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on Regulation |
| By: | Anaya, K.; Pollitt, M. |
| Abstract: | This paper explores the international experience in the procurement of reactive power and related electricity ancillary services. It involves system operators from different jurisdictions including Australia, the United States and Great Britain. The paper evaluates the different procurement mechanisms and related compensation schemes. In addition, it also appraises a novel approach (from the Power Potential initiative in the UK) for contracting reactive power services from distributed energy resources (DERs) using a market-based mechanism. The conceptual auction design applicable to the procurement of reactive power is also discussed. Our findings suggest that competition in reactive power is very limited in comparison with other ancillary services such as frequency regulation and capacity reserves. The introduction of more market oriented mechanisms for acquiring reactive and active power services by the system operator opens new opportunities and new ways to deal with voltage stability issues. Power Potential trails a technical and commercial solution, new market roles and the new interactions required in the introduction of a competitive reactive power market. |
| Keywords: | reactive power, system operators, distributed energy resources, procurement methods, auction market design |
| JEL: | L51 Q40 Q48 |
| Date: | 2018–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1854&r=reg |
| By: | Simshauser, P., Akimov, A.; Akimov, A. |
| Abstract: | From 2004 to 2018 the Regulatory Asset Base (RAB) of electricity networks across Australia’s National Electricity Market tripled in value, from $32 billion to $93 billion. The run-up in the capital stock was driven by forecast demand growth and a tightening of reliability standards. But demand contracted from 2010-2015. With a rising RAB, contracting demand and a regulated revenue constraint, an adverse cycle of sharply rising tariffs and falling demand appeared to be emerging. Some networks were characterised by significant investment mistakes in retrospect, and perhaps unsurprisingly, various consumer groups and regulatory bodies argued assets should be stranded or written-off completely and network tariffs reduced. From 2015-2018, energy demand increased once again. In this article we present a method for dealing with stranded assets under uncertainty; rather than permanently stranding assets that fail a used and useful test, we reorganise the financial and economic affairs of a template network utility and “Park” excess capacity, issue credit-wrapped bonds to temporarily finance the stranded capital stock, then re-test the Parked Assets at the end of each five-year regulatory determination. Parked Assets can then be “Un-Parked” and returned-to-service in line with connections growth, load growth, or both. The most interesting result is the immediate reduction in network tariffs, and a more stable trajectory under our generalised assumptions. |
| Keywords: | Electricity Utilities, Falling Demand, Stranded Assets |
| JEL: | D4 L5 L9 Q4 |
| Date: | 2018–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1853&r=reg |
| By: | Mitra, Krishnendranath; Dutta, Goutam |
| Abstract: | The price of retail electricity is restricted by regulations and have not increased at a same pace with the ever-growing demand of electricity. However, there exists a considerable amount of consumer surplus that can be harnessed by the electricity industry to improve the quality of service. In this paper we make an attempt to understand some characteristics of household electricity consumer demand. We performed an empirical, descriptive research and used inductive reasoning. Quantitative and qualitative primary data was collected through a questionnaire administered in Microsoft Excel format from 173 respondents. We propose a suitable present and future market segmentation of the retail electricity market based on several demographic and perceptual parameters respectively. We also analyze the demand price relationships and the price elasticities of demand for four appliances. We find that the willingness-to-pay is nearly five times the present average price of electricity. We also present perceptual distances for the future market related to adoption of dynamic prices and renewable energy by consumers. |
| Date: | 2018–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:iim:iimawp:14592&r=reg |
| By: | Alex L. Marten; Richard Garbaccio; Ann Wolverton |
| Abstract: | The requisite scope of analysis to adequately estimate the social cost of environmental regulations has been subject to much discussion. The literature has demonstrated that engineering or partial equilibrium cost estimates likely underestimate the social cost of large-scale environmental regulations and environmental taxes. However, the conditions under which general equilibrium (GE) analysis adds value to welfare analysis for single-sector technology or performance standards, the predominant policy intervention in practice, remains an open question. Using a numerical computable general equilibrium (CGE) model, we investigate the GE effects of regulations across different sectors, abatement technologies, and regulatory designs. Our results show that even for small regulations the GE effects are significant, and that engineering estimates of compliance costs can substantially underestimate the social cost of single-sector environmental regulations. We find the downward bias from using engineering costs to approximate social costs depends on the input composition of abatement technologies and the regulated sector. |
