|
on Regulation |
| By: | Raphaël Boroumand (PSB - Paris School of Business); Stéphane Goutte (LED - Laboratoire d'Economie Dionysien - UP8 - Université Paris 8 Vincennes-Saint-Denis); Thomas Porcher (ESG Research Lab - ESG Management School) |
| Abstract: | Our article provides a better understanding of risk management strategies for all energy market stakeholders. A good knowledge of optimal risk hedging strategies is not only important for energy companies but also for regulators and policy makers in a context of climate emergency. Indeed, the electricity sector is key to achieve energy and ecological transition. Electricity companies should be on frontline of climate change struggle. Taking the perspective of electricity retailers, we analyze a range of portfolios made of forward contracts and/or power plants for specific hourly clusters based on electricity market data from the integrated German-Austrian spot market. We prove that intra-day hedging with forward contracts is sub-optimal compared to financial options and physical assets. By demonstrating the contribution of intra-day hedging with options and physical assets, we highlight the specificities of electricity markets as hourly markets with strong volatility during peak hours. By simulating optimal hedging strategies, our article proposes a range of new portfolios for electricity retailers to manage their risks and reduce their sourcing costs. A lower hedging cost enables to allocate more resources to digitalization and energy efficiency services to take into account customers' expectations for more climate-friendly retailers. This is a virtuous circle. Retailers provide high value-added energy efficiency services so that consumers consume less. The latter contributes to reach electricity reduction targets to fight climate warming. |
| Keywords: | Diversification,Climate,Electricity,Risk,Intra-day,Hedging |
| Date: | 2019–07–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-02175358&r=all |
| By: | Briglauer, Wolfgang; Dürr, Niklas S.; Gugler, Klaus |
| Abstract: | There is still hardly any empirical evidence on how divergent broadband technologies, and, by extension, bandwidth levels, influence GDP growth, or on the extent of spatial externalities at a regional level. Our study aims to assess the economic benefits of high-speed broadband networks within and across neighbouring counties in Germany. Utilizing a balanced panel dataset of 401 German counties with data from 2010-2015 as well as different panel estimation techniques, we find that the availability of high-speed broadband (which enables transfer rates of 50 Mbit/sec and higher) has a small but significant positive effect on regional GDP growth in the average German county, when compared to normal broadband availability. Furthermore, we find that broadband deployment in German counties induces substantial economic benefits in terms of direct effects and regional externalities. According to our main estimation results, an increase in bandwidth coverage of 50 Mbit/sec and higher by one percentage point induces arise in regional GDP of 0.05%. This effect is almost doubled if we also take regional externalities into account and is of particular relevance for urban counties. Furthermore, our cost-benefit analysis suggests substantial efficiency gains, as the total economic benefits of subsidy programs to encourage broadband expansion substantially exceeded their associated costs. |
| Keywords: | high-speed broadband infrastructure,economic growth,spatial externalities,German counties,panel data |
| JEL: | H23 H54 L96 L98 R11 R58 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:19026&r=all |
| By: | Antonio Russo; Martin W. Adler; Federica Liberini; Jos N. van Ommeren |
| Abstract: | We estimate the marginal external congestion cost of motor-vehicle travel for Rome, Italy, using a methodology that accounts for hypercongestion (a situation where congestion decreases a road’s throughput). We show that the external cost – even when roads are not hypercongested – is substantial, equaling about two thirds of the private (time) cost of travel. About one third of this cost is borne by public transport users. Most roads are never hypercongested, but some are hypercongested for more than one hour per day. Hypercongestion accounts for about 40 percent of congestion-related welfare losses. Welfare losses incurred on roads that are hypercongested are substantial, predominantly because of a reduction in speed rather than throughput. Our results suggest policies that reduce congestion can result in important welfare gains. |
| Keywords: | marginal external congestion cost, deadweight loss, hypercongestion, public transport |
| JEL: | D62 R41 H23 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7693&r=all |
