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on Regulation |
| By: | Krauss, Alexander |
| Abstract: | Energy tariff increases are generally essential to address environmental and fiscal concerns but they can also push households into poverty. This paper estimates the expected poverty and distributional effects of a significant natural gas tariff reform in the context of Armenia that increased the country’s residential tariff by about 40%. It is the first paper in the literature on energy tariff reforms to simultaneously try and control for substitution between all major energy sources (not just some), to take into account the seasonality of consumption over the full annual cycle, and to apply different methods to assess changes in household consumption on natural gas and shifts in natural gas between main and supplementary heating sources. Existing papers thus generally overestimate the potential effects of energy price increases on household welfare. The results here – which face, like any statistical study, a set of important methodological constraints – suggest nonetheless that this significant tariff increase led to an estimated 8% of households shifting away from gas, mainly towards wood, as their heating source. It consequently resulted in an estimated 2.8% of households falling below the national poverty line, while likely also influencing non-monetary human welfare that cannot be well captured econometrically. Finally, methodological assumptions and limitations in assessing these relationships, as well as potential policy implications are outlined. |
| Keywords: | Energy price reform; Gas tariff increase; Methodological issues; Methods; Poverty; Armenia |
| JEL: | B4 D12 D60 Q41 Q48 |
| Date: | 2016–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:68496&r=reg |
| By: | Edward Oughton (Cambridge Judge Business School, University of Cambridge) |
| Abstract: | Moving from 4G LTE to 5G is an archetypal example of technological change. Mobile Network Operators (MNOs) who fail to adapt will likely lose market share. Hitherto, qualitative frameworks have been put forward to aid with business model adaptation for MNOs facing on the one hand increasing traffic growth, while on the other declining revenues. In this analysis, we provide a complementary scenario-based assessment of 5G infrastructure strategies in relation to mobile traffic growth. This information is required by commercial players in the digital ecosystem for strategy development, and can support management decision-making. Developing and applying an open-source modelling framework, we quantify the uncertainty associated with future demand and supply for a hypothetical MNO, using Britain as a case study example. We find that spectrum strategies require the least amount of capital expenditure and are capable of meeting baseline demand until approximately 2025, after which more spectrum capacity will be required. Alternatively, small cell deployments provide significant capacity but at considerable cost, and hence are likely only in the densest locations, unless MNOs can boost revenues by capturing value from the Internet of Things (IoT), Smart Cities or other technological developments dependent on digital connectivity. |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:jbs:wpaper:201704r&r=reg |
| By: | Hlalefang Khobai (Department of Economics, Nelson Mandela University) |
| Abstract: | This paper serves to investigate the causal relationship between electricity consumption and economic growth in the Brics countries during the period 1990 – 2014. Carbon dioxide emissions and urbanisation were included as additional variables to form a multivariate framework. The Kao panel co-integration and Johansen Fisher panel co-integration techniques are applied to analyse the co-integration relationship between the variables while the Vector Error Correction Model (VECM) Granger-causality test is used to estimate the causality relationship among the variables. The study’s results reveal that there is a long run relationship between the variables. The research outcome further detected a unidirectional causality flowing from economic growth to electricity consumption in the long run in Brics countries. So in the light of determination of the study, the policy implication is that a significant transformation of low carbon technologies such as renewable energy should be implemented to curb the emissions and sustain economic growth and development. |
| Keywords: | Energy consumption, Economic growth, Causality, BRICS countries |
| JEL: | D04 Q43 Z00 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:mnd:wpaper:1707&r=reg |
| By: | Hlalefang Khobai (Department of Economics, Nelson Mandela University); Pierre Le Roux (Department of Economics, Nelson Mandela University) |
| Abstract: | This study investigates the causal relationship between renewable energy consumption and economic growth in South Africa. It incorporates carbon dioxide emissions, capital formation and trade openness as additional variables to form a multivariate framework. Quarterly data is used for the period 1990 – 2014 and is tested for stationarity using the Augmented Dickey Fuller (ADF), Dickey Fuller Generalised Least Squares (DF-GLS) and Phillips and Perron (PP) unit root tests. The study employs the Autoregressive distributed lag (ARDL) model to examine the long run relationship among the variables. Lastly, the study determines the direction of causality between the variables using the Vector Error Correction Model (VECM). The results validated an existence of a long run relationship between the variables. Moreover, a unidirectional causality flowing from renewable energy consumption to economic growth was established in the long run. The short run results suggested a unidirectional causality flowing from economic growth to renewable energy consumption. The findings of the study suggest that an appropriate and effective public policy is required in the long run, while considering sustainable economic growth and development. |
| Keywords: | Renewable energy consumption, Economic growth, Causality, South Africa. |
| JEL: | C22 C23 Q43 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:mnd:wpaper:1708&r=reg |
| By: | Agiakloglou, Christos; Polemis, Michael |
