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Indivisibilities in investment and the role of a capacity market J. Regul. Econ (IF 1.553) Pub Date : 2024-03-07
Abstract The topic of pricing non-convexities in power markets has been explored vividly in the literature and among practitioners for the past twenty years. The debate has been focused on indivisibilities in short-term auctions, the computational tractability of some pricing proposals, and the economic analysis of their behavior. In this paper, we analyse a source of non-convexities that is not discussed
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The impact of energy transition on distribution network costs and effectiveness of yardstick competition: an empirical analysis for the Netherlands J. Regul. Econ (IF 1.553) Pub Date : 2024-03-04 Floris van Montfoort, Peter T. Dijkstra, Machiel Mulder
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The Bayesian approach to monopoly regulation after 40 years J. Regul. Econ (IF 1.553) Pub Date : 2024-01-22 Ismail Saglam
This paper surveys the monopoly regulation literature with the Bayesian approach. The literature builds on Baron and Myerson’s seminal 1982 paper, entitled “Regulating a Monopolist with Unknown Costs.” After presenting their contributions to the regulation literature, the paper discusses the main criticisms of their model, relating to either informational or commitment assumptions about the Bayesian
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The heterogenous effects of a higher volume of regulation: evidence from more than 200k Spanish norms J. Regul. Econ (IF 1.553) Pub Date : 2024-01-11
Abstract We analyze the aggregate economic impacts, as well as the heterogeneous effects on the different types of enterprises, of the increasing volume of regulation observed in Spain between 1995 and 2000. Our novel database classifies more than 200,000 regulations adopted at the region level for 13 industries (sectors) of the Spanish economy. Exploiting this database, we are able to estimate the
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A simple way to integrate distributed storage into a wholesale electricity market J. Regul. Econ (IF 1.553) Pub Date : 2023-12-30
Abstract Current plans to decarbonize the electric supply system imply that the generation from wind and solar sources will grow substantially. This growth will increase the uncertainty of system operations due to the inherent variability of these renewable sources, and as a result, more reserve capacity will be required to provide the ramping (flexibility) needed for reliable operations. This paper
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Effects of occupational license access on undocumented immigrants evidence from the California reform J. Regul. Econ (IF 1.553) Pub Date : 2023-12-12 Bobby W. Chung
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A hazard analysis of federal permitting under the national environmental policy act of 1970 J. Regul. Econ (IF 1.553) Pub Date : 2023-10-20 Michael Bennon, Daniel De La Hormaza, R. Richard Geddes
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Measuring regulatory errors from environmental policy uncertainty J. Regul. Econ (IF 1.553) Pub Date : 2023-08-28 Ana Espinola-Arredondo, Felix Munoz-Garcia, Dolores Garrido
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A re-examination of the foundations of the cost of capital for regulatory purposes J. Regul. Econ (IF 1.553) Pub Date : 2023-08-25 Darryl Biggar
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Co-operative investment by downstream rivals: network sharing in telecom markets J. Regul. Econ (IF 1.553) Pub Date : 2023-07-09 Øystein Foros, Bjørn Hansen, Thibaud Vergé
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Impact of renewable and non-renewable electricity generation on economic growth in India: an application of linear and nonlinear models J. Regul. Econ (IF 1.553) Pub Date : 2023-06-15 Mohd Arshad Ansari, Pushp Kumar, Muhammed Ashiq Villanthenkodath
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Compliance costs and productivity: an approach from working hours J. Regul. Econ (IF 1.553) Pub Date : 2023-06-04 Masayuki Morikawa
This study proposes a new approach of measuring compliance costs of rules and regulations by focusing on labor input, and estimates the compliance costs in Japan based on a survey of workers. According to the results, the working hours required to comply with rules and regulations account for more than 20% of total labor input. By industry, this cost is higher in the finance and insurance industry
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Price freezes and gas pass-through: an estimation of the price impact of electricity market restructuring J. Regul. Econ (IF 1.553) Pub Date : 2023-03-21 Alexander Hill
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Does an effective bankruptcy reform increases collateralized borrowing? Evidence from a quasi-natural experiment in India J. Regul. Econ (IF 1.553) Pub Date : 2023-03-08 Ranjeet Singh, Yogesh Chauhan, Nemiraja Jadiyappa