| By: | Cédric Clastres (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes); Jacques Percebois (UMR ART-Dev - Acteurs, Ressources et Territoires dans le Développement - CNRS - Centre National de la Recherche Scientifique - UM - Université de Montpellier - UM3 - Université Paul-Valéry - Montpellier 3 - UPVD - Université de Perpignan Via Domitia - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement, CEC - Chaire Economie du Climat - Université Paris-Dauphine, PSL Research University); Olivier Rebenaque (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes, CEC - Chaire Economie du Climat - Université Paris-Dauphine, PSL Research University); Boris Solier (UMR ART-Dev - Acteurs, Ressources et Territoires dans le Développement - CNRS - Centre National de la Recherche Scientifique - UM - Université de Montpellier - UM3 - Université Paul-Valéry - Montpellier 3 - UPVD - Université de Perpignan Via Domitia - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement, CEC - Chaire Economie du Climat - Université Paris-Dauphine, PSL Research University) |
| Abstract: | The deployment of renewable energies relies upon incentive policies to make their use profitable for the owner. Increasing costs of renewable support result in rising public service obligation tariffs to fund these policies. The photovoltaic prosumption could help decreasing the cost of developing renewables but induces cross-subsidies between prosumers and other users of the network that may compensate the benefits. We show that such cross-subsidies do occur but are dependent on the self-consumption rate that will remain low in the coming years. The regulator could fund these cross-subsidies by increasing the fixed part of the network tariff for prosumers only. |
| Keywords: | network tariff,cross-subsidies,self-consumption |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02146533&r=all |
| By: | Holmberg, P.; Ritz, R. |
| Abstract: | Capacity mechanisms are increasingly used in electricity market design around the world yet their role remains hotly debated. In this paper, we introduce a new benchmark model of a capacity mechanism in a competitive electricity market with many different generation technologies. We consider two policy instruments, a wholesale price cap and a capacity payment, and show which combinations of these instruments induce socially-optimal investment by the market. Changing the price cap or capacity payment affects investment only in peak generation plant, with no equilibrium impact on baseload or mid-merit plant. We obtain a rationale for a capacity mechanism based on the internalization of a system-cost externality – even where the price cap is set at the value of lost load. In extensions, we show how increasing renewables penetration enhances the need for a capacity mechanism, and outline an optimal design of a strategic reserve with a discriminatory capacity payment. |
| Keywords: | Investment, wholesale electricity market, capacity mechanism, capacity auction, strategic reserve |
| JEL: | D41 L94 |
| Date: | 2019–07–09 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1960&r=all |
| By: | Belloc, Filippo |
| Abstract: | We study hours worked by drivers in the peer-to-peer transportation sector with cross-side network effects. Medallion lease (regulated market), commission-based (Uber-like pay) and profit-sharing ("pure" taxi coop) compensation schemes are compared. Our static model shows that network externalities matter, depending on the number of active drivers. When the number of drivers is limited, in the presence of positive network effects, a regulated system always induces more hours worked, while the commission fee influences the comparative incentives towards effort of Uber-like pay versus profit-sharing. When the number of drivers is infinite (or close to it), the influence of network externalities on optimal effort vanishes. |
| Keywords: | Uber, network effects, ride-sharing, pay schemes, effort, taxi industry |
| JEL: | J22 J33 L91 |
| Date: | 2019–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:95179&r=all |
| By: | Woroniuk, D.; Karam, A.; Jamasb, T. |
| Abstract: | We apply network theory to analyse the interactions of trading hub prices, and to assess the harmonisation of the European gas market. We construct dynamic networks, where the nodes correspond to the twelve EU trading hubs, and where the edges weight the causality between the variations of the respective gas prices. Network density dynamically calculates the aggregate quantity of causal interactions recorded within the system, which provides information pertaining to the integration of the European gas network. We document a number of spikes in network density, suggesting short periods of improved connectivity of European gas markets. We argue that these results appear to be driven by exogenous factors, such as unseasonal weather patterns, seismic activity and pipeline capacity reductions or outages. The findings elucidate the time varying nature of European gas market dynamics, and the importance of continual monitoring of market evolution. |
| Keywords: | Market Integration, Information Transmissions, Natural Gas, Network Theory |
| JEL: | C32 F18 Q43 Q47 Q48 |
| Date: | 2019–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1964&r=all |