| Abstract: | This paper investigates the main determinants of Telecommunications demand for European Union (EU) countries using a panel data set for 19 EU countries over the period 1991-2010, capturing the years before and after the liberalization process. The goal is to clarify whether any changes in the demand of Telecommunications, as expressed by volume of traffic in local, mobile and international market segments, are attributed to regulatory process or to some other major drivers, taking also into account the relevant price elasticities. It turns out that the regulatory process does not seem to have significant impact on demand for Telecommunications services for the first period of liberalization. |
| Keywords: | Telecommunications Demand, Price Elasticities, Regulation, Panel data |
| JEL: | C2 L1 L51 |
| Date: | 2017–11–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:85119&r=reg |
| By: | Khobai, Hlalefang |
| Abstract: | The study purposes to investigate the relationship between renewable energy consumption and economic growth in Turkey using annual data covering the period 1990–2014. The Autoregressive Distributed Lag (ARDL) model is applied and the findings suggest existence of a long run relationship among the variables. The ARDL long run estimation results discovered that renewable energy consumption has a positive and significant effect on economic growth. The results from the Vector Error Correction Model (VECM) reveals that there is a unidirectional causality flowing from economic growth to renewable energy consumption without feedback. This findings bring a fresh perspective for policy makers for long run and sustainable economic development in Turkey. |
| Keywords: | Renewable energy consumption, Economic growth, Causality, Turkey |
| JEL: | C32 D04 Q01 Q42 Q47 |
| Date: | 2018–03–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:85082&r=reg |
| By: | Wolfgang Briglauer; Niklas S. Dürr; Oliver Falck; Kai Hüschelrath |
| Abstract: | We evaluate the impact of a major European state aid programme for broadband deployment applied to rural areas in the German state of Bavaria in the years 2010 and 2011. Using matched difference-in-differences estimation strategies, we find that aided municipalities have – depending on broadband quality – between 18.4 and 25.4 percentage points higher broadband coverage than non-aided municipalities. This increase in broadband coverage, closing the digital divide, results in an average increase of six employed individuals living in the respective aid-receiving municipalities while leaving the number of employed (measured at the place of work) or self-employed individuals and wages unaffected. We therefore conclude that an increase in broadband coverage through state aid protects rural areas from depopulation, but does not contribute to a further closing of the economic divide in the form of creating new jobs. |
| Keywords: | : government policy, state aid, ex-post evaluation, broadband, employment, rural areas, European Union, Germany, Bavaria |
| JEL: | D62 D73 G38 H23 J23 K23 L52 L96 L98 R23 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6947&r=reg |
| By: | Leal, Mariel; Garcia, Arturo; Lee, Sang-Ho |
| Abstract: | This study considers a Cournot duopoly model with a consumer-friendly firm and analyzes the interplay between the strategic choice of abatement technology and the timing of government’s commitment to the environmental policy. We show that the optimal emission tax under committed policy regime is always higher than that under non-committed one, but both taxes can be higher than marginal environmental damage when the consumer-friendliness is high enough. We also show that the non-committed policy will induce not only more outputs and higher profits but also more abatement and less emissions when the consumer-friendliness is high and the efficiency of abatement technology is not so high. Thus, the emergence of a consumer-friendly firm might yield better outcomes to both welfare and environmental quality without the commitment to the environmental policy. |
| Keywords: | abatement technology; commitment; consumer-friendly firm; environmental policy; emission tax |
| JEL: | L13 L31 Q58 |
| Date: | 2018–03–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:85393&r=reg |
| By: | Cherbonnier, Frédéric; Ivaldi, Marc; Muller-Vibes, Catherine; Van Der Straeten, Karine |
| Abstract: | This paper is aimed at evaluating the net gains and trade-offs at stake in implementing the competition of the rail mode in the long distance passenger market either by means of franchise or by an open access mechanism. We simulate the outcomes of competition in and for the market using a differentiated-products oligopoly model allowing for inter- and intra-modal competition in a long distance passenger market. Specifically we first calibrate the model using data describing high speed lines in France and show that the incumbent railway operator’s strategy does not simply boil down to a short-term profit maximization (e.g., because of existing regulation or limit-pricing strategy). This yields two important results when simulating competition. First, whether it is for or in the market, the opening to competition does not guarantee a decrease in prices in favor of passengers. Second, the effects of opening up to competition for the market are relatively predictable and potentially positive, while those of opening up to competition in the market remain very uncertain. |
| Keywords: | Intermodal competition; Oligopoly model; Open access |
| JEL: | L13 L90 R40 |
| Date: | 2018–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:32558&r=reg |
| By: | Reyer Gerlagh; Roweno J.R.K. Wan |
| Abstract: | We develop a 2-period emission trading model for a stock pollutant with demand shocks resolving over time. We find precise conditions for efficiency of a stabilization mechanism where cumulative available permits decrease with excess supply in early periods. Our model describes the stabilization rule, and identifies optimal parameters. The market stability mechanism substantially increases welfare, increases the domain of parameter values where (Stabilized) Banking outperforms Prices, and reduces price volatility. Our findings are important for emission trading schemes worldwide, such as California's Global Warming Solutions Act Scoping Plan, the U.S. Regional Greenhouse Gas Initiative, EU-ETS, and China's National ETS, the world’s largest carbon market. |
