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on Regulation |
| By: | Littlechild, S. |
| Abstract: | Economists acknowledge the problems of regulated transmission but take different views about the likely efficiency of merchant transmission. This paper examines the evidence on alleged market failure and regulatory failure as experienced in practice in Australia and Argentina. In these examples, merchant transmission (broadly defined to include private initiatives) has generally not exhibited the standard examples of market failure but regulated transmission generally has exhibited the standard examples of regulatory failure. Imperfect information – more specifically, in the form of lack of coordination – has often been a challenge whatever the approach. Policy should therefore seek to improve the regulatory framework and to remove barriers to merchant transmission and private initiatives. An important role for regulation is to facilitate coordination between potential providers and users of transmission lines. |
| JEL: | L33 L51 L94 |
| Date: | 2011–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1160&r=reg |
| By: | Pedro Gete and Paolo Porchia (Department of Economics, Georgetown University) |
| Abstract: | We study the optimal hiring and firing decisions of a firm under two different firing costs regulations: 1) Dual labor markets characterized by high firing costs for workers workers". 2) The Single Labor Contract, a policy proposal to make firing costs increasing in seniority at the job. We focus on the option value implied by the regulations and obtain some new results: the optimal firing rule is a constant function of worker’s productivity only for permanent workers. For temporary workers it varies with seniority at the job because the firm tries to keep alive the option to fire at low cost. In the Dual regulation the workers more likely to be fired are those close to become permanent. On the contrary, the Single Contract transfers that maximum firing to the new hires. Thus, fired workers are fired sooner under the Single Contract. However, if both regulations have the same average firing cost for workers who become permanent, temporary workers are less likely to be fired in the Single Contract. Moreover, this new regulation increases hiring and average employment duration. It also reduces turnover among temporary workers, but at the expense of higher turnover among permanent workers who are more often replaced by temporary workers. |
| Date: | 2011–01–02 |
| URL: | http://d.repec.org/n?u=RePEc:geo:guwopa:gueconwpa~11-11-02&r=reg |
| By: | Christin, Clémence; Nicolai, Jean-Philippe; Pouyet, Jerome |
| Abstract: | The issue of how to allocate pollution permits is critical for the political sustainability of any cap-and-trade system. Under the objective of offsetting firms' losses resulting from the environmental regulation, we argue that the criteria for allocating free allowances must account for the type of abatement technology: industries that use process integrated technologies should receive some free allowances, whereas those using end-of-pipe abatement should not. In the long run, we analyze the interaction between the environmental policy and the evolution of the market structure. In particular, a reserve of pollution permits for new entrants may be justified when the industry uses a process integrated abatement technology. -- |
| Keywords: | Cap-and-trade system,profit-neutral allocations,abatement technologies |
| JEL: | L13 Q53 Q58 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:34&r=reg |
| By: | Van Der Marel, Erik; Shepherd, Ben |
| Abstract: | Regulatory measures constitute a significant barrier to cross-border services trade in sectors including transport, communications, business services, insurance, and recreation. However, regulation has weaker effects on trade in financial services, distribution, and construction. Entry barriers and conduct regulations have heterogeneous effects across sectors, as do particular measures such as licensing requirements, economic needs tests, restrictions on business form, and limitations on advertising. In addition, regional trade agreements (RTAs) are trade creating in communications, finance, and distribution, but have only weak effects in other sectors. Contrary to findings for goods markets, trade diversion is relatively limited for services RTAs. |
| Keywords: | Trade in services; Non-tariff measures; Regional integration |
| JEL: | F15 F13 |
| Date: | 2011–09–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:34343&r=reg |
| By: | Nicholas Economides (Stern School of Business, New York University); David Henriques (Nova School of Business and Economics) |
| Abstract: | In Electronic Payment Networks (EPNs) the No-Surcharge Rule (NSR) requires that merchants charge the same final good price regardless of the means of payment chosen by the customer. In this paper, we analyze a three-party model (consumers, merchants, and proprietary EPNs) to assess the impact of a NSR on the electronic payments system, in particular, on competition among EPNs, network pricing to merchants and consumers, EPNs’ profits, and social welfare. We show that imposing a NSR has a number of effects. First, it softens competition among EPNs and rebalances the fee structure in favor of cardholders and to the detriment of merchants. Second, we show that the NSR is a profitable strategy for EPNs if and only if the network effect from merchants to cardholders is sufficiently weak. Third, the NSR is socially (un)desirable if the network externalities from merchants to cardholders are sufficiently weak (strong) and the merchants’ market power in the goods market is sufficiently high (low). Our policy advice is that regulators should decide on whether the NSR is appropriate on a market-by-market basis instead of imposing a uniform regulation for all markets. |