| By: | Victor von Loessl (University of Kassel); Heike Wetzel (University of Kassel) |
| Abstract: | Energy efficiency provides a substantial opportunity to tackle increasing greenhouse gas emissions. However, in traditionally regulated energy markets, energy providers maximize their profits by selling electricity or heat as long as their marginal revenue exceeds their marginal costs of production. This so called ’throughput incentive’ fundamentally restricts the motivation of utilities to invest in energy efficiency. This paper therefore investigates the relation between the regulatory policy revenue decoupling, that separates utilities’ revenue from sales fluctuations, and electricity customers’ energy demand and efficiency in the U.S. To address the research question at hand, we follow recent developments in energy demand function modeling and Stochastic Frontier Analysis (SFA) estimation techniques that allow to account for persistent as well as transient efficiency. The estimation results show a significant negative correlation between revenue decoupling and electricity consumption patterns.Furthermore, we find electricity customers have small transient inefficiency. However, results indicate an underlying persistent inefficiency across the entire electric sector. |
| Keywords: | Revenue decoupling, energy efficiency, stochastic frontier analysis, demand frontier function, transient and persistent efficiency |
| JEL: | C23 L51 L94 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201918&r=all |
| By: | Brown, Austin PhD; Fuller, Sam; Gregory, Jack |
| Abstract: | How, and how effectively, different electric vehicle (EV) related policies will work is an immediate and important question for California as the state updates its EV policies. Adding urgency, Assembly Bill (AB) 615, which was signed by the Governor, requires the California Air Resources Board (CARB) to produce a report by December 2018 on related topics, in consultation with the University of California Institute of Transportation Studies (UC ITS). Senate Bill (SB) 498, also signed, also requires CARB reporting with somewhat different but overlapping topics. The need is to define the state of the research on policies to support EV deployment in a manner that is directly usable by California in updating policies. The specific need for CARB is material estimates of these factors (called out in AB 615): "impact of income caps, increased rebates for low-income consumers, and increased outreach on the electric vehicle market, as well as a quantification of emissions reductions attributable to the Clean Vehicle Rebate Project." This white paper is one in a series summarizing recent research findings for the state of California. The topic of the series is evaluating the important components of electric vehicle adoption and its effects. The goals of these white papers are to: 1. Synthesize the best published and on-going research available on each topic; 2. Highlight important research gaps and propose areas for future research; 3. Provide the reader with a framework for understanding the various dimensions of each topic; 4. Make a clear link between research findings and policy implications, if possible; and 5. Be accessible to an informed and interested, but non-technical audience. |
| Keywords: | Social and Behavioral Sciences, Electric vehicles, policy analysis, automobile ownership, market penetration, incentives, emissions, California |
| Date: | 2019–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:itsdav:qt28x636nr&r=all |
| By: | Ewa Lazarczyk; L. (Lisa B.) Ryan |
| Abstract: | Modern electricity markets are characterized by increasing shares of intermittent production which has almost zero marginal costs. The effect of introducing large amounts of cheap power into the system is known as the merit order effect – a shift of a supply curve to the right which delivers lower equilibrium prices. The lower prices and the fact that fossil-fuel generators are used less often exacerbate adequacy problems – there is a threat that not enough generating capacity will be available in the system since generators´ revenues are low and investment needs are not met. This and the fact that energy markets are often capped in order to prevent market power leads to the so called “missing money problem” (Teirila and Ritz, 2018, Bublitz et al., 2019). One possible remedy is to supplement the energy only markets with capacity markets (Newbery, 2016; Cramton et al, 2013; Joskow, 2007). Recently the electricity market on the island of Ireland has been completely restructured, a change that affected also the capacity mechanism, transforming it from an administrative decision-based to a market-based mechanism, an auction. The move however has not been a smooth one, with a supply of Dublin put at risk as one of the main suppliers in the area wanted to withdraw from the market as a result of not being able to successfully secure the operation of its two units. Since Irish electricity demand is forecast to grow by between 15% and 47% over the next ten years, with over a quarter of all electricity consumed by data centres, many of which will be in the Dublin region (EirGrid, 2018a), the threat of losing one of the suppliers become even more serious. In this case study we show how even with considerable analysis and preparation, the introduction of an auction system is not without risk. |
