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on Regulation |
| By: | Tunç Durmaz (Department of Economics, Yildiz Technical University); Aude Pommeret (School of Energy and Environment, City University of Hong Kong); Ian Ridley (School of Energy and Environment , City University of Hong Kong) |
| Abstract: | It is expected that the renewable share of energy generation will rise considerably in the near future. The intermittent and uncertain nature of renewable energy (RE) calls for storage and grid management technologies that can allow for increased power system flexibility. To assist policy makers in designing public policies that incentivize RE generation and a flexible power system based on energy storage and demandside management, better knowledge as to the willingness to pay for the corresponding devices is required. In this paper, we appraise the willingness of a household (HH) to pay for a 1.9 kW peak photovoltaic (PV) system and smart grid devices, namely, a smart meter and a home storage battery. Results indicate that having access to a storage device is key for the HH decision to install a smart meter. We also find that it is beneficial for the HH to install the PV system regardless of the pricing scheme and the ownership of the battery pack. It is, nevertheless, barely desirable to install the battery pack regardless of the presence of the PV system; an outcome pointing to the fact that the high cost of storage is a drawback for the wider use of these systems. When storage is constrained in such a way that only the generated power can be stored, the willingness to install the battery pack reduces even further. The investment decisions made when legislation prohibits net-metering are also analyzed. |
| Keywords: | Renewable Energy, Intermittency, Distributed Generation, Smart Solutions, Energy Storage, Demand Response, Willingness to Pay |
| JEL: | D12 D24 D61 Q41 Q42 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2017.24&r=reg |
| By: | Christoph Böhringer (University of Oldenburg); Thomas F. Rutherford (University of Wisconsin) |
| Abstract: | With his announcement to pull the US out of the Paris Agreement US President Donald Trump has snubbed the international climate policy community. Key remaining parties to the Agreement such as Europe and China might call for carbon tariffs on US imports as sanctioning instrument to coerce US compliance. Our analysis, however, reveals an inconvenient insight for advocates of carbon tariffs: Given the possibility of retaliatory tariffs across all imported goods, carbon tariffs do not constitute a credible threat for the US. A tariff war with its main trading partners China and Europe might make the US worse off than compliance to the Paris Agreement but China, in particular, should prefer US defection to a tariff war. |
| Keywords: | Paris Agreement, US withdrawal, carbon tariffs, optimal tariffs, tariff war, computable general equilibrium |
| JEL: | Q58 D58 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:zen:wpaper:72&r=reg |
| By: | Christos Genakos; Tommaso Valletti; Frank Verboven |
| Abstract: | We study the dual relationship between market structure and prices and between market structure and investment in mobile telecommunications. Using a uniquely constructed panel of mobile operators' prices and accounting information across 33 OECD countries between 2002 and 2014, we document that more concentrated markets lead to higher end user prices. Furthermore, they also lead to higher investment per mobile operator, though the impact on total investment is not conclusive. Our findings are not only relevant for the current consolidation wave in the telecommunications industry. More generally, they stress that competition and regulatory authorities should take seriously the potential trade-off between market power effects and efficiency gains stemming from agreements between firms. |
| Keywords: | mobile telecommunications, market structure, prices, investments, mergers |
| JEL: | K20 L10 L40 L96 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1486&r=reg |
| By: | Fei Teng (Institute of Energy, Environment and Economy, Tsinghua University, Beijing, China); Frank Jotzo; Xin Wang |
| Abstract: | The electricity sector accounts for a large share of China’s carbon dioxide emissions and of the economy-wide abatement potential. China’s planned national emissions trading scheme would include electricity generation, as nearly all emissions trading schemes do. The critical difference is that in most existing carbon pricing systems the power sector operates with competitive markets and cost-based pricing, while the Chinese power industry still uses a highly regulated dispatch and pricing system. Together these limitations mean that the effect of a carbon price on China is limited in terms of the impact on operational decisions for existing power stations and in terms of the effects on investment decisions. We explore the channels of interaction between electricity market reform and carbon pricing in China, and provide quantitative estimates of the effects and interactions on electricity sector emissions. A probabilistic discrete choice model is used to simulate the behavior of investors in the power sector. The analysis indicates that market reform can help reduce emissions intensity, but to meet China’s 2030 targets for non-fossil fuel generation a low to moderate carbon price is also necessary; conversely, a carbon price will only be effective with market reform that provides flexibility in dispatch. Using our simplified quantitative analysis, the carbon price required for the same share of non-fossil fuel generation would be about twice as high without market reform. Combining market reform and a carbon price could achieve significant rates of decarbonization and is likely to be the most effective and most feasibly policy package to cut emissions from China’s power sector. |