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One size fits all? The differential impact of federal regulation on early-stage entrepreneurial activity across US states J. Regul. Econ (IF 1.553) Pub Date : 2023-02-14 John A. Dove
Numerous studies evaluate how a jurisdiction’s institutional and specifically regulatory environment impact firm formation and entrepreneurial activity. This study adds to this by employing a dataset measuring the differential impact that federal regulations have on industries across US states. Specifically, the paper addresses how such differences affect several facets of early-stage entrepreneurial
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Employing gain-sharing regulation to promote forward contracting in the electricity sector J. Regul. Econ (IF 1.553) Pub Date : 2023-01-09 David P. Brown, David E. M. Sappington
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Welfare optimal reliability and reserve provision in electricity markets with increasing shares of renewable energy sources J. Regul. Econ (IF 1.553) Pub Date : 2022-10-31 Fridrik Mar Baldursson, Julia Bellenbaum, Lenja Niesen, Christoph Weber
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Access pricing regulation in the U.S. domestic aviation industry J. Regul. Econ (IF 1.553) Pub Date : 2022-10-03 Douglas C. Turner
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Differences in NPI strategies against COVID-19 J. Regul. Econ (IF 1.553) Pub Date : 2022-08-22 Margarete Redlin
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Size control or intensity control: a comparative study of two Common Environmental Regulations J. Regul. Econ (IF 1.553) Pub Date : 2022-07-27 Hongyu Nian, Chunhua Wang, Haitao Yin
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Can regulation enhancing the shareholder franchise increase firm value? J. Regul. Econ (IF 1.553) Pub Date : 2022-07-21 Anne-Marie Anderson, Nandu Nayar
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Optimal pricing and investment for resources with alternative uses and capacity limits J. Regul. Econ (IF 1.553) Pub Date : 2022-07-21 Alessandro Avenali, Tiziana D’Alfonso, Pierfrancesco Reverberi
Airport runways, radio spectrum, and hospital beds are resources with capacity limits used to provide multiple services with specific capacity requirements in separate markets, which contribute to recover capacity investment costs. A welfare-maximizing and (possibly) budget-constrained firm, whose operating costs significantly increase as total capacity use presses against capacity, chooses prices
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Regulation, entrepreneurship, and firm size J. Regul. Econ (IF 1.553) Pub Date : 2022-04-11 Dustin Chambers, Patrick A. McLaughlin, Tyler Richards
We empirically investigate the theory that regulatory growth within an industry disproportionately burdens small businesses relative to their larger competitors. Using RegData 3.0, we find that a 10% increase in industry-specific regulatory restrictions is associated with a 0.5% reduction in the number of firms regardless of firm size, but a 0.6% reduction in employment only among small firms. We also
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Does capital-based regulation affect bank pricing policy? J. Regul. Econ (IF 1.553) Pub Date : 2022-04-09 Dominika Ehrenbergerová, Martin Hodula, Zuzana Gric
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Optimal WACC in tariff regulation under uncertainty J. Regul. Econ (IF 1.553) Pub Date : 2022-03-29 Ward Romeijnders, Machiel Mulder
In the regulation of network tariffs, the compensation for the opportunity costs of capital through the Weighted Average Costs of Capital (WACC) plays a crucial role. Determining the appropriate level for the WACC is, though, problematic because of the uncertainty about the future conditions in capital markets. When the WACC is set above the future opportunity costs of capital, consumers will pay too
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Correction to: Input price discrimination and horizontal shareholding J. Regul. Econ (IF 1.553) Pub Date : 2022-03-20 Youping Li,Jie Shuai
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Access price structure and entrant build-or-buy incentives in mobile markets J. Regul. Econ (IF 1.553) Pub Date : 2022-01-31 Malin Arve, Øystein Foros, Hans Jarle Kind
We consider a market structure with three mobile providers, two of which are vertically integrated with nationwide coverage. The third provider (an entrant) invests in partial coverage and needs to rent access from one of its rivals. Competition between the vertically integrated providers in the access market may drive them to offer an access price structure that benefits the entrant. For a given level
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Input price discrimination and horizontal shareholding J. Regul. Econ (IF 1.553) Pub Date : 2022-01-28 Youping Li, Jie Shuai
