|
on Regulation |
| By: | Johan F.M.Swinnen; Thijs Vandemoortele; |
| Abstract: | There are major differences in regulation among various countries. A particular case is the difference between the EU and US in regulating biotechnology.We develop a formal and dynamic model of government decision-making on regulation. We show that minor differences in consumer preferences can lead to important and persistent regulatory differences, and that temporary shocks to preferences can have long-lasting effects. This hysteresis in regulatory differences is shown to be caused by producer protectionist motives. We argue that this model may contribute to explain the difference between EU and US biotechnology regulation. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:27611&r=reg |
| By: | Gil, Ricard (IESE Business School) |
| Abstract: | This paper empirically examines whether regulation decreases market competition. For this purpose, I use data from Spanish local TV stations for 1996, 1999 and 2002. During this period of time, this industry transitioned from a state of alegality (no regulation in place whatsoever), to being highly regulated and finally to being liberalized. I estimate station population entry thresholds by number of entrants across years to proxy by the nature of competition by determining the necessary market size to sustain an extra station. I find that stations soften competition the most under no regulation and they seem to compete the hardest when highly regulated. I explain in the paper that, even though this is at odds with previous literature, this result is explained by the industry institutions, its low profitability and the nature of the first regulation and its consequent liberalization. |
| Keywords: | regulation; market; competition; TV industry; liberalization; |
| Date: | 2011–01–15 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0895&r=reg |
| By: | Jayasinghe-Mudalige, UK; Udugama, JMM; Ikram, SMM |
| Abstract: | The effect of a set of private/market (i.e. financial implications, internal efficiency, market response) and public/non-market (i.e. government regulation, judiciary/legal system) incentives for a firm to act voluntarily on environmental quality is examined. It uses the levels of adoption of five solid waste management practices [SWMPs], namely: (1) 3R system; (2) Composting; (3) Good manufacturing practices; (4) Biogas unit, and (5) ISO 14000 by food processing sector in Sri Lanka in response to the prevalence of each incentive at the firm as the case. The data collected from 325 firms through in-depth interviews and site inspections and supported by a validated structured questionnaire were analyzed using the principles of Structural Equation Modeling. The âAnalysis of Moment Structuresâ (AMOS) software was used to establish the relationships between the levels of adoption of SWMPs and the strength of each incentive. The results show that firmsâ response to environment is relatively low, i.e. 49.2% did not adopt a single practice, while only 28%, 12%, 7.4%, 3.1% and 0.3%, respectively, have adopted 1, 2, 3, 4 or all practices. Firms tend to adopt a higher number of SWMPs as the relative strength of an each incentive perceived by the decision maker of firm gets increases. Firms put a higher weight on the impact on regulation and legal system than the private incentives and the firm size has a substantial impact on its response to the environment. The results highlight the importance of bringing the current public regulatory regimes in developing countries like Sri Lanka towards co-regulation, which is practiced by developed countries like Australia and Canada to facilitate businesses to come up with own solutions for environmental and food quality, as the outcome of this analysis points out that firmsâ compliance to the recommended SWMP was not triggered satisfactorily by the private/voluntary action. |
| Keywords: | Environment management, Food processing sector in Sri Lanka, Incentives, Regulation, Solid waste management, Voluntary adoption, Farm Management, |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare11:100567&r=reg |
| By: | Mai Hassan (Faculty of Management Technology, The German University in Cairo); Christian Kalhoefer (Faculty of Management Technology, The German University in Cairo) |
| Abstract: | The importance of ratings for investors’ decisions and for the perceptions of the financial health of a nation pointed out the need that credit rating agencies should be regulated in some way. Regulators and market participants believed that the credit rating agencies need to abide by standards of corporate governance and supervision due to their pivotal role in the US subprime crisis. This belief was amplified recently because the rating agencies were deeply involved in the European debt crisis after various sovereign debt ratings were significantly downgraded. Therefore, the paper highlights the critique against the agencies’ role in the two most recent crises and reviews the regulation proposals which subject the rating agencies to behavioral standards. |
| Keywords: | Credit rating agencies, subprime, Euro crisis |
| JEL: | G15 G24 G38 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:guc:wpaper:26&r=reg |
| By: | Litan, Robert E.; Baily, Martin Neil |
