|
on Regulation |
| By: | Aleksandar Zaklan |
| Abstract: | This paper provides an empirical test of the Coase Theorem. I analyze whether emissions are independent from allowance allocations in the electricity sector as regulated under the EU's Emissions Trading System (EU ETS). Exogenous variation in levels of free allocation for power producing installations enables a difference-in-differences strategy. I find that the change in allocations generally does not affect installations' emissions, although temporary effects may exist for some small emitters. The analysis suggests that policy makers may use free allocation in the political bargaining process without compromising cost- effectiveness of the cap-and-trade program. |
| Keywords: | Coase theorem, independence property, cap-and-trade, EU ETS, greenhouse gas emissions |
| JEL: | Q58 Q54 Q52 L94 H23 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1850&r=all |
| By: | Usman,Zainab; Amegroud,Tayeb |
| Abstract: | Morocco charted its own distinctive path of power sector reform. It selectively introduced private sector participation for generation capacity expansion and electricity distribution, while retaining a strong, state-owned and vertically-integrated national power utility operating as a single buyer at the core of the sector. Until recently, the country eschewed an independent regulatory entity. The power sector has been guided by strong top-down policy mandates that have served to align the disparate actions of political parties and sector institutions. Ambitious targets for electricity access, liberalization, and renewable energy investments were conceived as an integrated approach to contribute to economic development by relieving fiscal pressures, reducing external dependence on fossil fuels, and positioning the country as a regional leader in renewable energy. The results have been impressive. Since 1990, Morocco has more than tripled its power supply, while growing renewable energy to account for one-third of the total and relying on the private sector to supply just over half of the electricity generated. Rural electrification has accelerated rapidly from 18 percent in 1995 to virtually 100 percent in 2017. While operational efficiency has been broadly adequate, performance has fluctuated over time. Moreover, the sector?s achievements through this selective approach to reform have come somewhat at the expense of the financial viability of the incumbent utility, the National Office for Electricity and Water (ONEE), which has suffered from lack of cost-reflective tariff-setting and an array of entrenched cross-subsidies. Other vulnerabilities include the continued but declining dependence on electricity imports, external price volatilities of imported fossil fuels, and a territorialized electricity distribution model that could be disrupted by grid integration of renewable energy. |
| Keywords: | Energy Policies&Economics,Energy and Mining,Energy and Environment,Energy Demand,Renewable Energy,Rural and Renewable Energy,Power&Energy Conversion,Energy Sector Regulation |
| Date: | 2019–08–07 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8969&r=all |
| By: | Daniel Felix Ahelegbey (Università di Pavia); Emmanuel Senyo Fianu (University Lüneburg); Luigi Grossi (Università di Verona) |
| Abstract: | Ensuring the security of stable, e?cient, and reliable energy supplies has intensi?ed the interconnections among energy markets. Imbalances between supply and demand due to operational failures, congestions and other sources of risk faced by these connections can lead to a system that is vulnerable to the spread of risk and its spill-over. The main contribution of this paper lies in the adoption of recently proposed network models in an innovative way, which enhances the proper analysis of these market connections. The case of the Italian energy market is studied because it is a clear example of a zonal market where risk can spread across connected zones. We estimate within-day and across-day zonal market interconnections with a multivariate time series of hourly prices, forecast demand and wind generation over the period 2010 – 2016 and evaluate the dynamics and persistence of zonal market connections examining the central market and the spread of risk in the zones of the Italian electricity market. Our ?ndings show that models based purely on prices give a better and more accurate explanation of risk contagion than models with exogenous regressors, revealing that the Central North and Central South zones are the most in?uential in terms of hub centrality for intraday and inter-day risk transmission, respectively, in the Italian energy market. |
| Keywords: | Bayesian inference, complex networks, energy prices, market e?ciency, systemic risk, volatility, zonal power market |
| JEL: | C11 C15 C32 C52 G01 Q41 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:pav:demwpp:demwp0182&r=all |
| By: | T. Brown; L. Reichenberg |