| Keywords: | China, emissions trading, energy sector reform, policy interaction |
| JEL: | Q48 Q52 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:een:ccepwp:1707&r=reg |
| By: | Lin, Ming Hsin; Matsumura, Toshihiro |
| Abstract: | We discuss optimal privatization policies in mixed oligopolies in which a public firm is the Stackelberg follower (private leadership). We find that under constant marginal cost, the optimal degree of privatization is zero. When the marginal cost is increasing, however, the optimal degree is never zero, and full privatization can be optimal. These results suggest that the optimal privatization policy depends on the cost conditions. We also find that the optimal degree of privatization is substantially lower under private leadership than in the simultaneous-move model when there is no cost difference between public and private firms. |
| Keywords: | private leadership; mixed oligopoly; mixed ownership in public firms |
| JEL: | H42 L13 |
| Date: | 2017–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:79913&r=reg |
| By: | Lanot, Gauthier (Department of Economics, Umeå University); Vesterberg, Mattias (Department of Economics, Umeå University) |
| Abstract: | We present a novel model for a time series of individual binary decisions which depends on the history of prices. The model is based on the Bayesian learning procedure which is at the core of sequential decision making. We show that the model capture dependence on past events and past priors in a straightforward fashion, the model capture some dependence on initial condition, here in the form of the prior at the start of the decision period, and that estimation through maximum likelihood is straightforward. We estimate the parameters of the model on a sample of Swedish households who have to decide over time between competing electricity contracts. The estimated parameters suggest that households respond to prices by switching between contracts, and that the response can be rather substantial for alternative price processes |
| Keywords: | Price; Contract Choice; Bayesian Learning; Time Series; Binary Decision; Survival analysis |
| JEL: | C11 C41 D12 Q41 |
| Date: | 2017–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0951&r=reg |
| By: | Xin Deng |
| Abstract: | With the exponential growth of the national vehicle fleet in the last three decades, most cities in China are facing mounting pressure to tackle congestion and air pollution problems caused by motor vehicles. Beijing, the capital city, is a good case to study how municipal governments address those issues. To alleviate road congestion and pollution, the government has invested heavily in road infrastructure, advanced traffic management technology and also introduced stringent standards on vehicular emissions. However, city planners have been over-relying on command and control measures including travel demand management, which have proven to be costly and inefficient in controlling motor vehicle ownership and usage—the fundamental causes of congestion and emissions. Economic measures including road pricing and vehicle registration auction schemes are superior and should be adopted in travel demand management in the future. |
| Keywords: | congestion, air pollution, motor vehicles, China, travel demand management |
| Date: | 2017–02–24 |
| URL: | http://d.repec.org/n?u=RePEc:een:appswp:201726&r=reg |
| By: | Arnaud Millien (Centre d'Economie de la Sorbonne) |
| Abstract: | The 7th Sustainable Development Goal aims to "ensure access to affordable, reliable, sustainable and modern energy for all". Because the cost to increase electrical capacity in Africa alone has been estimated at $800bn, this article investigates the extent to which electricity reliability could contribute to a reduction in the marginal cost of grid extension by attracting more customers. Using lightning as an instrument for outages severity, the article evaluates the assumption that less uncertainty about electricity availability would lead to a larger number of connected households. The article finds that a one percentage point increase in electricity reliability would yield a 0.67 percentage point increase in connections. Therefore, delivering fully reliable electrical power would allow an electricity company to achieve its targeted growth of customer base 15 months earlier than planned. The effect of reliability is highest for middle-rich households, which are the most reluctant to subscribe in the presence of total, severe or partial outages. A one-percentage-point upgrade in reliability increase the likelihood that these households will be connected by 1.28 percentage points. This article also finds that households are more sensitive to outages in areas where outages are less frequent. In addiction, the impact of reliability on households decision to connect could be at least 5% greater than the effect of poverty; if the frequency of outages is too high, the wealth or poverty effect might vanish and households would respond only to the excessively low reliability. These results confirm the uncertainty assumption, that is, regular and severe outages yield an uninsurable context that deters households from subscribing to the electric service |