Antitrust laws in many countries prohibit the setting of differential prices across buyers who compete against each other. In this paper, we consider a setting in which a downstream manufacturer has non-controlling interest in its rival and both buy input from an upstream monopolist. Under price discrimination, a lower price is charged to the manufacturer that holds the rival’s shares, which mitigates
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Investment in quality upgrade and regulation of the internet J. Regul. Econ (IF 1.553) Pub Date : 2022-01-15 Edmond Baranes, Cuong Hung Vuong
This paper studies the investment decision by a monopolistic internet service provider (ISP) in different regulatory environments. We consider that the ISP can technically provide separate quality upgrades to two vertically differentiated content providers (CPs). Our results show that if unregulated, the ISP could optimally provide asymmetric quality upgrades to both CPs, in favor of the high-quality
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Regulatory independence and thermal power plant performance: evidence from India J. Regul. Econ (IF 1.553) Pub Date : 2022-01-04 Abhinav Jindal, Rahul Nilakantan
We examine the role of regulatory independence on electricity generation performance in India. Electricity generation in India is exposed to several regulatory jurisdictions with varying levels of regulatory independence. Based on the level of regulatory independence, we classify Indian coal fired power plants into two groups, and evaluate their performance over the period 2005–14 using the non-radial
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Is real-time pricing smart for consumers? J. Regul. Econ (IF 1.553) Pub Date : 2021-11-09 Anette Boom, Sebastian Schwenen
We examine the effects of real-time pricing on welfare and consumer surplus in electricity markets. We model consumers on real-time pricing who purchase electricity on the wholesale market. A second group of consumers contracts with retailers and pays time-invariant retail prices. Electricity generating firms compete in supply functions. Increasing the number of consumers on real-time pricing increases
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Price cap regulation and water quality J. Regul. Econ (IF 1.553) Pub Date : 2021-10-22 Bjørner, Thomas Bue, Hansen, Jacob Victor, Jakobsen, Astrid Fanger
A number of studies suggest that price cap regulation may reduce the quality of the regulated good. This paper analyzes the impact on drinking water quality of a shift from cost-of-service to price cap regulation in Denmark, using a balanced panel of drinking water companies, for the period 2008 to 2016. The price cap was introduced in 2011 for companies above a certain threshold size. We exploit this
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Capital requirements, risk-taking and welfare in a growing economy J. Regul. Econ (IF 1.553) Pub Date : 2021-08-27 Agénor, Pierre-Richard, Silva, Luiz A. Pereira da
The effects of capital requirements on risk-taking and welfare are studied in an overlapping generations model of endogenous growth with banking, limited liability, and government guarantees. Capital producers face a choice between a safe technology and a risky, more productive but socially inefficient, technology. Bank risk-taking is endogenous. As a result of a skin in the game effect—motivated either
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Effects of interest rate caps on credit access J. Regul. Econ (IF 1.553) Pub Date : 2021-08-24 Cubillos-Rocha, Juan Sebastian, Gamboa-Arbelaez, Juliana, Melo-Velandia, Luis Fernando, Restrepo-Tamayo, Sara, Roa-Garcia, Maria Jose, Villamizar-Villegas, Mauricio
We study the liberalization of the microcredit usury rate in Colombia and its effects on loan expansion. In February 2007 the interest rate ceiling for microcredit loans was lifted and fixed to 33%, while the ceiling of all other loans remained unchanged and close to 20%. We perform a Difference-in-Difference analysis by comparing the expansion of microcredit loans (treatment group) with that of corporate
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Labor market outcomes of granting full professional independence to nurse practitioners J. Regul. Econ (IF 1.553) Pub Date : 2021-08-13 Luo, Tianyuan, Escalante, Cesar L., Taylor, Carmina E.
Faced with an impending shortage of physicians, the U.S. healthcare industry’s capability and capacity to meet its growing clientele’s needs rely on finding reliable alternative primary care providers. This study examines how professional independence granted to nurse practitioners could change their labor market outcomes and help alleviate the shortage crisis. The study finds that full scope-of-practice
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Product recall with symmetric uncertainty and multiunit purchases J. Regul. Econ (IF 1.553) Pub Date : 2021-08-03 Marino, Anthony M.
