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on Regulation |
| By: | Liang Lu (Centre for Competition Policy and Norwich Business School, University of East Anglia); Catherine Waddams Price (Centre for Competition Policy and Norwich Business School, University of East Anglia) |
| Abstract: | Adapting energy distribution systems to new patterns of energy generation and usage often creates tensions between environmental and equity objectives by challenging traditional distributional arrangements and associated charging methodologies. We discuss the principles of fairness and efficiency which might be applied to designing tariffs for residential consumers with self-generation opportunities, and identify the main examples of charging methodologies used in practice. Based on this experience, we develop a stylised model to simulate the effects of a wide range of tariff designs on households with diverse energy use profiles and ability to self-generate. We observe a clear trade-off between incentives to self-generate and distributional concerns across tariff scenarios and show how a net metering scheme may aggravate the trade-off. |
| Keywords: | Distributed Generation; Electricity; Fairness; Network; Renewables; Tariff |
| JEL: | D61 L51 L94 L97 Q41 Q42 |
| Date: | 2019–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:uea:ueaccp:2019_03&r=all |
| By: | Stephan Schulmeister |
| Abstract: | Neither a gradually rising carbon tax nor emission trading schemes can ensure that the costs of emitting greenhouse gases, in particular CO2, will steadily rise faster than the general price level. If, e.g., global fossil energy prices decline faster than a carbon tax or the emission permit price rises, then the final good and its use become cheaper. Since the prices of fossil energy as well as CO2 emission permit prices belong to the most unstable prices in the global economy, carbon taxes and trading schemes cannot anchor the long-term expectation that the effective emission costs for firms and households will rise continuously. Such an expectation, however, is a prerequisite for steadily growing investment in energy efficiency and/or renewable energy because the profits from such investments consist of the saved fossil energy costs (“opportunity profits†). This paper presents an alternative approach: The EU sets a path of steadily rising prices of crude oil, coal and natural gas by skimming off the difference between the EU target price and the respective world market price through a monthly adjusted quantity tax. Instead of the prices of fossil raw materials, the (implicit) quantity tax should fluctuate. In this way, the uncertainty about future price developments of crude oil, coal and natural gas and, hence, of the effective emission costs would be eliminated. Firms and households could calculate the profitability of investments in avoiding carbon emissions. At the same time, such a tax would ensure a uniform European carbon price in all sectors, provided the initial level of the price paths of crude oil, coal and natural gas account for the different CO2 intensities of these types of fossil energy. Given the size of the EU import bill for fossil energy, the amount of potential receipts of such an implicit and flexible CO2 tax would be (very) huge. |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:ico:wpaper:112&r=all |
| By: | Fabra, Natalia; Llobet, Gerard |
| Abstract: | The energy transition will imply a change in the competitive paradigm of electricity markets. Competition-wise, one distinguishing feature of renewables versus fossil-fuels is that their marginal costs are known but their available capacities are uncertain. Accordingly, in order to understand competition among renewables, we analyze a uniform-price auction in which bidders are privately informed about their random capacities. Renewable plants partially mitigate market power as compared to conventional technologies, but producers are still able to charge positive markups. In particular, firms exercise market power by either withholding output when realized capacities are large, or by raising their bids above marginal costs when realized capacities are small. Since markups are decreasing in realized capacities, a positive capacity shock implies that firms offer to supply more at reduced prices, giving rise to lower but also more volatile market prices. An increase in capacity investment depresses market prices, which converge towards marginal cost when total installed capacity is sufficiently large, or when the market structure is sufficiently fragmented. |
| Keywords: | Electricity markets; Forecasts; Multi-unit auctions; renewables |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14060&r=all |
| By: | Christoph Böhringer; Knut Einar Rosendahl |