| Keywords: | environmental regulation, general equilibrium, social costs |
| JEL: | D58 Q52 Q58 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:nev:wpaper:wp201806&r=reg |
| By: | Lars Vandrei |
| Abstract: | We analyze to what extend sales prices for residential housing prices reacttowards rent-price regulation. We do this exploiting a quasi-natural designin the German federal state of Brandenburg while using actual transactionprice data, provided by the committee of evaluation experts. Brandenburg announced and introduced both a capping limit for existing rental contracts as well as a price ceiling for new contracts for municipalities with ”tight housing markets” in 2014. Whether or not a municipality falls under this classification is based upon a region’s housing data that is translated into a specific score that ranges from 0 to 100. The regulations were introduced in municipalities with scores of above the average plus two standard deviations. We exploit this sharp cut-off point in a regression discontinuity design. First, we standardize prices in a hedonic regression model. Then we compare prices in regions that are located marginally above this threshold with prices in those slightly below. The analysis contains 15 municipalities in the treatment and 20 in the control group. An analysis of media citations shows that the public discussion of the two instruments did not start before the year 2013. We therefore compare a time frame before 2013 with one after 2014 to exclude anticipation effects. We expect to find no significant effects when we use a time-frame prior to media coverage of the regulations. When people are generally informed, however, apartment prices should be lower in regulated regions. |
| Keywords: | German housing market; regression discontinuity design; rent-price regulation; sales prices |
| JEL: | R3 |
| Date: | 2018–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2018_321&r=reg |
| By: | De Groote, Olivier; Verboven, Frank |
| Abstract: | We study a generous program to promote the adoption of solar photovoltaic (PV) systems through subsidies on future electricity production, rather than through upfront investment subsidies. We develop a tractable dynamic model of new technology adoption, also accounting for local market heterogeneity. We identify the discount factor from demand responses to variation that shifts expected future but not current utilities. Despite the massive adoption, we find that households significantly discounted the future benefits from the new technology. This implies that an upfront investment subsidy program would have promoted the technology at a much lower budgetary cost. |
| JEL: | C51 Q48 Q58 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:32966&r=reg |
| By: | Li, Leona Shao-Zhi (Faculty of Business Administration, University of Macau); Cui, Chuantao (School of Economics, Sichuan University) |
| Abstract: | Using a balanced panel of manufacturing firms from China between 2007 and 2013, we estimate that being connected to a high-speed rail system leads to 9.5% reduction in local firms' input inventory spending. The e ect is stronger for downstream industries and private enterprises. A back-of-envelope calculation suggests that each dollar of HSR investment reduces input inventory stock by 12 cents, which is significantly larger than the e ects found in previous studies based on highway or road investment. Declines in transportation and communication cost, as well as agglomeration e ect are identified as plausible mechanisms. Our findings reveal a micro channel through which improved transport infrastructure brings about economic gains, and contribute to the cost-benefit assessment of high-speed rail investment. |
| Keywords: | Transport infrastructure; high-speed rail; firm performance; inventory; China |
| JEL: | D21 H54 O18 R4 |
| Date: | 2018–10–04 |
| URL: | http://d.repec.org/n?u=RePEc:xjt:rieiwp:2018-08&r=reg |
| By: | Ian Parry; Dirk Heine; Kelley Kizzier; Tristan Smith |
| Abstract: | The International Maritime Organization (IMO) announced in April 2018 a target of cutting greenhouse gas (GHG) emissions from the sector by 50 percent below 2008 levels by 2050 and subsequent meetings of the IMO will develop a strategy for making headway on this commitment. This paper seeks to inform dialogue about the possibility of a carbon tax as a key element of GHG mitigation policy for international maritime transport. The paper discusses the case for the tax over alternative mitigation instruments, options for the practical design issues, and then presents estimates of the impacts of carbon taxation and other instruments from an analytical model of the maritime sector. |
| Date: | 2018–09–11 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:18/203&r=reg |
| By: | Melanie Franke; Claudia Nadler |