| Keywords: | Capacity markets; Electricity markets; Auctions; Energy economics |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:ucn:oapubs:10197/10915&r=all |
| By: | Ryan Hawthorne; Lukasz Grzybowski |
| Abstract: | We test for the distributional effects of regulation and entry in the mobile telecommunications sector in a highly unequal country, South Africa. Using six waves of a consumer survey of over 134,000 individuals between 2009-2014, we estimate a discrete-choice model allowing for individual-specific price-responsiveness and preferences for network operators. Next, we use a demand and supply equilibrium framework to simulate prices and the distribution of welfare without entry and mobile termination rate regulation. We find that regulation benefits consumers significantly more than entry does, and that high-income consumers and city-dwellers benefit more in terms of increased consumer surplus. |
| Keywords: | mobile telecommunications, competition, entry, discrete choice, inequality |
| JEL: | L13 L40 L50 L96 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7703&r=all |
| By: | Govorukha, Kristina; Mayer, Philip; Rübbelke, Dirk; Vögele, Stefan |
| Abstract: | The main drivers of transformation processes of electricity markets stem from climate policies and changing economic environments. In order to analyse the respective developments, modelling approaches regularly rely on multiple structural and parametric simplifications. For example, discontinuities in economic development (recessions and booms) are frequently disregarded. Distorting effects that are caused by such simplifications tend to scale up with an extension of the time horizon of the analysis and can significantly affect the accuracy of long-term projections. In this study, we include information on economic discontinuities and elaborate on their influences on short-and long-term modelling outcomes. Based on historical data, we identify the impact of a high-amplitude change in economic parameters and examine its cumulative effect on the German electricity market by applying a techno-economic electricity market model for the period from 2005 to 2014. Similar changes may consistently occur in the future and we expect that a more comprehensive understanding of their effects on long-term scenarios will increase the validity of long-term models. Results indicate that policy decision making based on modelling frameworks can benefit from a comprehensive understanding of the underlying simplifications of most scenario studies. |
| Keywords: | Resource /Energy Economics and Policy |
| Date: | 2019–07–24 |
| URL: | http://d.repec.org/n?u=RePEc:ags:feemfe:291802&r=all |
| By: | Casini, Paolo; Valentini, Edilio |
| Abstract: | There is a large consensus that low levels of carbon price cannot provide adequate incentives to invest in cleaner technologies and abate emissions. Since carbon demand and price tend to decrease during recessions, economists and policy makers have proposed different types of price stabilizing mechanisms (PSM) for emissions markets to prevent carbon price from falling too low. We investigate the effects of a PSM on investments and emissions and show that when unfavorable macroeconomic conditions reduce emissions, adjusting the supply of allowances to sustain their price may inhibit investments. Moreover, when firms invest in an integrated abatement technology, not only can emissions increase - an effect previously examined in the literature - but a PSM can exacerbate this effect when an exogenous negative shock curbs the demand of carbon. |
| Keywords: | Research Methods/ Statistical Methods |
| Date: | 2019–07–24 |
| URL: | http://d.repec.org/n?u=RePEc:ags:feemec:291801&r=all |
| By: | Chen, Luoye; Khanna, Madhu; Blanc, Elena; Hudiburg, Tara; DeLucia, Evan |
| Keywords: | Resource /Energy Economics and Policy |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:291091&r=all |
| By: | Zhang, Lin; Adom, Philip Kofi |
| Abstract: | This study examines the energy efficiency transitions in China using provincial data covering the period 2003–2015. Sustainable progress in energy efficiency achievements is beneficial to energy insecurity and the achievement of the Paris Agreement. This article combines the stochastic frontier method with the panel Markov-switching regression to model energy efficiency transitions. Estimated energy efficiency scores showed significant regional and provincial heterogeneity. Also, while human capital development, urbanization, and foreign direct investment promote energy efficiency, price and income per capita reduce it. The transition probabilities indicate that the high energy-efficient state is less sustainable, and the movement towards the frontier seems less persistent than movement from the frontier. Thus, it appears that China is not making sustainable progress in energy efficiency. The unsustainable nature of the high energy-efficient state suggests that in China, there are weak energy efficiency efforts and energy efficiency policies lack robustness. |