| Keywords: | electrification; reliability; outages; Kenya; instrumental variable |
| JEL: | Q4 Q01 O18 O55 C26 C52 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:17031&r=reg |
| By: | Ando, Michihito (National Institute of Population and Social Security Research); Dahlberg, Matz (Department of Economics); Engström, Gustav (The Beijer Institute of Ecological Economics) |
| Abstract: | Using a data set on housing sales transactions we explore the potential effect of the Fukushima disaster on housing prices in Sweden. In contrast to most earlier findings in other countries we do not find any disproportionate effect from the Fukushima disaster on housing prices in vicinity of nuclear power plants in Sweden. |
| Keywords: | Fukushima; Nuclear accident; housing price; difference-indifferences |
| JEL: | Q51 Q53 R21 |
| Date: | 2017–02–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uunewp:2017_002&r=reg |
| By: | Oskar Knapik (Aarhus University and CREATES) |
| Abstract: | For risk management traders in the electricity market are mainly interested in the risk of negative (drops) or of positive (spikes) price jumps, i.e. the sellers face the risk of negative price jumps while the buyers face the risk of positive price jumps. Understanding the mechanism that drive extreme prices and forecasting of the price jumps is crucial for risk management and market design. In this paper, we consider the problem of the impact of fundamental price drivers on forecasting of price jumps in NordPool intraday market. We develop categorical time series models which take into account i) price drivers, ii) persistence, iii) seasonality of electricity prices. The models are shown to outperform commonly-used benchmark. The paper shows how crucial for price jumps forecasting is to incorporate additional knowledge on price drivers like loads, temperature and water reservoir level as well as take into account the persistence in the jumps occurrence process. |
| Keywords: | autoregressive order probit model, categorical time series, seasonality, electricity prices, Nord Pool power market, forecasting, autoregressive multinomial model, fundamental price drivers |
| JEL: | C1 C5 C53 Q4 |
| Date: | 2017–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:aah:create:2017-07&r=reg |
| By: | John Vickers |
| Abstract: | Abstract The paper synthesizes and develops the welfare analysis of regulating relative prices, for example price differences, of which banning price discrimination is a special case. Welfare results are derived directly by convexity arguments using functions of welfare levels. The method is also used to obtain results about e¤ects on consumer surplus. |
| Keywords: | Price discrimination |
| JEL: | D42 L12 |
| Date: | 2017–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:828&r=reg |
| By: | Chen, John-ren (Center for Mathematical Economics, Bielefeld University) |
| Date: | 2017–04–04 |
| URL: | http://d.repec.org/n?u=RePEc:bie:wpaper:35&r=reg |
| By: | Andrea Bastianin (University of Milan); Paolo Castelnovo (University of Milan); Massimo Florio (University of Milan) |
| Abstract: | Some regulatory reforms do not change just a specific signal that can be represented by a quantitative continuous variable, such as a tax rate, a price cap, or an emission threshold. The standard theory of reform in applied welfare economics (going back to contributions by e.g. Ramsey, Samuelson and Guesnerie) asks the question: What is the marginal effect on social welfare of changing a policy signal? However, reforms such as privatization, unbundling or liberalization of network industries are often described by ‘packages’ shifting a policy framework. It is increasingly frequent in the empirical evaluation of such reforms to use categorical variables, often in polytomous form, for instance describing unbundling steps (vertical integration, accounting, functional, legal, ownership separation) on a discrete numerical scale, such as those proposed by the OECD and other international bodies. We review recent econometric literature evaluating regulatory reforms using such variables (40 papers) and we discuss some methodological issues arising in this context. |
| Keywords: | Econometrics, Policy Evaluation, Network Industries, Reforms |
| JEL: | B41 C20 C54 D04 L98 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2017.22&r=reg |
| By: | Flores Aguilar, Adrián; Hidalgo Arellano, Marcos; Peralta Quesada, Leda |
| Abstract: | The present study explores opportunities and challenges to increase energy efficiency in government vehicle fleets through electrification. It identifies international best practices in relation to fleet electrification, suggests the most suitable comprehensive approach for a fleet transition, and recommends the most immediate actions to deploy. Considering the leading role that the public sector plays in promoting the use of renewable energies and enhancing energy efficiency, the study presents a roadmap for government fleet transitions of vehicles that have equivalent alternatives in the market. |
| Keywords: | SISTEMAS DE TRANSPORTE, TRANSPORTE, TRANSPORTE PUBLICO, RECURSOS ENERGETICOS, RENDIMIENTO ENERGETICO, INNOVACIONES TECNOLOGICAS, FINANCIACION, POLITICA DE TRANSPORTE, DESARROLLO SOSTENIBLE, TRANSPORT, TRANSPORT SYSTEMS, PUBLIC TRANSPORT, ENERGY RESOURCES, ENERGY EFFICIENCY, TECHNOLOGICAL INNOVATIONS, FINANCING, TRANSPORT POLICY, SUSTAINABLE DEVELOPMENT |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col033:41812&r=reg |