| Abstract: | Although recent studies have shown that electricity systems with shares of wind and solar above 80% can be affordable, economists have raised concerns about market integration. Correlated generation from variable renewable sources depresses market prices, which can cause wind and solar to cannibalize their own revenues and prevent them from covering their costs from the market. This cannibalization appears to set limits on the integration of wind and solar, and thus contradict studies that show that high shares are cost effective. Here we show from theory and with numerical examples how policies interact with prices, revenue and costs for renewable electricity systems. The decline in average revenue seen in some recent literature is due to an implicit policy assumption that technologies are forced into the system, whether it be with subsidies or quotas. If instead the driving policy is a carbon dioxide cap or tax, wind and solar shares can rise without cannibalising their own market revenue, even at penetrations of wind and solar above 80%. Policy is thus the primary factor driving lower market values; the variability of wind and solar is only a secondary factor that accelerates the decline if they are subsidised. The strong dependence of market value on the policy regime means that market value needs to be used with caution as a measure of market integration. |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2002.05209&r=all |
| By: | Thomas Schinko (International Institute for Applied Systems Analysis (IIASA), Austria); Birgit Bednar-Friedl (University of Graz, Austria); Barbara Truger (University of Graz, Austria); Rafael Bramreiter (University of Graz, Austria); Nadejda Komendantova (University of Graz, Austria); Michael Hartner (Energy Economics Group, TU Wien, Austria) |
| Abstract: | To achieve a low-carbon transition in the electricity sector, countries combine national-scale policies with regional renewable electricity (RES-E) initiatives. Taking Austria as an example, we investigate the economy-wide effects of implementing national-level feed-in tariffs alongside local-level ‘climate and energy model (CEM) regions’, taking account of policy externalities across the two governance levels. We distinguish three types of CEM regions by means of a cluster analysis and apply a sub-national Computable General Equilibrium (CGE) model to investigate two RES-E scenarios. We find that whether the net economic effects are positive or negative depends on three factors: (i) RES-E potentials, differentiated by technology and cluster region; (ii) economic competitiveness of RES-E technologies relative to each other and to the current generation mix; and (iii) support schemes in place which translate into policy costs. We conclude that the focus should mainly be on economically competitive technologies, such as PV and wind, to avoid unintended macroeconomic side-effects. To achieve that, national support policies for RES-E have to be aligned with regional energy initiatives. |
| Keywords: | energy transition; computable general equilibrium (CGE); national support policies; regional energy initiatives; policy externality |
| JEL: | Q42 R13 C68 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:grz:wpaper:2020-05&r=all |
| By: | Bushnell, James PhD; Mazzone, Daniel; Smith, Aaron; Witcover, Julie |
| Abstract: | California’s low carbon fuel standard (LCFS) specifies that the state’s transportation fuel supply achieve a 20% reduction in carbon intensity (CI) below 2011 levels by 2030. Reaching the standard will require substantive changes in the fuel mix, but the specifics and the cost of these changes are uncertain. We assess if and how California is likely to achieve the standard, and the likely impact of infrastructure credits on this compliance outlook. We begin by projecting a distribution of fuel and vehicle miles demand under business-as-usual economic and policy variation and transform those projections into a distribution of LCFS net deficits for the entire period from 2019 through 2030. We then construct a variety of scenarios characterizing LCFS credit supply that consider different assumptions regarding input markets, technological adoption over the compliance period, and the efficacy of complementary policies. In our baseline scenario for credit generation, LCFS compliance would require that between 60% and 80% of the diesel pool be produced from biomass. Our baseline projections have the number of electric vehicles reaching 1.3 million by 2030, but if the number of electric vehicles reaches Governor Jerry Brown’s goal of 5 million by 2030, then LCFS compliance would require substantially less biomass-based diesel. Outside of rapid zero emission vehicle penetration, compliance in 2030 with the $200 credit price may be much more difficult. New mechanisms to allow firms to generate credits by building electric vehicle charging stations or hydrogen fueling stations have minor implications for overall compliance because the total quantity of infrastructure credits is restricted to be relatively small. |
| Keywords: | Engineering, Biomass fuels, hydrogen fuels, energy resources, renewable energy sources, greenhouse gases, carbon taxes, incentives, zero emission vehicles, low carbon fuel standards |
| Date: | 2020–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:itsdav:qt7sk9628s&r=all |
| By: | Mireille Chiroleu-Assouline (Paris School of Economics, University Paris 1 Panthéon-Sorbonn); Ariane Lambert-Mogiliansky (Paris School of Economics) |