| Abstract: | This paper shows why the Federal Reserve Board’s proposed alternatives for regulating interchange fees are not “reasonable” and therefore in direct violation of the statutory mandate that these rules be “reasonable” and “proportional” to the costs incurred by debit card issuers. The Board’s December 16, 2010 proposal is not “reasonable” because it would lead to a series of “unreasonable” outcomes, which, in significant part, flow from the predictable responses issuers of debit cards would take in response to the proposal. Policy makers cannot reasonably assume that banks in competitive markets will sit idly by while being forced to reduce their current market-determined debit card interchange fees, which comprise much of their debit-card revenues and a material portion of bank profits, by anywhere from 73 to 84 percent. To the contrary, banks will attempt to make up as much of the lost revenue as they can by some combination of higher fees on checking accounts, fees or reductions of benefits for debit card use, or more refusals by issuers to permit consumers to conduct higher-cost types of transactions that impose greater fraud risk. We argue that the Board should find that, in the absence of empirical evidence evaluated using the analytical framework governing two-sided markets proving otherwise, market-set interchange fees are reasonable and proportional to cost. Any other decision would lead to the unreasonable outcomes. |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:reg:wpaper:642&r=reg |
| By: | Laurino, Antonio; Grimaldi, Raffaele |
| Abstract: | In the last decade, the private sector has increased its role in the highways sector both through the construction and management of new assets. Private sector involvement, often justified by the need to ease public expenditure, allows a reduction in public participation for new investments. The public sector remains in charge of other important issues such as regulation, but privatization entails the transfer of a natural monopoly to another subject with completely different objectives compared with the public operator. The present work wants to analyse the highway privatization processes in Italy and Japan focusing on the two approaches and on their differences; the paper tries to evaluate the policies applied and their consequences on the general economic well – being according to a public economics viewpoint. Italy implemented a real privatization process (even if some regulatory issues have risen) while Japan still faces a strong public presence. |
| Keywords: | privatization; highways; natural monopoly; Italy; Japan |
| JEL: | R42 R48 L43 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:29146&r=reg |
| By: | Chiodo, Emilio; Casolani, Nicola; Fantini, Andrea |
| Abstract: | The paper analyses how different aspects connected with regulations can influence the consumersâ quality perception and the value that consumers attribute to the wine sector products. In particular, aspects concerning labelling and presentation of designations of origin, which, in turn, mirror different regulations of production methods, are considered. Consumersâ preference can allow enterprises to complying with more restrictive rules and sustain higher costs for differentiate their products and achieve higher quality. When choosing a product, consumers do not evaluate each single quality factor but the product as a whole, therefore the analysis has to be done with a methodology considering both the combination of all characteristics of the product, and the contribution of every factor to the creation of value for consumers. For this reason the value that consumers attribute to different characteristics is evaluated through an experimental economic analysis applying the method of the Conjoint analysis. |
| Keywords: | Conjoint analysis, designations of origin, wine sector regulation, consumer perception, Agricultural and Food Policy, Q 13, Q 18, |
| Date: | 2011–02–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaa122:99590&r=reg |
| By: | Frederick van der Ploeg; Cees Withagen |
| Abstract: | Optimal climate policy is studied. Coal, the abundant resource, contributes more CO2 per unit of energy than the exhaustible resource, oil. We characterize the optimal sequencing oil and coal and departures from the Herfindahl rule. "Preference reversal" can take place. If coal is very dirty compared to oil, there is no simultaneous use. Else, the optimal outcome starts with oil, before using oil and coal together, and finally coal on its own, The "laissez-faire" outcome uses coal forever or starts with oil until it is no longer profitable to do so and then switches to coal. The optimum requires a steeply rising CO2 tax during the oil-only phase and a less steeply rising CO2 tax during the subsequent oil-coal and coal-only phases to avoid the abrupt switch from oil to coal thus leaving a lot of oil in situ. Finally, we analyze the effects on the opitamal transition times and carbon tax of a carbon-free, albeit expensive backstop (solar or wind). Without a carbon tax, a prohibitive coal tax leads to less oil in situ, substantially delays introduction of renewable, and thus curbs global warming substantially. Subsidizing renewables to just below the cost of coal does not affect the oil-only phase. The gain in green welfare dominates the welfare cost of the subsidy if the subsidy gap is small and the global warming challenge is acute. |
| Keywords: | Herfindahl rule, Hotelling rule, non-renewable resource, dirty backstop, coal, global warming, carbon tax, renewables, tax on coal, subsidy on renewables |
