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on Regulation |
| By: | Simone Ghislandi (Department of Socioeconomics, Vienna University of Economics and Business); Michael Kuhn (Wittgenstein Centre, Vienna Institute of Demography) |
| Abstract: | It is frequently argued that the high costs of clinical trials prior to the admission of new pharmaceuticals are stifling innovation. At the same time, regulation of the access to markets is often justified on the basis of consumers’ inability to detect the true quality of a product. We examine these arguments from an information economic perspective by setting a framework where the incentives to invest in R&D are influenced by the information structure prevailing when the product is launched in the market at a later stage. In this setting, by changing the information structure, regulation (or the lack of) can thus indirectly affect R&D efforts. More formally, we construct a moral hazard – cum – adverse selection model in which a pharmaceutical firm exerts an unobservable effort towards developing an innovative (high quality) drug (moral hazard) and then announces the (unobservable) quality outcome to an uninformed regulator and/or consumers (adverse selection). We compare the outcomes in regard to innovation effort and expected welfare under two regimes: (i) regulation, where products undergo a clinical trial designed to ascertain product quality at the point of market access; and (ii) laissez-faire with free entry, where the revelation of quality is left to the market process. Results show that whether or not innovation is greater in the presence of entry regulation crucially depends on the efficacy of the trial in identifying (poor) quality, on the probability that unknown qualities are revealed in the market process, and on the preference and cost structure. The welfare ranking of the two regimes depends on the differential effort incentive and on the net welfare gain from implementing full information instantaneously. For example, in settings of vertical monopoly, vertical differentiation and horizontal differentiation with no variable cost of quality, entry regulation tends to be the preferred regime if the effort incentive under pooling is relatively low and profits do not count too much towards welfare. A complementary numerical analysis shows how the outcomes vary with the market and cost structure. |
| Keywords: | adverse selection, (entry) regulation, moral hazard, pharmaceutical industry, R&D incentives |
| JEL: | D82 I18 L15 L51 O31 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp219&r=reg |
| By: | Michele Raitano; Eleonora Romano; Pietro Zoppoli |
| Abstract: | The literature on renewable energy sources (RES) does not provide a shared methodology to measure the sectorial intensity of production linked to RES. Furthermore, empirical evidence on the relationship between RES intensity of production and workers’ earnings is scant. The aim of this paper is to fill in these literature gaps providing, on the one hand, an original microdata-based methodology to measure the RES sectorial intensity of production, and, on the other hand, estimating, through panel data techniques, the relationship between RES sectorial intensity of production and earnings for a representative sample of Italian workers in the period 2002-2009. Focusing on the case of Italy in the first decade of the 21th century is very relevant given that in that period Italy promoted one of the most generous renewable support schemes worldwide. Our main findings are the following: i) the RES sectorial intensity of production in Italy largely increased in 2008-2009; ii) on average, the RES sectorial intensity of production does not affect earnings levels; iii) remarkably, a clear skill-premium effect emerges when the RES sectorial intensity of production increases. |
| Keywords: | Renewable energy sources earnings inequality, skill-biased technical change, RES support scheme, Italy |
| JEL: | Q4 J31 L11 D41 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:itt:wpaper:2016-1&r=reg |
| By: | Amigues, Jean-Pierre; Moreaux, Michel |
| Abstract: | The global economy produces energy from two sources: a polluting nonrenewable resource and a renewable resource. Transforming crude energy into ready-to-use energy services requires costly processes and more efficient energy transformation rates are more costly to achieve. Renewable energy is in competition with food production for land acreage but the food productivity rate of land can also be improved at some cost. The exploitation of non-renewable energy releases polluting emissions in the atmosphere. To avoid catastrophic climate damages, the pollution stock is mandated to stay below a given cap. In the interesting case where the economy would be constrained by the carbon cap at least temporarily, we show the following. When the economy is not constrained by the cap, the efficiency rates of energy transformation increase steadily until the transition toward the ultimate green economy; when renewable energy is exploited, its land acreage rises at the expense of food production; food productivity increases together with the land rent but food production drops; the prices of useful energy and food increase and renewables substitute for non-renewable energy. During the constrained phase, the economy follows a constant path of prices, quantities, efficiency rates, food productivity and land rent, a phenomenon we call the generalized ceiling paradox. |