| Abstract: | Several European countries have decided to phase out coal power generation. Emissions from electricity generation are already regulated by the EU Emissions Trading System (ETS), and in some countries like Germany the phaseout of coal will be accompanied with cancellation of emissions allowances. In this paper we examine the consequences of phasing out coal, both for the broader economy, the electricity sector, and for CO2 emissions. We show analytically how the welfare impacts for a phaseout region depend on i) whether and how allowances are canceled, ii) whether other countries join phaseout policies, and iii) terms-of-trade effects in the ETS market. Based on numerical simulations with a computable general equilibrium model for the European economy, we quantify the economic and environmental impacts of alternative phaseout scenarios, considering both unilateral and multilateral phaseout. We find that terms-of-trade effects in the ETS market play an important role for the welfare effects across EU member states. For Germany, coal phaseout combined with unilateral cancellation of allowances is found to be welfare-improving if the German citizens value emissions reductions at 65 Euro per ton or more. |
| Keywords: | coal phaseout, emissions trading, electricity market |
| JEL: | D61 F18 H23 Q54 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8412&r=all |
| By: | Emanuela Ciapanna (Bank of Italy); Giacomo Roma (Bank of Italy) |
| Abstract: | The purpose of this work is to describe the present conditions and possible development of telecommunication networks in Italy, with particular reference to new generation networks. We review the main technological solutions adopted from a cross-country perspective and investigate the determinants of the Italian lag on both the supply and demand side. We also assess the congestion risk associated with the COVID-19 emergency. The latter is interpreted as a large demand shock, whose effects on some sectors ? namely smart working, e-commerce and e-government ? are already visible. The main message from our analysis is that our country has shown varying degrees of resilience and adaptability to the shock: areas covered with high-speed broadband and clusters of firms and public administrations that had invested in digitalization in the past found themselves well equipped to face the shock. On the contrary, areas without an adequate bandwidth coverage, as well as firms and public administrations devoid of a settled digital culture, were caught unprepared. Our study reiterates the urgent need to maximize the coverage of the whole territory with high-speed internet broadband, and to invest in digital human capital development. |
| Keywords: | telecommunication networks, telecommunication regulation, broadband, 5G, digital skills, smart working, e-commerce, e-government, Covid-19 |
| JEL: | K21 K23 L4 L96 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_573_20&r=all |
| By: | Joto, Keigo; Konagane, Joji; Kono, Tatsuhito; Kuwahara, Masao |
| Abstract: | This paper explores optimal location-dependent but time-invariant peak-load charges on a road and a train in a continuous closed city with bottleneck road congestion and rail overcrowding. In our model, rail and car commuters both choose their departure times, considering their schedule delay costs and dynamically changing transportation costs, and their residential locations. Our theoretical results show that when the bottleneck is located at the fringe of the CBD area (Situation 1), the optimal uniform toll and fares are determined by the difference in price distortions between the train and cars. When the bottleneck on the road is located some distance from the CBD (Situation 2), the optimal uniform toll and fares are represented by price distortions of the cars and train, respectively. Our quantitative results show that, in Situation 1, our toll and fares can achieve 25% of the first-best welfare gains, whereas, in Situation 2, our toll and fares can achieve approximately 30% of the first-best welfare gains. |
| Keywords: | Bottleneck road congestion, Congestion toll, Railway fare, Rail overcrowding |
| JEL: | H21 H23 R48 |
| Date: | 2020–05–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:100446&r=all |
| By: | Sanguinetti, Angela; Ferguson, Beth; Oka, Jamie; Alston-Stepnitz, Eli; Kurani, Kenneth |
| Abstract: | Robo-taxis (automated vehicles operating in a ride-hailing model) have the potential to improve mobility while reducing traffic, emissions, and energy use. However, such outcomes depend largely on increasing riders per vehicle. Public policy that incentivizes industry to design robo-taxis to support ride-pooling may be critical to achieving positive outcomes. This research reviews current shared automated vehicle designs and literature related to potential consumer risks and benefits of ride-pooling in robo-taxis in order to articulate potential design solutions to promote pooling. |