| Keywords: | Electronic Payment System, Market Power, Network Externalities, No-Surcharge Rule, Regulation, Two-sided Markets, MasterCard, Visa, American Express, Discover. |
| JEL: | L13 L42 L80 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1103&r=reg |
| By: | Daveri, F.; Lecat, R.; Parisi , M L. |
| Abstract: | We use firm-level data for France and Italy to explore the impact of service regulation reform implemented in the two countries on the mark-up and eventually on the performance of firms between the second half of the 1990s and 2007. In line with some previous studies, we find that the relation between entry barriers and productivity is negative. This relation is intermediated through the firm’s mark up and is stronger in the long than in the short run. |
| Keywords: | regulation, services, performance, TFP. |
| JEL: | D24 K20 L51 O40 O57 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:346&r=reg |
| By: | Viju, Crina; Yeung, May T.; Kerr, William A. |
| Abstract: | Trade in genetically modified (GM) products remains a major issue in agricultural trade policy. In particular, the European Union has sought to deny market access to GM-products. In the wake of a WTO case brought by Canada and the US, among others, against an import ban imposed on genetically modified agricultural products by the European Union (EU) â which the EU lost â the import ban was dropped and the EU put in place a new regulatory regime for GM-products. The EU suggests that the post-moratorium regulatory regime is compliant with its WTO obligations. As of June 2011, the operation of this new import regime has not been formally assessed. The first GM-crops are just now working their way through the post-moratorium regulatory system and an assessment of the operation of the regime is timely. The results of this assessment suggest that the EUâs approval system is only partially based in science and thus is not in conformity with its SPS obligations under the WTO. Hence, the new EU regulatory regime could be challenged through a WTO Disputes panel. |
| Keywords: | EU regulatory regime, Genetically Modified (GM) products, Science, SPS, Agribusiness, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, International Relations/Trade, |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:catpcp:116848&r=reg |
| By: | Sjaak Hurkens (Institute for Economic Analysis (CSIC)); Ángel Luis López (Public-Private Sector Research Center, IESE Business School, University of Navarra) |
| Abstract: | We examine the effects of mobile termination rate regulation in asymmetric oligopolies. We do this by extending existing models of asymmetric duopoly and symmetric oligopoly where consumer expectations about market shares are passive. We ?first calibrate product differentiation parameters using detailed data from the Spanish market from 2010. Next, we predict equilibrium outcomes and welfare effects under alternative scenarios of future termination rates. Lowering termination rates typically lowers pro?fits of all networks and improves consumer and total surplus. |
| Keywords: | Mobile Termination Rates, Network Effects, Simulations, Telecommunications, Welfare |
| JEL: | D43 K23 L51 L96 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1109&r=reg |
| By: | Matthew J. Kotchen; Kevin J. Boyle; Anthony A. Leiserowitz |
| Abstract: | This paper provides the first willingness-to-pay (WTP) estimates in support of a national climate-change policy that are comparable with the costs of actual legislative efforts in the U.S. Congress. Based on a survey of 2,034 American adults, we find that households are, on average, willing to pay between $79 and $89 per year in support of reducing domestic greenhouse-gas (GHG) emissions 17 percent by 2020. Even very conservative estimates yield an average WTP at or above $60 per year. Taking advantage of randomized treatments within the survey valuation question, we find that mean WTP does not vary substantially among the policy instruments of a cap-and-trade program, a carbon tax, or a GHG regulation. But there are differences in the sociodemographic characteristics of those willing to pay across policy instruments. Greater education always increases WTP. Older individuals have a lower WTP for a carbon tax and a GHG regulation, while greater household income increases WTP for these same two policy instruments. Republicans, along with those indicating no political party affiliation, have a significantly lower WTP regardless of the policy instrument. But many of these differences are no longer evident after controlling for respondent opinions about whether global warming is actually happening. |
| JEL: | Q4 Q48 Q5 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17539&r=reg |