| Abstract: | Improving the energy efficiency in the real estate sector plays a decisive key factor in the German energy and climate policy. In order to meet the EU-targets of reducing the energy consumption as well as CO2 emissions energy performance certificates (EPCs) have been introduced to prove the energy efficiency of commercial and residential properties. The aim of the present work is to determine the role of EPCs in the rental decision-making process by investigating their influence on tenants' preferences in the housing market. In this study, we apply a choice-based conjoint (CBC) analysis to investigate the relative importance of different housing characteristics including the apartments' energy efficiency represented by the buildings' EPC. The results suggest an ongoing change in the perception of energy efficiency in the housing market, as the attribute received the third highest importance score after monthly rent and residential area. Moreover, the analysis of different respondent segments provides new insights into the importance of EPCs that strongly depended on the awareness and conscious consideration of the provided information. Thus, the results emphasize a novel perspective on EPCs in the housing market and point out crucial factors for its success as a marketing tool. |
| Keywords: | CBC; Choice-based Conjoint analysis; energy performance certificates; EPC; Housing Market; Rental decision-making process |
| JEL: | R3 |
| Date: | 2018–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2018_59&r=reg |
| By: | Odolinski, Kristofer (CTS - Centre for Transport Studies Stockholm (KTH and VTI)); Yarmukhamedov, Sherzod (The Swedish National Audit Office); Nilsson , Jan-Eric (CTS - Centre for Transport Studies Stockholm (KTH and VTI)); Haraldsson, Mattias (CTS - Centre for Transport Studies Stockholm (KTH and VTI)) |
| Abstract: | In this study, we analyze the difference between survival and corner solution models in estimating the marginal cost of reinvestments. Both approaches describe the reinvestment process in rather intuitively similar ways but have several methodological distinctions. We use Swedish railway data on track segment and section levels over the period 1999-2016 and focus on reinvestments in track superstructure. Results suggest the marginal costs from survival and corner solution models are SEK 0.0041 and SEK 0.0103, respectively. The conclusion is that the corner solution model is more appropriate, as this method consider the impact traffic has on the risk of reinvestment as well as on the size of the reinvestment cost. The survival approach does not consider the latter, which is problematic when we have systematic variations in costs due to traffic and infrastructure characteristics. |
| Keywords: | railways; reinvestment; renewal; survival model; corner solution model; two-part model; marginal cost |
| JEL: | C41 H54 L92 R48 |
| Date: | 2018–10–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ctswps:2018_020&r=reg |
| By: | Jingbo Cui; GianCarlo Moschini (Center for Agricultural and Rural Development (CARD)) |
| Abstract: | This paper examines the role of a firm’s internal network in determining plant shutdown decisions in response to environmental regulations. Using unique plant-level data for U.S. manufacturing industries from 1990 to 2008, we find evidence that, in response to increasingly stringent environmental regulations at the county level, multi-plant firms do exercise their greater flexibility in adjusting production, relative to single-plant firms. Specifically, in regulated counties, the likelihood of a plant shutting down is higher for multi-plant firms. Moreover, we measure the firm internal network effect at the local, neighborhood, and the wider-area levels, as defined by the number of affiliated plants clustered in different regional levels. Their effects on plant closure decisions for dirty subsidiaries vary with the network level. We further decompose the neighborhood network into those in regulated and unregulated neighborhood counties, and examine how these network metrics are associated with closure decisions of dirty plants affiliated with multi-plant firms. The presence of more sibling plants residing in neighboring counties that are free from regulatory controls are associated with a higher closure probability of dirty plants in a regulated county. |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:ias:cpaper:18-wp585&r=reg |
| By: | Jacquelyn Pless; Arthur A. van Benthem |
| Abstract: | We formalize pass-through over-shifting as a simple yet under-utilized test for market power. We apply this test in the market for solar energy. Speci cally, we estimate the pass-through of solar subsidies to solar system prices using rich micro-level transaction and subsidy data from California. Buyers of solar systems capture nearly the full subsidy, while there is more-than-complete pass-through to lessees. We conclude that solar markets are imperfectly competitive by ruling out alternative explanations for over-shifting, and reinforce this conclusion with a test of solar demand curvature. This procedure can serve to detect market power beyond the solar market. |
| Keywords: | solar subsidy, pass-through, over-shifting, demand curvature, market power, third-party ownership, buy vs. lease |
| JEL: | H22 Q42 Q48 Q58 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:oxcrwp:212&r=reg |
| By: | Atal, Juan Pablo (University of Pennsylvania); Cuesta, José Ignacio (University of Chicago); Sæthre, Morten (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | We study the effects of quality regulation on market outcomes by exploiting the staggered phase-in of bioequivalence requirements for generic drugs in Chile. We estimate that the number of drugs in the market decreased by 25%, average paid prices increased by 10%, and total sales decreased by 20%. These adverse effects were concentrated among small markets. Our results suggest that the intended effects of quality regulation on price competition through increased (perceived) quality of generics—and therefore reduced vertical differentiation—were overturned by adverse competitive effects arising from the costs of complying with the regulation. |