| JEL: | Q30 Q42 Q54 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:oxcrwp:056&r=reg |
| By: | Silvia Micheli |
| Abstract: | This study explores the reasons why countries have chosen subsidies to green electricity instead of implementing the more common Pigouvian tax on polluting emissions. I focus on the learning by doing effects from the production of wind power on the cost of future production as a justification for the observed policies. In doing so, I present two models that differ in the way I introduce learning. Under reasonable parameter values, the price paid to a firm for the energy produced from wind power is heterogeneous, and varies among the firms that produce energy from wind power according to the index of productivity of the firm itself. The suggested strategies of this research differ from the main price-driven schemes adopted by EU members; by comparing such results with European Union policy, the paper show that EU policy is not optimal. |
| Keywords: | learning by doing, environmental policy, Pigouvian taxes, subsidies. |
| JEL: | H23 Q48 |
| Date: | 2010–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:pia:wpaper:81/2010&r=reg |
| By: | Burtraw, Dallas (Resources for the Future); Parry, Ian W.H. (Resources for the Future) |
| Abstract: | This paper examines alternative ways that the value of CO2 emissions allowances created under cap-and-trade policy could be returned to households. One approach (based on principles of economic efficiency) is effectively a “tax shift” that would use revenues from an auction of CO2 emissions allowances to reduce preexisting distortionary taxes. A second approach (based on principles of property rights for common-pool resources), known as cap-and-dividend, would refund allowance value as equal lump-sum cash transfers to households. Economic theory suggests (with some caveats) that a tax shift would be considerably less costly to the overall economy. In contrast, cap-and-dividend provides ample compensation for low-income households, though it appears to be more costly than other approaches, including perhaps well-designed regulatory policies. A dividend approach might be combined with other policies to provide incentives for households to invest in energy-efficient technologies and thereby lower the costs of the carbon policy. |
| Keywords: | cap-and-trade, auction tax shift, revenue recycling, tax interaction, dividends |
| JEL: | H23 Q54 Q58 |
| Date: | 2011–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-11-03&r=reg |
| By: | Pietro Biroli; Gilles Mourre; Alessandro Turrini |
| Abstract: | This paper assesses the adjustment mechanism in the euro area. Results show that the real exchange rate (REER) adjusts in such a way to redress cyclical divergences and that after monetary unification REER dynamics have become less reactive to country-specific shocks but also less persistent. It is found that regulations, notably affecting price and wage nominal flexibility and employment protection, play a role in the adjustment mechanism. Indicators of product and labour regulations appear to matter forboth the reaction of price competitiveness to cyclical divergences (differences between national and euro-area output gaps) and for the inertia of competitiveness indicators. Moreover, regulations appear to matter also for the extent to which common shocks may end up producing country-specific effects on the price competitiveness, as revealed by their interaction with proxies of unobservable common shocks along the lines of the methodology developed in Blanchard and Wolfers (2000). In light of the tendency towards less stringent regulations in past decades, the results seem consistent with the observed reduction in the persistence of inflation differentials, and has have implications for the design of adjustment-friendly product and labour market reforms. |
| JEL: | E30 F41 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:euf:ecopap:0428&r=reg |
| By: | Feil, Jan Henning; MuÃhoff, Oliver; Balmann, Alfons |
| Abstract: | In recent years, the dairy sector has been exposed to strong changes in general conditions and extreme fluctuations in milk prices. Farmers and lobbyists have therefore asked politicians for additional market regulation. In this paper an agent-based real options market model is developed, which allows the analysis of the effects of different political schemes on the willingness to invest, firm profitability and economic efficiency in the dairy sector. The model results show that political schemes generally increase the willingness to invest in competitive markets under consideration of real options effects. However, they do not offer any substantial financial benefits to the producers and can cause a significant reduction in welfare. Furthermore, the results suggest that investment subsidies are preferable to lower price limits because the welfare is less reduced under the same stimulation of the willingness to invest. |
| Keywords: | Real Options, Competition, Policy Impact Analysis, Dairy Sector, Agricultural and Food Policy, D81, Q12, Q18, |
| Date: | 2011–02–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaa122:100039&r=reg |
| By: | Gil, Ricard (IESE Business School); Riera-Crichton, Daniel (Bates College) |