| By: | Nicolas Véron |
| Abstract: | Credit rating agencies have been under the spotlight since the beginning of the current financial crisis. They failed in their assessment of US residential mortgage- based securities in the mid-2000s. Nevertheless, investors generally consider credit ratings useful to help form their views on credit risks. The global market for credit ratings is very concentrated, ostensibly as a consequence of high natural barriers to entry. All three leading rating agencies have headquarter functions in the US, but there is no compelling evidence that this has created an analytical bias. Tighter regulation of rating agencies can be envisaged but is unlikely to have a material positive effect on ratings quality. Better standardised public disclosures on risk factors by issuers are the most promising avenue for future improvements in credit risk assessments. This Policy Contribution is based on a briefing note for the Polish Presidency of the Council of the European Union. |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:bre:polcon:628&r=reg |
| By: | Tsunehiro Otsuki (Osaka School of International Public Policy, Osaka University) |
| Abstract: | This paper assesses the performance and progress of the ASEAN economies in trade facilitation, and the effect of improved trade facilitation on the regionfs manufacturing trade with a focus on port efficiency, customs environment, regulatory environment and service sector infrastructure. Under a scenario of raising the below-average countries halfway to the global average, ASEANfs trade is estimated to increase by $99 billion, three-quarters of which comes from the regionfs own improvements. Also, regulatory reforms, for example, enhancing transparency of trade-related regulations and ensuring law-abiding operations of the regulatory authorities, are found to be most effective. |
| Keywords: | regional integration, trade facilitation, gravity model |
| JEL: | F15 H54 L51 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:osp:wpaper:11e006&r=reg |
| By: | Martin Grossmann (Institute for Strategy and Business Economics, University of Zurich); Markus Lang (Institute for Strategy and Business Economics, University of Zurich); Helmut Dietl (Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | Bonus taxes have been implemented to prevent managers from excessive risk-taking. This paper analyzes the effects of taxing executives' bonuses in a principal-agent model. Our model shows that unintentionally the introduction of a bonus tax intensifies the manager's risk-taking behavior and decreases the manager's effort. The principal responds to a bonus tax by offering the manager a higher fixed salary but a lower incentive-based salary. |
| Keywords: | Principal-agent model, bonus tax, risk-taking, executive compensation, financial regulation |
| JEL: | H24 J30 M52 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:iso:wpaper:0150&r=reg |
| By: | Hans Pitlik (WIFO); Margit Schratzenstaller (WIFO) |
| Abstract: | The relationship between government size and growth has received an enormous attention in the economics literature, and the recent financial crisis has forced this topic back on the agenda. A highly controversial debate in this respect is whether large governments are harmful for growth. Endogenous growth theory provides us with the view that tax structure and the composition of public expenditure may be important for growth, perhaps even more than total tax or expenditure levels. Government size and structure are, however, also reflected in the level and structure of market regulations, which may substitute or complement fiscal intervention. The study provides an overview of the growth-friendliness of fiscal and regulatory structures in a cross-section of EU 15 and EU 12 countries and highly developed OECD countries. Peripheral European (transition) countries are also included, whenever respective data are available. Our analysis is based on several measures capturing the expenditure and the tax side of the budgets, as well as regulatory policies. It is shown that the size and the structure of fiscal and regulatory regimes and, hence, the expected long-run growth impact of government activities, still differ markedly across countries. |
| Date: | 2011–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2011:i:404&r=reg |
| By: | Pierluigi Bologna (Banca d'Italia) |
| Abstract: | This paper tests the role of different banks’ liquidity funding structures in explaining the bank failures that occurred in the United States between 2007 and 2009. The results highlight that funding is indeed a significant factor in explaining banks’ probability of default. By confirming the role of funding as a driver of banking crisis, the paper also recognizes that the new liquidity framework proposed by the Basel Committee on Banking Supervision appears to have the features needed to strengthen banks’ liquidity conditions and improve financial stability. Its correct implementation, together with closer supervision of banks’ liquidity and funding conditions, appear decisive, however, if such improvements are to be achieved. |
| Keywords: | banks, default, crises, liquidity, funding, brokered deposits, liquidity regulation, deposit insurance, United States |