| Keywords: | energy efficiency; carbon pollution; non-renewable resources; renewable resources; land use |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:30210&r=reg |
| By: | Susana Martins Moretto (IET/CICS.NOVA, Universidade Nova de Lisboa, Faculdade de Ciências e Tecnologia, Portugal and University of Tongji, Shanghai, R.P. China); António Brandão Moniz (IET/CICS.NOVA, Universidade Nova de Lisboa, Faculdade de Ciências e Tecnologia, Portugal, and ITAS, Karlsruhe Institute of Technology, Germany); Douglas Robinson (Teqnode, Paris, France) |
| Abstract: | Future Oriented Technology Analysis (FTA) has been visible in railway planning since 2001. Over a dozen reports have been produced in the past thirteen years, the majority being descriptive endogenous technocentric visions. They have played a role in the revitalization of the sector, predominantly relating to collective alignments and interdependencies in choice and form of the technological path the various stakeholders’ follow to achieve policy goals. A striking example is the case of ERRAC visions, where strategic agendas and roadmaps greatly impacted the high-speed train technology transition from the second to the third generation of vehicles. However, today’s socio-economic events have revealed the limitations of previously applied FTA fall short for railways. In particular, there is an inability to bridge technocentric visions with the societal challenges that are becoming increasingly prominent on the policy agenda. To fill this FTA-need in railways it is here proposed a role for constructive technology assessment as bridging function towards achieving success in the transition to a next generation of high-speed trains. The findings here presented result from the analysis of reports and interviews with their commissioning institutions and drafters. |
| Keywords: | future oriented technology analysis; constructive technology assessment; technology transitions; s-curve; multi-level alignments; high-speed trains |
| JEL: | O31 O38 R42 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:ieu:wpaper:65&r=reg |
| By: | Pieterse,Duncan; Farole,Thomas; Odendaal,Martin; Steenkamp,Andre |
| Abstract: | Transport and logistics infrastructure is a critical determinant of the competitiveness of a country's producers and exporters. Well-functioning transport and logistics infrastructure relies not just on hardware, but critically on the operating environment that emerges from the interaction between private sector operators; national policies and regulatory regimes; and, in many countries, state-owned owners and operators of core infrastructure. This paper looks at the case of South Africa, where constraints in access, pricing, reliability, and network interfaces, particularly in the port and rail network, are eroding the competitiveness of South African exporters. The paper draws on interviews with a wide range of exporters along with secondary research to examine South Africa's port and rail network, and explores the underlying factors contributing to these constraints, including chronic underinvestment, an inadequate regulatory environment, insufficient private sector participation, and weak regional integration. The paper concludes with a review of the reforms needed to deliver a more broadly accessible and competitive rail and port sector based on international case examples. It highlights the need for institutional reforms to promote competitive pricing; private sector participation to increase investment and improve service delivery; information and coordination to address market failures and improve access; and cooperation to improve intermodal, interregional, and institutional interfaces. |
| Keywords: | Transport and Trade Logistics,Common Carriers Industry,Railways Transport,Airports and Air Services,Transport Economics Policy&Planning |
| Date: | 2016–01–11 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7532&r=reg |
| By: | Lionel Nesta (OFCE); Francesco Vona (OFCE) |
| Abstract: | This policy brief addresses the issue of the complementarity of policies supporting renewable energy and market competition in fostering green innovation. Innovation is commonly regarded as the best answer to sustaining current life standards while overcoming severe environmental concerns. This is especially relevant in the case of energy, where increasing resource scarcity calls for the rapid development of alternative energy sources, notably renewable energy. 2) Although as of today, renewable energy (RE henceforth) cannot compete with fossil fuel in terms of production costs, impressive technological progress has paved the way to new promising sources such as biomass, solar and wind, among others. 3) Countries too have developed areas of specialization in specific types of renewable energy sources: for example, Denmark has established a strong technological advantage in wind technologies, Sweden and Germany have specialized in bioenergy, Germany and Spain in solar, Norway and Austria in Hydropower. France, with its specialization in nuclear energy, seems to be lagging behind in RE innovation, as compared with other major players such as the USA or Germany. |
| Keywords: | Renewable energy; Green innovation; Market competition |
| JEL: | Q2 Q4 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/s7ouirg8f83sohbc3077aukl9&r=reg |
| By: | Marc Joëts |
| Date: | 2016–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:ipg:wpaper:2013-28&r=reg |