| Abstract: | We study the problem faced by activists who want to maximize firms' compliance with high environmental standards. Our focus is on radical activism which relies on non-violent civil disobedience. Disruptive actions and the threat thereof are used to force firms to concede i.e., to engage in self-regulation. We address the optimal use of scarce activist resources in face of incomplete information by looking at a general mechanism, directly adapted from Myerson's (1981) optimal auction theory. The characterization informs that the least vulnerable and most polluting firms should be targeted with disruptive actions while the others are granted a guarantee not to be targeted in exchange for a concession. This characterization allows studying the determinants of the activist's strength and how it is affected by repression, a central feature for civil disobedience. We find that optimal radical activism is relatively resilient to repression. In an extension that accounts for asymmetry between firms'abatement cost, we find that the mechanism optimizes the allocation of abatment efforts and creates incentives for innovation. We discuss some other welfare properties of optimal activism. |
| Keywords: | Activism, Self-regulation, Mechanism design, Repression |
| JEL: | D44 D73 D82 F21 G22 H23 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:fae:wpaper:2020.07&r=all |
| By: | Oriana Bandiera; Michael Carlos Best; Adnan Qadir Khan; Andrea Prat |
| Abstract: | We design a field experiment to study how the allocation of authority between frontline procurement officers and their monitors affects performance both directly and through the response to incentives. In collaboration with the government of Punjab, Pakistan, we shift authority from monitors to procurement officers and introduce financial incentives to a sample of 600 procurement officers in 26 districts. We find that autonomy alone reduces prices by 9% without reducing quality and that the effect is stronger when the monitor tends to delay approvals for purchases until the end of the fiscal year. In contrast, the effect of performance pay is muted, except when agents face a monitor who does not delay approvals. The results illustrate that organizational design and anti-corruption policies must balance agency issues at different levels of the hierarchy. |
| JEL: | D02 D04 D2 D23 D73 H1 H11 H57 H83 M42 M48 M52 O1 O12 O2 O23 O38 O53 P16 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26733&r=all |
| By: | Nitsch, Volker; Ahlfeldt, Gabriel M.; Wendland, Nicolai |
| Abstract: | For a complete cost‐benefit analysis of durable infrastructures, it is important to understand how the value of non‐market goods such as transit time and environmental quality changes as incomes rise in the long‐run. We use difference‐in‐differences and spatial differencing to estimate the land price capitalization effects of metro rail in Berlin, Germany today and a century ago. Over this period, the negative implicit hedonic price of rail noise tripled. Our results imply income elasticities of the value of noise reduction and transport access of 2.2 and 1.4, substantially exceeding cross‐sectional contingent valuation estimates. |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:dar:wpaper:117314&r=all |
| By: | Daniel Bj\"orkegren; Burak Ceyhun Karaca |
| Abstract: | Governments spend billions of dollars subsidizing the adoption of different goods. However, it is difficult to gauge whether those goods are resold, or are valued by their ultimate recipients. This project studies a program to subsidize the adoption of mobile phones in one of the poorest countries in the world. Rwanda subsidized the equivalent of 8% of the stock of mobile phones for select rural areas. We analyze the program using 5.3 billion transaction records from the dominant mobile phone network. Transaction records reveal where and how much subsidized handsets were ultimately used, and indicators of resale. Some subsidized handsets drifted from the rural areas where they were allocated to urban centers, but the subsidized handsets were used as much as handsets purchased at retail prices, suggesting they were valued. Recipients are similar to those who paid for phones, but are highly connected to each other. We then simulate welfare effects using a network demand system that accounts for how each person's adoption affects the rest of the network. Spillovers are substantial: 73-76% of the operator revenue generated by the subsidy comes from nonrecipients. We compare the enacted subsidy program to counterfactual targeting based on different network heuristics. |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2002.05791&r=all |
| By: | Vesa Kanniainen; Juha Laine; Ismo Linnosmaa |
| Abstract: | A non-trivial fraction of people cannot afford to buy pharmaceutical products at unregulated market prices. Therefore, the paper analyzes the public insurance of the pharmaceutical products in terms of price controls and the socially optimal third-degree price discrimination. It characterizes first the Ramsey pricing rule in the absence of insurance and in the case where the producer price has to cover the R&D sunk cost of the firm. Subsequently, conditions for a welfare increasing departure from Ramsey pricing are stated in terms of price regulation and insurance coverage. The resulting outcome is second best. Unlike the earlier views expressed, increased consumption of pharmaceutical products is shown to be welfare increasing in the second best world. As the optimal means-tested insurance, two alternative criteria for vertical equity are examined in the spirit of the Rawlsian view. In the first scheme, the regulator chooses a higher insurance coverage for individuals with their income below a threshold. In the second scheme, the society imputes a social value to low-income patients in terms of the value-added they produce after the treatment. Under both schemes, the threshold is determined endogenously. |