| JEL: | G20 G21 G28 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_103_11&r=reg |
| By: | Tsunehiro Otsuki (Osaka School of International Public Policy, Osaka University) |
| Abstract: | This study estimates the response of Japanese consumersf demand for poultry meat to the food safety regulations at the border using the almost ideal demand system (AIDS) with a particular focus on the maximum residue limits (MRL) on pesticides and veterinary drugs. The AIDS model allows for differing demand response to the food safety regulations across goods from different origins as consumers tend to rearrange their consumption within a product category. The results indicate the asymmetry of the demand response to a change in MRLs and avian-influenza bans. Tightening the MRLs reduces domestic demand for poultry meat as well as demand for imports from China and the US, and increases demand for imports from Brazil. Thus, the assessment of the impact of regulatory policies needs to take consumersf flexible rearrangement of bundles into account. |
| Keywords: | Poultry meat trade, food safety regulations, the AIDS model |
| JEL: | D18 F10 Q11 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:osp:wpaper:11e007&r=reg |
| By: | Nikolaus Hautsch; Julia Schaumburg; Melanie Schienle |
| Abstract: | We propose the systemic risk beta as a measure for financial companies’ contribution to systemic risk given network interdependence between firms’ tail risk exposures. Conditional on statistically pre-identified network spillover effects and market and balance sheet information, we define the systemic risk beta as the time-varying marginal effect of a firm’s Value-at-risk (VaR) on the system’s VaR. Suitable statistical inference reveals a multitude of relevant risk spillover channels and determines companies’ systemic importance in the U.S. financial system. Our approach can be used to monitor companies’ systemic importance allowing for a transparent macroprudential regulation. |
| Keywords: | Systemic risk contribution, systemic risk network, Value at Risk, network topology, two-step quantile regression, time-varying parameters |
| JEL: | G18 G32 G38 C21 C51 C63 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2011-072&r=reg |
| By: | Andrea Teglio (Department of Economics, Universitat Jaume I (Castellón, Spain)); Marco Raberto (University of Genova (Genova, Italy)); Silvano Cincotti (University of Genova (Genova, Italy)) |
| Abstract: | Since the start of the ?nancial crisis in 2007, the debate on the proper level leverage of ?nancial institutions has been ?ourishing. The paper addresses such crucial issue within the Eurace arti?cial economy, by considering the effects that different choices of capital adequacy ratios for banks have on main economic indicators. The study also gives us the opportunity to examine the outcomes of the Eurace model so to discuss the nature of endogenous money, giving a contribution to a debate that has grown stronger over the last two decades. A set of 40 years long simulations have been performed and examined in the short (?rst 5 years), medium (the following 15 years) and long (the last 20 years) run. Results point out a non-trivial dependence of real economic variables such as the Gross Domestic Product (GDP), the unemployment rate and the aggregate capital stock on banks’ capital adequacy ratios; this dependence is in place due to the credit channel and varies signi?cantly according to the chosen evaluation horizon. In general, while boosting the economy in the short run, regulations allowing for a high leverage of the banking system tend to be depressing in the medium and long run. Results also point out that the stock of money is driven by the demand for loans, therefore supporting the theory of endogenous nature of credit money. |
| Keywords: | Agent-based models, banking regulation |
| JEL: | G2 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2011/01&r=reg |
| By: | Nakuja, T.; Akhand, M.; Hobbs, J. E.; Kerr, W. A. |
| Abstract: | The Food Safety Modernization Act (FSMA) which was signed into law in January, 2011 represents a major initiative to improve food safety in the US. The legislation mandates the US Food and Drug Administration with developing a regulatory system to implement the Act. As yet, the full effect of the Act cannot be evaluated because the regulatory requirements are yet to be developed. There is little doubt, however, that those firms, both domestic and foreign, that wish to supply US consumers with food will face a considerable increase in regulatory costs. This paper outlines the major requirements of the FSMA and suggests how the regulatory burden may fall on foreign versus US domestic suppliers. Areas where Canadian firms may be disadvantaged relative to US firms are outlined. Opportunities that may arise from the FSMA for Canadian agri-food firms are discussed, as are the areas where the FSMA may not conform with the international trade commitments of the United States. |
| Keywords: | competitiveness, food safety, regulatory burden, SPS, Agribusiness, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, International Relations/Trade, |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:ags:catpcp:116847&r=reg |
| By: | Marcelo de Oliveira Torres |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:anp:en2009:189&r=reg |