| Keywords: | Social and Behavioral Sciences, Automated vehicles, Ride-sharing, Ride-pooling, Design |
| Date: | 2020–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:itsdav:qt65s3m92w&r=all |
| By: | Mathieu Marcoux (Université de Montréal) |
| Abstract: | To shed light on the limited success of competition enhancing policies in mobile telecommunications, I estimate a game of transceivers’ locations between national incumbents and a new entrant in Canada. I recover player-specific unobserved heterogeneity from bids for spectrum licenses to address the unavailability of regressors required to identify incumbents’ responses to the new entrant’s decisions. I find that incumbents benefitting from important economies of density is a plausible explanation for policies’ drawbacks. I then evaluate the equilibrium effect of subsidizing the new entrant’s transceivers and find that this alternative proposition increases its investments while only slightly modifying incumbents’. |
| Keywords: | Multiple equilibria, Unobserved heterogeneity, Empirical games, Telecommunications |
| JEL: | C57 L11 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:mtl:montde:2019-01&r=all |
| By: | Anthea Paelo; Genna Robb |
| Abstract: | This paper reviews comparative approaches to key issues in economic regulation in four countries of the Southern African Development Community, and how this has been reflected in outcomes in terms of competition, prices, access, and innovation in telecommunications services. In this paper, regulatory models in South Africa, Tanzania, Zambia, and Zimbabwe are evaluated with a focus on regulation of spectrum assignment, infrastructure sharing, call termination rates, and number portability. |
| Keywords: | Competition, economic regulation, Regulation, Southern African Development Community, Telecommunication |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2020-84&r=all |
| By: | Daniel Jeong-Dae Lee (Macroeconomic Policy and Financing for Development Division, United Nations Economic and Social Commission for Asia and the Pacific) |
| Abstract: | Climate change is a fundamental threat to development; significant reductions in greenhouse gas emissions are needed to avert a climate crisis. While no single instrument will achieve this goal, there is broad agreement that carbon pricing is an integral part of climate action. This policy brief shows that carbon tax and emissions trading system are gaining momentum across the world, including in Asia and the Pacific, but current rates are too low to shift behaviour, capital and technology towards low-carbon development. While recognizing the need to raise ambition, governments are naturally concerned about the potential impacts of carbon pricing on industries, jobs and low-income households. This policy brief discusses ways to alleviate the concerns, including through effective use of carbon pricing revenues and regional cooperation. |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:unt:pbmpdd:pb107&r=all |
| By: | Bernadeta Gołębiowska (Faculty of Economic Sciences, University of Warsaw); Anna Bartczak (Faculty of Economic Sciences, University of Warsaw); Mikołaj Czajkowski (Faculty of Economic Sciences, University of Warsaw) |
| Abstract: | The study aims to investigate the impact of social norms and the financial motivation on the disutility of Polish households from energy management. We analyzed consumers’ preferences for the new Demand-Side Management (DSM) programs. We applied a choice experiment (CE) framework for various electricity contracts that implied external control of electricity usage. Based on the hybrid model, we proved that people with higher descriptive social norms about electricity consumption are less sensitive to the level of compensation and more responsive to the number of blackouts. People who stated they would sign the contract because of the financial reasons are less sensitive to the external control of electricity consumption. They are less inclined towards the status quo option. Poland’s energy policy focuses on energy efficiency, and reduction of greenhouse gas emissions. This study may contribute to understanding the decisions of households and provide insights into the DSM option in Poland. |
| Keywords: | choice experiment, demand-side management, electricity, social norms, willingness to accept |
| JEL: | C25 D19 D91 Q41 Q48 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2020-25&r=all |
| By: | Tim Tutton (Centre for Competition Policy, University of East Anglia) |