| Keywords: | pharmaceutical products, price regulation, public health insurance, third-degree price discrimination, equity criterion |
| JEL: | L10 L50 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8031&r=all |
| By: | Marleen Marra (Département d'économie) |
| Abstract: | This paper presents, solves, and estimates the first structural auction model with seller selection. This allows me to quantify network effects arising from endogenous bidder and seller entry into auction platforms, facilitating the estimation of theoretically ambiguous fee impacts by tracing them through the game. Relevant model primitives are identified from variation in second-highest bids and reserve prices. My estimator builds off the discrete choice literature to address the double nested fixed point characterization of the entry equilibrium. Using new wine auction data, I estimate that this platform’s revenues increase up to 60% when introducing a bidder discount and simultaneously increasing seller fees. More bidders enter when the platform is populated with lower-reserve setting sellers, driving up prices. Moreover, I show that meaningful antitrust damages can be estimated in a platform setting despite this two-sidedness. |
| Keywords: | Auctions with entry; Two-sided markets; Nonparametric identification; Estimation; Nested fixed point |
| JEL: | D44 C52 C57 L81 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/5kht5rc22p99sq5tol4efe4ssb&r=all |
| By: | Fabien Leurent (LVMT - Laboratoire Ville, Mobilité, Transport - IFSTTAR - Institut Français des Sciences et Technologies des Transports, de l'Aménagement et des Réseaux - UPEM - Université Paris-Est Marne-la-Vallée - ENPC - École des Ponts ParisTech, ENPC - École des Ponts ParisTech); François Combes (LVMT - Laboratoire Ville, Mobilité, Transport - IFSTTAR - Institut Français des Sciences et Technologies des Transports, de l'Aménagement et des Réseaux - UPEM - Université Paris-Est Marne-la-Vallée - ENPC - École des Ponts ParisTech); Rob van Nes (TU Delft - Delft University of Technology) |
| Abstract: | The paper provides a synthetic, "strategic" model of transit systems in urban areas that features out a set of modes, quality of service and terminal access, demand and network usage by users' trips, with some hints of spatial heterogeneity. The model encompasses technical relationships relating fleet size and design parameters such as infrastructure length and station spacing, to frequency, commercial speed and access distance, hence to wait time, running time and access/egress time. Economic features are modelled, too: generalized costs to individual users, demand elasticity, supply costs and system welfare. The model can be used for synthetic statistical description of real-world systems as well as for economic analysis and the assessment of given system states against theoretical references. After introducing the model elements and relationships, we put forward a causal diagram that synthesizes the system under study and constitutes the model architecture. We then turn to mathematical analysis to formalize (i) the determination of a system state on the basis of a supply plan, technical relationships and demand behaviour, (ii) the optimisation of system welfare with respect to the action levers on the supply side. Next, for an uncongested system we establish theoretical conditions for both an optimum system state under fixed demand and a second best optimum under variable demand and tariffs. Three "golden rules" for transit network design and management are established, namely (i) balancing the rolling stock costs and the users' costs of waiting time, (ii) balancing the station costs plus the value to users of the dwelling part of their in-network times, against the users' costs of "longitudinal" access times, (iii) balancing the full supply costs and the users' costs of "transversal" access times. Furthermore, the existence and uniqueness of a System Optimum state are proven and a solution scheme is provided. |
| Date: | 2020–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02462463&r=all |
| By: | Roberta De Santis (ISTAT); Cecilia Jona Lasinio (ISTAT); Piero Esposito (LUISS) |
| Abstract: | In this paper, we empirically analyse the environmental regulation-productivity nexus for 14 OECD countries in the period 1990-2013. Our findings support the hypothesis that environmental policies have a productivity growth enhancing effect through innovation as suggested by Porter and Van Der Linde (1995). We provide evidence that both market and non-marked based policies foster labour and multifactor productivity growth and that the positive association is better captured by environmental adjusted productivity indicators. Moreover, we find that productivity increases resulting from changes in the environmental regulation pass through a stimulus to capital accumulation and this effect is concentrated in high ICT intensive countries. Overall, the need to speed up the transition towards a “green economy” for environmental protection purposes can be seen also as an opportunity to improve competitiveness generating a virtuous circle between innovation and environmental friendly production techniques. |
