E58 E61 E65 G28 |
| Date: | 2024–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:gii:giihei:heidwp02-2024&r=reg |
| By: | Schilling, Linda |
| Abstract: | Policy makers have developed different forms of policy intervention for stopping, or preventing runs on financial firms. This paper provides a general framework to characterize the types of policy intervention that indeed lower the run-propensity of investors versus those that cause adverse investor behavior, which increases the run-propensity. I employ a general global game to analyze and compare a large set of regulatory policies. I show that common policies such as Emergency Liquidity Assistance, and redemption (withdrawal) fees either exhibit features that lower firm stability ex ante, or have offsetting features rendering the policy ineffective. |
| Keywords: | financial regulation, bank runs, global games, policy effectiveness, bank resolution, withdrawal fees, emergency liquidity assistance, lender of last resort policies, money market mutual fund gates, suspension of convertibility |
| JEL: | D81 D82 G21 G28 G33 G38 |
| Date: | 2024–02–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120041&r=reg |
| By: | Joshua S. Gans |
| Abstract: | New generative artificial intelligence (AI) models, including large language models and image generators, have created new challenges for copyright policy as such models may be trained on data that includes copy-protected content. This paper examines this issue from an economics perspective and analyses how different copyright regimes for generative AI will impact the quality of content generated as well as the quality of AI training. A key factor is whether generative AI models are small (with content providers capable of negotiations with AI providers) or large (where negotiations are prohibitive). For small AI models, it is found that giving original content providers copyright protection leads to superior social welfare outcomes compared to having no copyright protection. For large AI models, this comparison is ambiguous and depends on the level of potential harm to original content providers and the importance of content for AI training quality. However, it is demonstrated that an ex-post `fair use' type mechanism can lead to higher expected social welfare than traditional copyright regimes. |
| JEL: | K20 O34 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32106&r=reg |
| By: | Di Corato, Luca; Moretto, Michele |
| Abstract: | We consider a long-term contractual relationship in which a buyer procures a fixed quantity of a product from a supplier and then sells it on the market. The production cost is private information and evolves randomly over time. The solution to this dynamic principal-agent problem involves a periodic two-part payment. The fixed part of the payment depends on the initial supplier’s cost type while the other is contingent on the current cost type. A notable feature is that, by using the information about the initial cost type, the buyer can reduce the burden of information rents paid for the revelation of the future cost type. We show that the distortion, resulting from information asymmetry, remains constant over time and decreases with the initial type. Lastly, we show that our analysis immediately applies also when input prices are private information and evolve randomly over time. |
| Keywords: | Demand and Price Analysis, Industrial Organization, Productivity Analysis |
| Date: | 2024–02–23 |
| URL: | http://d.repec.org/n?u=RePEc:ags:feemwp:340040&r=reg |
| By: | Fabrizio Colella (USI University); Keith Maskus (University of Colorado at Boulder); Alessandro Peri (University of Colorado at Boulder) |
| Abstract: | Tighter money-laundering regulations in offshore financial havens may inadvertently spur incentives to launder money domestically. Our study exploits regulations targeting financially based money laundering in Caribbean jurisdictions to uncover the creation of front companies in the United States. We find that counties exposed via offshore financial links to these jurisdictions experienced an increase in business activities after the tightening of anti-money-laundering regulations. The effect is more pronounced among small firms, in sectors at high risk of money laundering, and in regions with high intensities of drug trafficking. Our work provides the first empirical evidence of the real effects of policy-induced money-laundering leakage. |
| Keywords: | Money laundering, money-laundering leakage, business establishments, offshore leaks, regulatory reforms, monopolistic competition |
| JEL: | F30 K40 G28 H00 D58 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:2403&r=reg |
| By: | Itai Arieli; Yakov Babichenko; Omer Madmon; Moshe Tennenholtz |
| Abstract: | We consider a model of third-degree price discrimination, in which the seller has a valuation for the product which is unknown to the market designer, who aims to maximize the buyers' surplus by revealing information regarding the buyer's valuation to the seller. Our main result shows that the regret is bounded by $U^*(0)/e$, where $U^*(0)$ is the optimal buyer surplus in the case where the seller has zero valuation for the product. This bound is attained by randomly drawing a seller valuation and applying the segmentation of Bergemann et al. (2015) with respect to the drawn valuation. We show that the $U^*(0)/e$ bound is tight in the case of binary buyer valuation. |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2401.16942&r=reg |
