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on Regulation |
| By: | Armstrong, Mark; Vickers, John |
| Abstract: | We study pricing by multiproduct firms in the context of unregulated monopoly, regulated monopoly and Cournot oligopoly. Using the concept of consumer surplus as a function of quantities (rather than prices), we present simple formulas for optimal prices and show that Cournot equilibrium exists and corresponds to a Ramsey optimum. We then present a tractable class of demand systems that involve a generalized form of homothetic preferences. As well as standard homothetic preferences, this class includes linear and logit demand. Within the class, profit-maximizing quantities are proportional to efficient quantities. We discuss cost-passthrough, including cases where optimal prices do not depend on other products' costs. Finally, we discuss optimal monopoly regulation when the firm has private information about its vector of marginal costs, and show that if the probability distribution over costs satisfies an independence property, then optimal regulation leaves relative price decisions to the firm. |
| Keywords: | Multiproduct pricing, homothetic preferences, Cournot oligopoly, monopoly regulation, Ramsey pricing, cost passthrough, multidimensional screening |
| JEL: | D42 D43 D82 L12 L13 L51 |
| Date: | 2016–01–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:68717&r=reg |
| By: | Connolly, Sean (Boston University); Stavins, Joanna (Federal Reserve Bank of Boston) |
| Abstract: | Today’s consumer has access to more payment instruments than consumers of just a few years ago. As the number of available payment methods increases, so does the need to understand why consumers adopt certain payment instruments, how consumers choose to pay for purchases, which consumers make certain payments, and who is most affected by changes in the payment system. Previous literature that examined the association between consumer payment behavior and consumer demographic information was based on data from a single time period. This paper contributes to the literature on this topic by reporting, for the first time, demographic trends in consumer adoption and use of several payment instruments over the period of five consecutive years from 2009 to 2013. |
| JEL: | D12 D14 |
| Date: | 2015–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbdr:15-6&r=reg |
| By: | Jan Abrell (ETH Zurich, Switzerland); Sebastian Rausch (ETH Zurich, Switzerland) |
| Abstract: | This paper develops a multi-country multi-sector general equilibrium model, integrating high-frequency electricity dispatch and trade decisions, to study the eects of electricity transmission infrastructure (TI) expansion and re- newable energy (RE) penetration in Europe for gains from trade and carbon dioxide emissions in the power sector. TI can benet or degrade environ- mental outcomes, depending on RE penetration: it complements emissions abatement by mitigating dispatch problems associated with volatile and spa- tially dispersed RE but also promotes higher average generation from low- cost coal if RE production is too low. Against the backdrop of European decarbonization and planned TI expansion, we nd that emissions increase for current and targeted year-2020 levels of RE production and decrease for year-2030 targets. Enhanced TI yields sizeable gains from trade that de- pend positively on RE penetration, without creating large adverse impacts on regional equity. |
| JEL: | F18 Q28 Q43 Q48 C68 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:16-229&r=reg |
| By: | Brown, David P. (University of Alberta, Department of Economics); Sappington, David E. M. (University of Florida) |
| Abstract: | We analyze the design of policies to promote efficient distributed generation (DG) of electricity. The optimal policy varies with the set of instruments available to the regulator and with the prevailing DG production technology. DG capacity charges often play a valuable role in inducing optimal investment in DG capacity, allowing payments for DG production to induce the optimal production of electricity using non-intermittent DG technologies. Net metering can be optimal in certain settings, but often is not optimal, especially for non-intermittent DG technologies. |
| Keywords: | electricity pricing; distributed generation; regulation |
| JEL: | L50 L94 Q40 |
| Date: | 2016–01–06 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2016_001&r=reg |
| By: | Vibhor Saxena (School of Economics and Finance, University of St Andrews); P.C. Bhattacharya (Heriot-Watt University) |
| Abstract: | Using the National Sample Survey Organisation data from the 68th round (2011–12) of 88,939 households, this paper investigates the inequalities in access to Liquid Petroleum Gas (LPG) and electricity usage by the households belonging to the three major disadvantaged groups in India, viz., the scheduled castes, the scheduled tribes, and the Muslims. The results of our analysis suggest that, after controlling for the other socio-economic factors which impinge on the households’ demand and supply characteristics, the households belonging to these disadvantaged groups do have poorer access to LPG and electricity usage as compared to the upper caste households. It is the scheduled caste and scheduled tribe households who would appear to face most discrimination in the equality spaces of the electricity usage and LPG distribution. Policy implications of the findings are considered. |