| Abstract: | Political control of utilities is problematic. On the one hand, the industries have high political salience, meaning that politicians want a serious say in what they deliver. On the other hand, day-to-day political intervention tends to have a high cost in terms of damage to operating efficiency. The UK solution to this conflict has typically been for government to appoint an agent, with a high degree of independence from ministers, to deliver the government's objectives for the utility in question. The agents have been the boards of the public corporations in the nationalised era and the economic regulators in the privatised era. This paper looks at what lessons can be learned from both eras to answer the question of how might political control be better exercised than in the past, in the event that utilities are renationalised. A core conclusion is the desirability of an independent agency (whether or not called a 'regulator') between the minister and the utility, with a transparent ministerial brief to that agency on how it should interpret its (inevitably high-level) statutory obligations. |
| Date: | 2019–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:uea:ueaccp:2019_08&r=all |
| By: | Haraguchi, Junichi; Matsumura, Toshihiro |
| Abstract: | This study investigates the relationship between the optimal privatization policy and the degree of common ownership among private firms by formulating a mixed oligopoly model in which one public firm competes against private firms under common ownership. We find that depending on the private firms' cost structure, one of the following three patterns emerges: (a) the optimal degree of privatization is increasing in the degree of common ownership, (b) the optimal degree of privatization is decreasing in the degree of common ownership, (c) an inverted U-shaped relationship exists between the two. If the marginal cost of private firms is constant, then (b) always emerges, regardless of whether the marginal cost of the public firm is increasing or constant. However, if the marginal cost of private firms is increasing, then all three patterns can emerge. Our results suggest that the property of the optimal privatization policy depends crucially on the cost structure of private firms. |
| Keywords: | overlapping ownership, optimal degree of privatization, mixed oligopolies, relative profit maximization, payoff interdependence |
| JEL: | H44 K21 L13 L32 |
| Date: | 2020–07–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:102152&r=all |
| By: | Isabelle Cadoret (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Emma Galli (Dipartimento di Scienze Sociali - Università degli Studi di Roma "La Sapienza" [Rome]); Fabio Padovano (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This paper empirically examines how governments actually use environmental taxes, by looking to what extent their resort to this type of taxation is consistent with three alternative interpretations of environmental taxes proposed by the welfare economics theoretical literature: the strict and the loose Pigouvian and the double dividend hypotheses. We also extend our analysis to an alternative vision of politics, the Leviathan model, to verify how governments that are imperfectly accountable use environmental taxes. Each theory leads to alternative testable hypotheses, which we verify on a sample that minimizes the analysts' discretionary evaluations, the EU-28 countries that committed themselves to reducing the greenhouse gas emissions by 2020. The estimates lend support to the strict Pigouvian hypothesis and, to a lesser extent, to a version of the double dividend hypothesis, where personal income taxes are "recycled" by environmental ones. The other interpretations do not appear consistent with the data. |
| Keywords: | Environmental taxes,environmental policy goals,Pigouvian taxation,double dividend hypothesis,Leviathan government,dynamic simultaneous equations model |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02875118&r=all |
| By: | David Deller (Centre for Competition Policy, University of East Anglia); Amelia Fletcher (Centre for Competition Policy and Norwich Business School, University of East Anglia) |
| Abstract: | While householders’ ability to navigate the domestic retail energy market has generated considerable debate, little attention has been given to micro and small businesses’ (MSBs) purchasing of energy. This paper provides the first academic assessment of MSBs’ satisfaction with the UK’s retail energy market. Using survey data from the UK energy regulator we find that while intermediaries are central to MSBs switching energy supplier, the quantity of marketing contact received from them is a key source of dissatisfaction. This dissatisfaction with marketing contact has direct policy relevance as the Competition and Market Authority’s 2016 Energy Market Investigation recommended that a database of ‘disengaged’ MSBs be established to enable marketing communications from rival suppliers to prompt MSBs to switch. We also query whether the need for more MSB engagement is obvious, given the prevalence of multi-year energy contracts among MSBs, suggesting that the ‘optimal’ switching level of MSBs likely differs from that of householders. Our evidence suggests that there could be benefits from increased regulatory oversight of intermediaries’ behaviour. Furthermore we note that existing data fail to address an issue of importance for regulatory decision making: the overlap between households and MSBs and the potential choice for MSBs between domestic and non-domestic contracts. Overall, the paper exemplifies the types of insights that can be obtained by regulators providing wider access to the surveys they commission. We recommend that UK regulatory agencies share anonymised raw survey data by default to enhance the transparency, and potentially quality, of their decision making. |