| By: | María Victoria Gasca (G2Elab-SYREL - G2Elab-SYstèmes et Réseaux ELectriques - G2ELab - Laboratoire de Génie Electrique de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes); Rémy Rigo-Mariani (G2Elab-SYREL - G2Elab-SYstèmes et Réseaux ELectriques - G2ELab - Laboratoire de Génie Electrique de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes, G2ELab - Laboratoire de Génie Electrique de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes); Vincent Debusschere (G2ELab - Laboratoire de Génie Electrique de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes, G2Elab-SYREL - G2Elab-SYstèmes et Réseaux ELectriques - G2ELab - Laboratoire de Génie Electrique de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes); Yousra Sidqi (Lucerne University of Applied Sciences and Arts [Luzern]); Cédric Clastres (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes) |
| Abstract: | This paper aims to give an insight on the motivation of end-users within an energy community to encourage other users to join by sponsoring them. The proposed community organization is divided in two stages: first one for energy management and second one for costs allocation in an energy community (i.e. the way the overall bill is distributed among the members). In particular, two billing allocation approaches are proposed and account for end-user's preferences and their willingness to pay. Those strategies are based on an approach designed to set individual tariffs while preserving the properties of traditional allocation methods. This work gives perspective on different end-user's preferences and facilitates the understanding of energy communities farther than merely financial enterprises. |
| Keywords: | Energy communities, Willingness to pay, Cost allocation, Energy management strategy |
| Date: | 2023–10–23 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04431478&r=reg |
| By: | Martínez (Dir.), Astrid (FEDESARROLLO); Mosquera Daza (Inv.), Santiago (FEDESARROLLO) |
| Abstract: | El análisis explora la Resolución CREG 704 002 de la Comisión de Regulación de Energía y Gas concerniente a la distribución mayorista de combustibles líquidos, la cual establece los precios de combustibles líquidos, a saber: la gasolina, el diésel y los biocombustibles. Adicionalmente, busca establecer los regímenes de control aplicables a los márgenes de distribución con base en la dinámica del mercado, sustentada en el artículo 60 de la Ley 81 de 1988, la cual dispone de tres regímenes de control de precios. A pesar de hacer referencia a regulaciones y metodologías anteriores como la CREG 174 de 2016 y la Resolución MME 40193 de 2021, la ausencia de un estudio de competencia de mercado que lo respalde podría generar resultados no deseados en el comportamiento del mercado debido a los márgenes impuestos. Particularmente, cuando existe competencia entre agentes. De este modo, este documento inicial comienza como una consultoría, cuyo objetivo es analizar los mercados mayoristas de distribución de combustible para recomendar los regímenes de regulación de precios vigentes. Consta de una introducción, una descripción general contextual y una sección de análisis de la competencia económica subdividida en seis partes, que exploran las metodologías de mercado, el sistema de índices de Linda, la solidez, la competencia no estática, la promoción y las conclusiones. |
| Keywords: | Régimen de Regulación de Precios; Mercados Relevantes; Combustibles Líquidos; Mercados de Distribución Mayorista; Price Regulatory Regime; Relevant Markets; Liquid Fuels; Wholesale Distribution Markets |
| JEL: | L71 |
| Date: | 2023–06–28 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:021025&r=reg |
| By: | Christian von Hirschhausen; Lukas Barner; Franziska Holz; Claudia Kemfert; Niels Kunz; Fabian Präger; Björn Steigerwald |
| Abstract: | Zwei Jahre nach Beginn des russischen Angriffskriegs auf die Ukraine haben sich die Erdgasmärkte in Deutschland stabilisiert. Trotz der gesunkenen Importe aus Russland waren auch im Winter 2023/24 weder die Versorgung gefährdet noch die Speicher unzureichend befüllt. Eine Gasmangellage, mit der der beschleunigte Ausbau von Flüssigerdgas (LNG)-Infrastruktur seit dem Sommer 2022 gerechtfertigt wird, trat zu keinem Zeitpunkt ein. Angesichts zu erwartender rückläufiger Erdgasverbräuche in Deutschland und der Stabilisierung der Versorgung scheint es angebracht, die im LNG-Beschleunigungsgesetz (LNGG) angedachten Vorhabenstandorte auf den Prüfstand zu stellen. Dabei sollte die Bundesregierung von der Entwicklung landseitiger LNG-Terminals absehen und die schwimmenden Regasifizierungsanlagen (Floating Storage and Regasification Units - FSRU) neu bewerten. Aus Klimaschutzperspektive bleiben weiterhin Energieeffizienz und proaktives Gassparen wichtig. |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwakt:92de&r=reg |