| Keywords: | Energy inequality; Cooking fuel; Electricity usage; |
| JEL: | O13 Q41 Q48 |
| Date: | 2015–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:san:wpecon:1512&r=reg |
| By: | Neuhoff, Karsten |
| Abstract: | We first discuss different rules for pricing and provision of balancing across EU member states and their implications. Some member states face significant transmission constraints inside their pricing zone(s). In principle, this can be avoided with smaller pricing zones and in some instances transmission expansion. We discuss in the second part, how in practice different strategies are pursued to accommodate internal transmission constraints within balancing mechanisms. European market integration has to date focused on enhancing day-ahead trading. We discuss in a third part the experience, benefits and perspectives for better integrating balancing mechanisms across EU member states before we conclude. |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esrepo:125565&r=reg |
| By: | David Comerford (Division of Economics, University of Stirling); Ian Lange (Division of Economics and Business, Colorado School of Mines); Mirko Moro (Division of Economics, University of Stirling) |
| Abstract: | We build on research documenting demand-side consequences of energy-efficiency labels for buildings by testing for a supply-side response. We exploit a natural experiment to test whether the introduction of mandatory energy labels for residential homes influenced investment in home energy efficiency. From 2008, vendors and lettors in the UK were required to publish a property's energy performance certificate (EPC). The EPC evaluates home energy efficiency overlaying a color-coded letter grade (from a green A to red G, respectively) on a pre-existent 0-100 point scale, the Standard Assessment Procedure (SAP) score. We hypothesize that the salient color letter grades will serve as targets when home owners are deciding the scale of investment to make in home energy efficiency. Consistent with this hypothesis, we find fewer homes just below, and more homes just above, the D grade threshold in the treatment years relative to the control years. This clustering is higher for homes that were traded after the EPC requirement was in effect. We conclude that there is a supply-side response to energy-efficiency labels. |
| Keywords: | energy efficiency, bunching, labels, thresholds |
| JEL: | Q48 L15 Q58 H23 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:mns:wpaper:wp201601&r=reg |
| By: | Massimo Filippini (ETH Zurich, Switzerland); Bettina Hirl (Institute of Economics, Università della Svizzera italiana); Giuliano Masiero (Institute of Economics, Università della Svizzera italiana) |
| Abstract: | Dynamic partial adjustment models of residential electricity demand account for the fact that households may not adjust electricity consumption immediately in response to changes in prices, income, and other relevant factors, because of behavioral habits or adjustment costs for the capital stock of appliances. However, forward-looking behavior is generally neglected. Expectations about future prices or consumption may have an impact on current decisions. In this paper we propose rational habit models for residential electricity demand and apply them to a panel of 48 US states between 1995 and 2011. We estimate lead consumption models using fixed effects, instrumental variables, and the GMM Blundell-Bond estimator. We find that expectations about future consumption significantly influence current consumption decisions, which suggests that households behave rationally when making electricity consumption decisions. This novel approach may improve our understanding of the dynamics of residential electricity demand and the evaluation of the effects of energy policies. |
| Keywords: | Residential electricity, Partial adjustment models, Dynamic panel data models, Rational habits |
| JEL: | D12 D84 D99 Q41 Q47 Q50 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:16-228&r=reg |
| By: | Steven J. Davis |
| Abstract: | The U.S. regulatory system has grown increasingly expansive, intrusive and complex in recent decades, its tax system has become ridiculously complicated, and its economic policies have become less predictable. I present several pieces of evidence related to these developments and discuss some of their costs. I then sketch some ideas to arrest or reverse these developments. In this regard, I stress the importance of simplicity in regulatory design, the advantages of policy designs that foster predictable regulatory responses, and the need for new institutions to restrain ineffective, excessively burdensome and capricious regulations. |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:hoo:wpaper:15118&r=reg |
| By: | Estelle Cantillon |
| Date: | 2014–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/223776&r=reg |