| Keywords: | Quality regulation; competition; bioequivalence; generic pharmaceuticals |
| JEL: | I11 L11 L15 L65 |
| Date: | 2018–09–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2018_020&r=reg |
| By: | Vladimir Udalov (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)) |
| Abstract: | This paper investigates an intergenerational conflict arising from renewable energy support. Using a politico-economic overlapping generations (OLG) model, it can be shown that older individuals unambiguously lose from renewable energy support and therefore vote to keep it at a minimum level. In contrast, younger individuals face ambiguous effects arising from renewable energy support. In the short run, they also lose from a negative consumption effect. In the long run, however, younger individuals benefit from a positive environmental effect. Renewable energy support also generates both positive and negative effects on consumption. The voting outcome is determined through a political process, whereby political parties converge to platforms that maximize the aggregate welfare of the electorate. Zusammenfassung: Dieses Papier untersucht einen Generationenkonflikt, der aufgrund der Förderung erneuerbarer Energien entsteht. Unter Verwendung eines einfachen polit-ökonomischen Modells sich überlappender Generationen kann gezeigt werden, dass die älteren Individuen durch die Förderung erneuerbarer Energien eindeutig schlechter gestellt werden und deshalb für ein minimales Niveau der Förderung stimmen. Im Gegensatz dazu sind die jungen Individuen mit einem nicht eindeutigen Effekt konfrontiert. In der kurzen Frist werden sie durch die Förderung erneuerbarer Energien genauso wie die älteren Individuen schlechter gestellt werden. Allerdings profitieren sie in der langen Frist von einem positiven Umwelteffekt und stehen unter bestimmten Bedingungen auch einem positiven Konsumeffekt gegenüber. Aus diesem Grund wählen sie ein höheres Niveau der Förderung. Das Abstimmungsergebnis wird im Rahmen eines politischen Prozesses bestimmt, wobei die politischen Parteien zu einer Plattform konvergieren, die aggregierte Wohlfahrt der Wählerschaft maximiert. |
| Keywords: | overlapping generations, generational conflict, environmental policy, renewable energy, voting |
| JEL: | Q54 Q29 D60 D90 H23 D72 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:bwu:eiiwdp:disbei245&r=reg |
| By: | Lade, Gabriel; Rudik, Ivan |
| Keywords: | Resource and Environmental Policy Analysis, Environmental and Nonmarket Valuation, Production Economics |
| Date: | 2018–06–20 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea18:274448&r=reg |
| By: | Roberto Antonietti (Department of Economics and Management, University of Padova); Fulvio Fontini (Interdepartmental Centre for Energy Economics and Technology, University of Padova) |
| Abstract: | In this paper, we analyze the relationship between energy intensity and energy price in a panel of 120 countries over 34 years, from 1980 to 2013. We use information on energy intensity and real oil price, and merge it with macroeconomic data on the countries’ structural characteristics. We assess their direction of causality using fixed effects, dynamic panel data models and Granger causality tests. We identify a statistically significant, but weak negative effect of real oil price on energy intensity, which corresponds to a positive effect of energy price on energy efficiency. We also show significant, large regional differences in this relationship. We thus posit that a global policy aimed at increasing the price of oil would induce a limited increase in average energy efficiency through a more efficient use of energy, but this increase would differ considerably across regions around the world. |
| Keywords: | energy price, energy efficiency, real oil price, panel data |
| JEL: | Q41 Q43 Q55 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:srt:wpaper:1218&r=reg |
| By: | Mishal Ahmed (School of Economics, Georgia Institute of Technology, 221 Bobby Dodd Way, Atlanta, GA 30313, USA); Erik Johnson (University of Alabama, Culverhouse College of Business, Department of Economics, Finance and Legal Studies, Tuscaloosa, AL 35487, USA); Byung-Cheol Kim (University of Alabama, Culverhouse College of Business, Department of Economics, Finance and Legal Studies, Tuscaloosa, AL 35487, USA) |
| Abstract: | Using detailed trip-level taxi and for-hire-vehicle data and new incident-level complaints data, we study how the entry of Uber and Lyft has affected the quality of taxi services in New York City. In a panel setting with 263 NYC taxi-zones over the time period from 2014 to 2017, we find that increased competition measured by the number of daily Uber/Lyft trips in a given taxi-zone has led to more complaints regarding a variety of service quality dimensions such as unsafe driving, rude behavior and fare refusal. Our results are robust to accounting for potential simultaneity in the determination of complaints and Uber and Lyft penetration. |
| Keywords: | ride-sharing applications; taxi; competition; service quality |
| JEL: | D01 L91 O18 R4 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1816&r=reg |