| Date: | 2018–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:uea:ueaccp:2018_09&r=all |
| By: | Cathrine Hagem; Michael Olaf Hoel; Thomas Sterner |
| Abstract: | We analyse two mechanism designs for refunding emission payments to polluting firms: output-based refunding (OBR) and expenditure-based refunding (EBR). In both instruments, emission fees are returned to the polluting industry, typically making the policy more politically acceptable than a standard tax. The crucial difference between OBR and EBR is that the fees are refunded in proportion to output in the former but in proportion to the firms’ expenditure on abatement technology equipment in the latter. To achieve the same abatement target as a standard tax, the fee level in the OBR design is higher, whereas the fee level in the EBR design is lower. The use of OBR and EBR may lead to large differences in the distribution of output and costs across firms. Both designs imply a cost-ineffective provision of abatement, as firms put relatively too much effort into reducing emissions through abatement technology compared with reducing output. However, a standard tax may be politically infeasible and maintaining output may be seen as a political advantage by policymakers if they seek to avoid activity reduction in the regulated sector. |
| Keywords: | emission payments, carbon tax, refunding, CO2, NOX, policy design |
| JEL: | Q28 Q25 H23 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8364&r=all |
| By: | Kendall, Alissa; Harvey, John T.; Butt, Ali A.; Lozano, Mark T.; Saboori, Arash; Kim, Changmo |
| Abstract: | Local governments increasingly prepare Climate Action Plans to lay out specific strategies for achieving local and state greenhouse gas reduction goals. Strategies to reduce transportation emissions are often a key component of these plans, as the transportation sector is responsible for 41% of greenhouse gas emissions in California and 28% in the US. However, many Climate Action Plans do not quantify the emissions reductions or costs of proposed strategies, and even fewer consider the life cycle impacts of the strategies. Life cycle-based assessments consider emissions and costs that occur at the outset of a strategy’s implementation (e.g., purchase, installation, and construction), during operation and maintenance, and at end-of-life. Quantifying the life cycle cost effectiveness and emissions reductions of different strategies can, along with other community priorities, inform the design and implementation of Climate Action Plans that achieve climate goals at a reasonable cost. A marginal abatement cost curve is a useful way to present this information, offering a visualization of the rank order cost-effectiveness and total possible emissions reductions of alternative strategies in a Climate Action Plan. Researchers at the University of California, Davis developed a decision support framework for local governments to assess life cycle greenhouse gas reductions and costs of Climate Action Plan strategies. The researchers demonstrated their approach by developing marginal abatement cost curves for two California counties, Yolo and Unincorporated Los Angeles, based on strategies from their respective Climate Action Plans. This policy brief summarizes findings from that research. View the NCST Project Webpage |
| Keywords: | Engineering, Climate change, Decision making, Greenhouse gases, Life cycle analysis, Local government agencies, Performance measurement, Transportation planning |
| Date: | 2020–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:itsdav:qt7xc670k6&r=all |
| By: | ITF |
| Abstract: | This paper reviews opportunities for mitigating greenhouse gas emissions from Argentina’s transport sector. It also identifies the main challenges for that objective, specifically in freight transport. Actions taken at different levels of government are assessed and the impact of policies focused on other priorities - such as lowering logistic costs - is discussed. The paper also highlights what data on transport emissions are available for Argentina and which tools government agencies use for examining them. |
| Date: | 2020–05–05 |
| URL: | http://d.repec.org/n?u=RePEc:oec:itfaac:75-en&r=all |