| Keywords: | Energy efficiency transitions, Panel Markov, Stochastic frontier, China |
| JEL: | O4 O47 Q4 Q40 Q43 Q48 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94797&r=all |
| By: | Katarzyna Maciejowska |
| Abstract: | The literature on renewable energy sources indicates that an increase of the intermittent wind and solar generation affects significantly the distribution of electricity prices. In this article, the influence of two types of renewable energy sources (wind and solar photo voltaic) on the level and variability of German electricity spot prices is analyzed. The quantile regression models are built to estimate the merit order effect for different quantiles of electricity prices. The results indicate that both types of renewable generations have a similar, negative impact on the price level, approximated by the price median. When the price volatility, measured by the inter-quantile range (IQR), is considered, the outcomes show that wind and solar influence prices differently. Conditional on the level of the total demand, the wind generation would either increase (when the demand is low) or decrease (when the demand is high) the IQR. Meanwhile, the increase of solar power stabilizes the price variance for moderate demand level. Thus, policy supporting the development and integration of RES should search for a balance between the wind and solar power. |
| Keywords: | Electricity prices; Quantile regression; Merit order effect; Price variability |
| JEL: | C22 C32 C51 Q41 |
| Date: | 2019–07–11 |
| URL: | http://d.repec.org/n?u=RePEc:wuu:wpaper:hsc1902&r=all |
| By: | Martin W. Adler; Federica Liberini; Antonio Russo; Jos N. van Ommeren |
| Abstract: | We estimate the effect of public transport supply on travel times of motor-vehicle and bus users in Rome, Italy. We apply a quasi-experimental methodology exploiting hourly information on public transport service reductions during strikes. We find that a 10 percent reduction in public transit supply increases the travel time of motor-vehicles by about 1.6 percent in the morning peak. The effect on bus travel time is similar. The congestion-relief benefit of public transport is thus sizeable and bus travel time gains account for an important share of it. We also examine the welfare effects of providing bus lanes. All else given, a bus lane reduces bus travel time by at least 29 percent. We find that bus lanes are undersupplied in Rome, despite the potential costs due to reducing capacity available to cars. |
| Keywords: | congestion relief benefit, bus lanes, public transit, strikes |
| JEL: | H23 H42 R41 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7698&r=all |
| By: | Ángela García-Alamino (University of Castilla-La Mancha); Santiago J. Rubio (University of Valencia) |
| Abstract: | The paper studies the use of emission taxes and feed-in subsidies for the regulation of a monopoly that can produce the same good with a technology that employs a polluting input and a clean technology. The second-best tax and subsidy are calculated solving a two-stage policy game between the regulator and the monopoly with the regulator acting as the leader of the game. We find that the second-best tax rate is the Pigouvian tax. The tax implements the efficient level of the dirty output but does not affect the total output. On the other hand, the subsidy leads to the monopoly to reduce the dirty output but also to increase the total output. This increase in total output may yield a larger net social welfare when the subsidy is used provided that the marginal cost of clean output is not very high, as a linear-quadratic specification of the model confirms. Finally, it is showed that the combination of an emission tax with a feed-in subsidy induces the firm to choose the efficient outputs, but in this case the first-best tax must be lower than the Pigouvian tax. Thus, the findings of this paper support the idea that feed-in subsidies open the possibility for improving the regulation of a polluting firm with market power. |
| Keywords: | Monopoly, Polluting Inputs, Clean Technology, Production-mix, Emission Tax, Feed-in Subsidy |
| JEL: | D42 H23 L12 Q58 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2019.15&r=all |
| By: | Holowach, Monique C.; Parkins, John; Anders, Sven M.; Meyerhoff, Juergen |
| Keywords: | Resource /Energy Economics and Policy |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:291103&r=all |
| By: | Arellano Gonzalez, Jesus; Moore, Frances; AghaKouchak, Amir; Qin, Yue; Davis, Steven; Burney, Jennifer; Levy, Morgan |
| Keywords: | Resource /Energy Economics and Policy |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:291122&r=all |