| Keywords: | Inenvironmental regulation, productivity, innovation, Porter hypothesis, |
| JEL: | D24 Q50 Q55 O47 O31 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:lui:lleewp:20153&r=all |
| By: | Marcel Bednarz; Tom Broekel |
| Abstract: | This paper contributes to and connects the literature on spatial innovation diffusion, entre-preneurship, and industry life-cycles by disentangling the relevance of local demand and sup-ply in the adoption of wind energy production. More precisely, we evaluate the strength of local supply-push effects with those of local demand-pull over the course of the evolution of an industry and its main product evolution. By using Bayesian survival models with time-dependent data of wind turbine deployment and firm foundation for 402 German regions between the years 1970 and 2015, we show that the spatial evolution of the German wind energy industry was more strongly influenced by local demand-pull than local supply-push processes. New producers are found to emerge in proximity to existing local demand for wind turbines. No evidence was found for producers being able to create local demand for their products by pushing the adoption of the technology in their regions. |
| Keywords: | supply-push, demand-pull, Bayesian survival analysis, wind energy |
| JEL: | Q21 R12 O33 O31 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2008&r=all |
| By: | Rick van der Ploeg; Armon Rezai |
| Abstract: | Assets in the fossil fuel industries are at risk of losing market value due to anticipated breakthroughs in renewable technology and governments stepping up climate policies in the light of the Paris commitments to limit global warming to 1.5 or 2 degrees Celsius. Stranded assets arise due to uncertainty about the future timing of these two types of events and substantial intertemporal and intersectoral investment adjustment costs. Stranding of assets mostly affects the 20 biggest oil, gas and coal companies who have been responsible for at least a third of global warming since 1965, but also carbon-intensive industries such as steel, aluminium, cement, plastics and greenhouse horticulture. A disorderly transition to the carbon-free economy will lead to stranded assets and legal claims. Institutional investors should be aware of these financial risks. A broader definition of stranded assets also includes countries reliant on fossil fuel exports and workers with technology-specific skills. |
| Keywords: | de-carbonisation, policy tipping, technology, stranded assets |
| JEL: | E62 F41 G11 O33 Q33 Q34 Q35 Q40 Q54 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8025&r=all |
| By: | Marko Köthenbürger |
| Abstract: | Tech giants such as Google and Facebook generate significant amounts of advertising income, which is mainly reported in low-tax countries. This has created a policy discussion of how to re-align the location of value creation and taxation. The success of the business model of these digital platforms relies on the existence of indirect network effects, which are the prime reason why platforms exist and generate advertising income. To account for these effects, conventional tax policy needs to be adjusted. This includes an adjusted concept of nexus that should rely on the location of users, which generate the relevant indirect network effects. The recent EU proposal of a digital service tax goes in this direction and constitutes a policy option for other countries. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:econwp:_41&r=all |
| By: | Francesco Decarolis (Bocconi University); Cristina Giorgiantonio (Bank of Italy) |
| Abstract: | This paper contributes to the analysis of quantitative indicators (i.e., red flags or screens) to detect corruption in public procurement. Expanding the set of commonly discussed indicators in the literature to new ones derived from the operating practices of police forces and the judiciary, this paper verifies the presence of these red flags in a sample of Italian awarding procedures for roadwork contracts in the period 2009-2015. Then, it validates the efficacy of the indicators through measures of direct corruption risks (judiciary cases and police investigations for corruption-related crimes) and indirect corruption risks (delays and cost overruns). From a policy perspective, our analysis shows that the most effective red flags in detecting corruption risks are those related to discretionary mechanisms for selecting private contractors (such as the most economically advantageous offer or negotiated procedures), compliance with the minimum time limit for the submission of tenders and subcontracting. Moreover, our analysis suggests that greater standardization in the call for tender documents can contribute to reducing corruption risks. From a methodological point of view, the paper highlights the relevance of prediction approaches based on machine learning methods (especially the random forests algorithm) for validating a large set of indicators. |
| Keywords: | public procurement, corruption, red flags |
| JEL: | D44 D47 H57 R42 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_544_20&r=all |