| Abstract: | In this paper, we empirically test the relation between price discrimination and product market competition in a two-sided market setting using a new data set of Spanish local TV stations that provides information on subscription and advertising prices per station for 1996, 1999 and 2002. During these years, changes in regulation in this sector had a deep impact on the degree of local market competition. We use differences in market structure across markets and across years to study the relation between competition and price discrimination in this setting. Our findings suggest that stations in more competitive markets are less likely to use price discrimination. We also find evidence that stations price discriminating in a market are also more likely to price discriminate on the other market. Finally, cable subscription fees and advertising prices are higher in more competitive markets which suggests that tougher competition may increase market segmentation through station differentiation, driving stations to charge higher uniform prices to more loyal customers. This may indicate that less price discrimination may be associated with lower consumer surplus in all markets. |
| Keywords: | Price discrimination; market competition; Local TV Industry; product; subscription; advertising; |
| Date: | 2011–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0894&r=reg |
| By: | Eilev S. Jansen and Tord S. H. Krogh (Statistics Norway) |
| Abstract: | The interaction between financial markets and the macroeconomy can be strongly affected by changes in credit market regulations. In order to take account of these effects we control explicitly for regime shifts in a system of debt equations for Norway using a common, flexible trend. The estimated shape of the trend matches the qualitative development in the regulations, and we argue that it can be viewed as a measure of relative credit availability, or credit conditions, for the period 1975-2008 -- a credit conditions index (CCI). This entails years of strict credit market regulations in the 1970s, its gradual deregulation in the 1980s, followed by a full-blown banking crisis in the years around 1990 and the development thereafter up to the advent of the current financial crisis. Our study is inspired by Fernandez-Corugedo and Muellbauer (2006), which introduced the methodology and provided estimates of a CCI for the UK. The trend conditions on a priori knowledge about changes in the Norwegian regulatory system, as documented in Krogh (2010b), and it shows robustness when estimated recursively. |
| Keywords: | financial credit conditions; flexible trend; financial deregulation; household loan. |
| JEL: | E44 G21 G28 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:646&r=reg |
| By: | Parry, Ian W.H. (Resources for the Future); Williams, Roberton C. (Resources for the Future) |
| Abstract: | This paper estimates the welfare costs of the main medium-term options for significantly reducing U.S. energy-related carbon dioxide (CO2) emissions, including carbon taxes and cap-and-trade systems applied economy-wide and to the power sector only, and an emissions rate standard for power generation. The key theme is that welfare costs depend importantly on how policies interact with distortions in the economy created by the broader fiscal system. If allowance rent is not used to increase economic efficiency, economy-wide cap-and-trade systems perform the worst on cost-effectiveness grounds. In contrast, if revenues are used to substitute for distortionary income taxes (either directly, or indirectly through deficit reduction), economy-wide carbon taxes (or auctioned allowance systems) may have (slightly) negative costs. The bottom line is that revenues or rents created under economy-wide, market-based carbon policies must be used to increase economic efficiency to ensure that these instruments are more cost-effective than regulatory or sectoral approaches. |
| Keywords: | carbon tax, cap-and-trade, cost-effectiveness, distortionary taxes, revenue recycling |
| JEL: | Q48 Q58 H21 R48 |
| Date: | 2011–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-11-02&r=reg |
| By: | Gil, Ricard (IESE Business School) |
| Abstract: | This paper empirically examines the relation between product market competition and vertical integration in the Spanish local TV industry. For this reason, I use a data set of Spanish local TV stations that provides station level information on vertical integration and product market competition, as well as other station and market characteristics, for the years 1996, 1999 and 2002. During this period, changes in regulation in this industry had a strong impact on the level of market competition faced by local TV stations. I use differences in market structure across markets and years to empirically study the relation between vertical integration and competition. My results show that there exists a negative relation between vertical integration and market competition. I also find that despite the fact that private stations are less likely to integrate content production, they are more likely to do so the higher the number of competing stations in their coverage area. Private stations do so because by increasing the percentage of content produced in-house they differentiate themselves from competition and therefore soften competition and maximize profits. |
| Keywords: | market competition; local TV Industry; product; vertical integration; |
| Date: | 2011–01–11 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0893&r=reg |