| By: | Zhang, Ruohao; Li, Huan; Khanna, Neha; Sullivan, Dan; Krupnick, Alan; Hill, Elaine |
| Keywords: | Environmental Economics and Policy |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:290817&r=all |
| By: | Dorothée Charlier (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Bérangère Legendre (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Anna Risch (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes) |
| Abstract: | Between 50 and 125 million Europeans are unable to afford the energy needed for adequate heating, cooking, light, and use of appliances in the home. Tackling fuel poverty has thus become a public policy challenge. In this paper, we assess the effectiveness of social energy subsidies and social housing to reduce fuel poverty. The literature reports that rising fuel prices, low incomes, and energy-inefficient housing are the main causes of fuel poverty. Existing public policies focus mainly on price-and income-based measures to reduce fuel poverty, such as social energy subsidies. This type of policy is palliative as it does not permit to sustainably eradicate fuel poverty. Other policies aim to encourage renovation in order to improve energy efficiency. Those policies are curative as they sustainably reduce one cause of fuel poverty : energy inefficiency. In this paper, we focus on another public policy to tackle fuel poverty : social housing. We believe that this policy could be preventive, as the literature reports the better energy efficiency of social housing. We use matching methods and find that living in social housing decreases fuel poverty by 5.4% to 9.1%. On the contrary, social energy subsidies have no effect on fuel poverty. |
| Keywords: | Fuel poverty,social housing,social energy subsidy,matching method |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02145950&r=all |
| By: | Gorecki, Paul |
| Abstract: | In 2019 the Department with responsibility for household waste (HHW) policy in Ireland will commence a review of its 2012 Policy. That review – as anticipated in the 2012 Policy – will rely on the research and analysis of the Competition and Consumer Protection Commission (CCPC) on the state of competition in the HHW sector and on its policy guidance/recommendations. The CCPC’s 2018 study draws attention to a number of shortcomings in the HHW sector’s performance. It recommends a national economic regulator, not the appropriate market design (i.e. the status quo, side-by-side competition, which is evolving into a series of geographic unregulated monopolies; competitive tendering; and/or price control). Market design is delegated to the regulator. The description and analysis of the CCPC concerning the HHW sector should be relied upon by the Department in its review. There is, however, no need for a national economic regulator and all the associated costs, which no doubt will be passed onto households. Competitive tendering administered by local authorities with advice from the Office of Government Procurement, the CCPC and others, is the preferred market design and regulatory structure. |
| Keywords: | household waste collection; competitive tendering; side-by-side competition; competition for the market; competition in the market; Competition and Consumer Protection Commission. |
| JEL: | D44 L10 L40 |
| Date: | 2019–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:95000&r=all |
| By: | Achim Voss (University of Hamburg, Department of Economics) |
| Abstract: | I analyze energy-efficiency policy as a prescription of a minimum-efficiency standard for energy-using household goods like cars, building insulation, and home appliances. Such a policy has two effects. At the intensive margin, a household that invests will choose a more efficient device. At the extensive margin, there will be more households that choose not to invest at all. Thus, additional to and different from rebound effects, energy-efficiency policy may have unintended consequences. I analyze the equilibrium effects of a minimum-efficiency standard, taking price adjustments and household heterogeneity into account. A moderate minimum-efficiency standard increases demand for efficiency-enhancing household capital goods, and reduces energy demand. More stringent policy is shown to be less effective or even counterproductive. For the case of a fixed supply of efficiency-enhancing capital, it is shown that minimum-efficiency standards increase equilibrium energy demand. Finally, I analyze which households benefit from minimum-efficiency standards and which ones lose. A standard induces investing households to expend more for household capital and less for energy. The wedge between the induced expenditures and the private optimum is analyzed as a deadweight loss. |
| Keywords: | Energy Efficiency, Rebound Effects, Household Heterogeneity, Extensive Margin, Gruenspecht Effect, Investment, Theory of Environmental Policy |
| JEL: | Q41 Q48 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2019.13&r=all |