| Keywords: | prices, quantities, emission trading, regulatory instruments, pollution, climate change |
| JEL: | H23 Q54 Q58 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6950&r=reg |
| By: | Alessi, Monica; Núñez Ferrer,Jorge; Egenhofer, Christian |
| Abstract: | This paper focuses on the damage – and the potential for inflicting further damage – to investor confidence arising from legal uncertainties surrounding renewable energy support in some EU member states. A higher-than-expected expansion of the renewables sector, resulting in higher costs of the support, combined with the financial crisis, has driven some member states to radically curtail renewable energy support schemes. Loss-making investors unsuccessfully challenged these EU governments in national courts, arguing that their rights had been violated and denounced reforms that they considered to be retroactively punitive in nature. A number of EU-based international investors turned to international arbitration courts under the provisions of the Energy Charter Treaty (ECT), which protects cross-border investment in the energy sector. This move, however, has called into question the legal framework of the single market and EU state aid rules. A dispute on the jurisdiction of the ECT within the single market has ensued, which highlights a complex and unresolved situation. While the legal disputes accumulate, the concern is that investors may shy away from the EU as a result of the regulatory and legal uncertainties. The main aim of the paper is to provide some clarity for non-specialists on a complex situation, and to highlight the need to find workable solutions that de facto restore investor confidence. |
| Keywords: | Energy Charter Treaty, ECT, retroactive changes, RES, renewables, renewable energy Directive, investors, single market, arbitration, state aids |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:13373&r=reg |
| By: | Chatterjee, Rittwik; Chattopadhyay, Srobonti; Kabiraj, Tarun |
| Abstract: | Spillovers of R&D outcome affect the R&D decision of a firm. The present paper discusses the R&D incentives of a firm when the extent of R&D spillover is private information to each firm. We construct a two stage game involving two firms when the firms first decide simultaneously whether to invest in R&D or not, then they compete in quantity. Assuming general distribution function of firm types we compare R&D incentives of firms under alternative scenarios based on different informational structures. The paper shows that while R&D spillovers reduce R&D incentives under complete information unambiguously, however, it can be larger under incomplete information. |
| Keywords: | R&D incentives, Cournot duopoly, Spillovers, Incomplete information |
| JEL: | D43 D82 L13 O31 |
| Date: | 2018–03–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:85089&r=reg |
| By: | Damert, Matthias; Rudolph, Frederic |
| Abstract: | In this policy paper we discuss policy instruments which can help to decarbonise passenger cars in the European Union. We elaborate to what extent these policy instruments are effective, technology-neutral, predictable, cost-effective and enforceable. Based on these criteria, we develop recommendations for the European Union and its Member States on (1) how to shape their policy frameworks in order to achieve existing climate change mitigation targets; (2) how to support car manufacturers in selling innovative and competitive products; and (3) how to encourage consumers in Europe to purchase appropriate vehicles. We conclude that favourable policy instruments are used, but there is a strong need for adjustment and further development. The effectiveness of the current EU emission standard should be further increased by turning away from granting "supercredits" and introducing a size-based (instead of weight-based) credit system. Moreover, its overall ambition is questionable and the existing compliance mechanisms should be sharpened. Fuel taxes are an effective means to push consumers to buy energy-efficient cars. However, a sharp increase may not have the desired effects. Instead, the Member States should harmonise their excise duties at the level of those Member States, which currently impose the highest taxes (Netherlands, Italy). This includes the abolition of any diesel tax bonus. An introduction and harmonisation of vehicle taxes (purchase and circulation) should be based on a vehicle's energy consumption. Additionally, reformation efforts should aim to change the taxation of company cars in a way that vehicle sizes are reduced over time. Ambitious Member States may also want to introduce a sales quota for electric vehicles. Sales quotas are a very cost-effective policy instrument provided that the mandated technology will achieve a certain market share. This may be assumed for battery-electric vehicles. Further supportive instruments that should be considered are eco-labelling, public procurement and purchase incentives. However, the latter instrument's effectiveness is debatable and its implementation should therefore not be a Member State's priority. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wuppap:193&r=reg |
| By: | Chenghan Hou; Bao H. Nguyen |
| Abstract: | Over the past three decades, the US natural gas market has witnessed significant changes. Utilizing a standard Bayesian model comparison method, this paper formally determines four regimes existing in the market. It then employs a Markov switching vector autoregressive model to investigate the regime-dependent responses of the market to its fundamental shocks. The results reveal that the US natural gas market tends to be much more sensitive to shocks occurring in regimes existing after the Decontrol Act 1989 than the other regimes. The paper also finds that shocks to the natural gas demand and price have negligible effects on natural gas production while the price of natural gas is mainly driven by specific demand shocks. Augmenting the model by incorporating the price of crude oil, the results show that the impacts of oil price shocks on natural gas prices are relatively small and regime-dependent. |
| Keywords: | Natural gas market, Bayesian model comparison, Markov Switching VAR model |
| JEL: | C32 E32 Q4 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2018-14&r=reg |