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on Regulation |
| By: | Sandeep Kapur (Department of Economics, Mathematics & Statistics, Birkbeck); Anthony Heyes (Royal Holloway, University of London) |
| Abstract: | The extent to which environmental regulatory institutions are either 'green' or 'brown' impacts not just the intensity of regulation at any moment, but also the incentives for the development of new pollution-control technologies. We set up a strategic model of R&D in which a polluter can deploy technologies developed in-house, or license technologies developed by specialist outsiders. Polluters exert R&D effort and may even develop redundant technologies to improve the terms on which they procure technology from outside. We find that, while regulatory bias has an ambiguous impact on the best-available technology, strategic delegation to systematically biased regulators can improve social welfare. |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:bbk:bbkefp:1016&r=reg |
| By: | Ivaldi, Marc (Toulouse School of Economics); Pouyet, Jérôme (Paris School of Economics) |
| Abstract: | Based on the modern theory of regulation, the analysis aims to characterize the effective economic regulation of the French railway industry. The methodology consists in econometrically testing various scenarios of regulation and determining which of these best fits the data. Using aggregate data on the overall passenger traffic for the incumbent French rail operator (RO), SNCF, the two behavioral hypotheses of reference which we consider –absence of regulation of the rail operator which acts as a pure monopoly, and price regulation of services supplied by the RO– are both statistically significant and do not subtract from each other. This result is certainly related to the fact that passenger services include both high speed train services, for which the RO has some entrepreneurial freedom, and regional transport services, which are regulated by local authorities. In any case however, as the presence of unobservable efforts exerted by the RO to improve its productivity is statistically relevant, one concludes that the RO is not fully and properly regulated. This emphasizes that the design of policy reforms must account for the incentives they create on the RO. The analysis also shows that the most statistically significant scenarios are the ones in which the access tariff imposed by the infrastructure manager is such that the revenue generated by the access tariff is equal to the infrastructure spending. The pricing of the access to the infrastructure network therefore does not seem to be governed by economic principles, but more by budget considerations. While data limitations does neither allow to understand all the facets of a complex reality, nor to claim a high level of precision in the measure of all the parameters of interest, we believe however that we provide an objective methodology to characterize the optimal economic policies for the railway sector, in particular because it yields realistic estimates of the main structural parameters. Indeed the empirical results suggest that the railway industry as a whole exhibits increasing returns to scale, which incidentally is not compatible with the presence of multiple firms. In addition, the elasticity of demand for railway transport is relatively high, an indication of the competitive constraints this mode of transport faces from other transport modes or induced traffic. |
| Keywords: | Regulation, Asymmetric information, Railroad industry |
| JEL: | L51 L92 |
| Date: | 2010–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:23730&r=reg |
| By: | Karanfil, Fatih (Galatasaray University Economic Research Center) |
| Abstract: | Unrecorded economic activities have an important weight, especially in developing countries where environmental regulations are gradually pursued. Both theoretical and empirical studies on the subject which do not take into account the existence of unrecorded economy may not provide a complete insight on the effects of both fiscal and environmental enforcement policies. After a brief review of the relevant literature, this paper develops an economic model to analyze the potential impacts of environmental regulatory policies on the size of unrecorded economy. Two dierent cases are considered: first, firms' emissions and productions are audited with exogenous probabilities which may be different from each other; second, a unique probability-to-audit function is determined to audit both emissions and productions of firms whether in recorded or unrecorded economy. The form of this function is specied using the cointegration technique. The results in this paper essentially show that environmental regulations may increase the size of unrecorded economy. The paper also attempts to give a precise limit value for the environmental tax rate exceeding which may induce a rise in the extent of unrecorded activities. |
| Keywords: | Environmental taxation; Unrecorded economy; Duopolistic competition |
| JEL: | D43 H32 Q58 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ris:giamwp:2010_002&r=reg |
| By: | Gabriele Galati; Richhild Moessner |
| Abstract: | The recent financial crisis has highlighted the need to go beyond a purely micro approach to financial regulation and supervision. In recent months, the number of policy speeches, research papers and conferences that discuss a macro perspective on financial regulation has grown considerably. The policy debate is focusing in particular on macroprudential tools and their usage, their relationship with monetary policy, their implementation and their effectiveness. Macroprudential policy has recently also attracted considerable attention among researchers. This paper provides an overview of research on this topic. We also identify important future research questions that emerge from both the literature and the current policy debate. |
| Keywords: | Macroprudential policy |
| JEL: | E58 G28 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:267&r=reg |
| By: | Muravyev, Alexander (IZA) |
| Abstract: | This paper presents and discusses new data on employment protection legislation (EPL) in the successor states of the former USSR – the CIS and Baltic states – over 25 years from 1985 to 2009. We use the OECD methodology (OECD EPL, version II) for assessing the strictness of national labor laws with respect to employers’ firing costs. In addition to the overall OECD EPL index, we present detailed statistics for 18(22) sub-indicators used for its computation. The new data allow us to make several important observations. In particular, the data do not support the widely held view that labor regulations in the former USSR with respect to firing costs were extremely rigid and were subsequently liberalized by the 15 successor states over the course of transition to a market economy. Rather, the dynamics of the EPL index in the region resembles an inverted U-shaped pattern with the peak of labor market rigidity occurring in the mid-1990s in the CIS countries and a decade later in the Baltic States. In terms of major sub-indicators, we observe a rather unusual pattern: gradual liberalization of permanent contracts on the background of increasing regulation of temporary contracts and collective dismissals. This is in sharp contrast with the OECD economies, where liberalization of temporary contracts has been the major trend in the recent decades. By now, the ex-USSR states as a group do not differ that much from the EU-15 and OECD countries in terms of the overall EPL index, although they differ considerably in terms of contributions to the overall EPL of its thee major components, namely, regulation of permanent contracts, temporary contracts, and collective dismissals. We also show that our EPL data are correlated with a number of variables characterizing economic development, progress in market-oriented reforms, and political regimes prevailing in the countries studied, which suggests potential of using the new dataset in further politico-economic research. |
| Keywords: | labor market institutions, employment protection, transition countries |
| JEL: | J68 K31 P20 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5365&r=reg |
| By: | Gilbert E. Metcalf |
| Abstract: | The United States requires a substantial investment in transmission capacity over the next several decades. This investment is needed to ensure system reliability, to accommodate growth in demand for electricity, and to allow the integration of significant amounts of renewable generating capacity. In this paper I survey the need for new transmission capacity and consider the financial and regulatory obstacles that stand in the way of this new investment. This paper makes three points. First, the historical pace of transmission investments will not be adequate to enhance grid reliability or to allow largescale penetration of renewable generating capacity. Second, the replacement of a vertically integrated electric utility industry in many parts of the country by a more disaggregated one composed of merchant generators has added to the challenge of transmission planning and investment. Third, the focus on federal funding for grid improvements is misplaced. There is no evidence that the private sector is incapable of raising the funds needed for critical investment, provided a rationalized regulatory structure is put into place. Making changes to our regulatory and political systems that facilitate transmission investment and siting will not be easy. But the costs of underinvesting in an improved and enlarged national transmission grid are high. Moving to a largely carbon-free economy by the middle of the century will require a transformation of the power system in this country, one that cannot be successful without a strong interstate high-voltage transmission backbone. |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:mee:wpaper:1015&r=reg |