This paper considers product recall under a perfect regime of strict liability. We show that safety is under supplied given output due to an under internalization of infra-marginal units. If we add a mandatory refund with a possible penalty fee in the event that the product turns out to be unsafe, then while the price increases, there is no change in the allocation, utility, profit or total welfare
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Threshold effects in the regulation-innovation nexus: evidence from the telecommunications industry J. Regul. Econ (IF 1.553) Pub Date : 2021-07-22 Michael L. Polemis, Markos Tselekounis
This study empirically tests the relationship between regulation and innovation in the telecommunications sector by deploying an efficient panel threshold model. The balanced panel dataset comprises of 32 OECD countries over the period 1995–2012. The empirical results unveil that beyond a certain threshold, a further increase in the (de)regulatory intensity leads to a decrease of the sectoral innovation
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Input price discrimination and non-controlling vertical shareholding J. Regul. Econ (IF 1.553) Pub Date : 2021-06-30 Romain Lestage
We study how input price discrimination and non-controlling, vertical shareholding interact. We first discuss the implications of the invariance principle (Greenlee and Raskovich in Eur Econ Rev 50:1017–1041, 2006) for input price discrimination across independent downstream markets. We show that, in the short term, price discrimination based on non-controlling, backward shareholding is more likely
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Design and regulation of balancing power auctions: an integrated market model approach J. Regul. Econ (IF 1.553) Pub Date : 2021-06-11 Karl-Martin Ehrhart, Fabian Ocker
We present an integrated market model which considers the dependencies between the wholesale market and the highly regulated balancing power markets. This fosters the understanding of the mechanisms of these markets and, thus, allows the evaluation of the designs of these markets and their interplay. In contrast to existing literature, in our model the prices on the different markets are interdependent
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Optimal risk regulation of monopolists with subjective risk assessment J. Regul. Econ (IF 1.553) Pub Date : 2021-06-08 Daiki Kishishita, Susumu Sato
This study characterizes the optimal regulation of risky activities when the assessment of the probability of an accident is subjective. The optimism of stakeholders forms subjective risk perceptions, which substantially affect the optimal intervention. To explore this issue, we construct a moral hazard model with a limited liability constraint, where stakeholders have heterogeneous beliefs about the
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Correction to: Forward-looking distribution network charges considering lumpy investments J. Regul. Econ (IF 1.553) Pub Date : 2021-06-01 Niels Govaerts,Kenneth Bruninx,Hélène Le Cadre,Leonardo Meeus,Erik Delarue
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Access pricing in network industries with mixed oligopoly J. Regul. Econ (IF 1.553) Pub Date : 2021-05-03 Shana Cui, David E. M. Sappington
We characterize optimal regulated access prices in mixed oligopoly network industries where a private, profit-maximizing firm competes against a public enterprise after purchasing an essential input (e.g., network access). Optimal access prices often are lower for the private firm than for the public enterprise, and can be particularly low for a relatively efficient private supplier. In contrast to
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Forward-looking distribution network charges considering lumpy investments J. Regul. Econ (IF 1.553) Pub Date : 2021-05-01 Niels Govaerts, Kenneth Bruninx, Hélène, Leonardo Meeus, Erik Delarue
Many regulators are pushing for more cost-reflective distribution network charges to inform end users of the grid infrastructure costs their behavior causes. Since future investment costs can be avoided by reducing simultaneous peak loads, forward-looking, coincident peak charges are often proposed. Under the assumption of convex network costs, it has been shown that optimal charges signal long-run
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Regulating corruptible certifier behavior J. Regul. Econ (IF 1.553) Pub Date : 2021-03-20 Sungho Yun
We investigate how to regulate a potentially corruptible certifier considering a situation in which a short-lived firm can acquire a quality label from a long-lived certifier. Such a label can be acquired by investing in quality or bribing the certifier. The unregulated certifier behaves honestly only when the discount factor is sufficiently high, while for lower discount factors, maximizes the size
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Optimal destabilization of cartels J. Regul. Econ (IF 1.553) Pub Date : 2021-02-23 Ludwig von Auer, Tu Anh Pham
This paper introduces an oligopoly model that includes three actors: a cartel (comprising two or more firms that operate like one merged company), a group of competing fringe firms, and a welfare maximizing antitrust authority. The cartel is the Stackelberg quantity leader and the fringe firms are in Cournot competition with respect to the residual demand. The cartel is internally stable if none of
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Macroprudential regulations and bank profit efficiency: international evidence J. Regul. Econ (IF 1.553) Pub Date : 2021-01-16 Chrysovalantis Gaganis, Emilios Galariotis, Fotios Pasiouras, Christos Staikouras
This study examines the impact of macroprudential regulations on bank profit efficiency. The latter is being estimated with a production frontier function using a cross-country dataset of more than 3000 banks from over 130 countries during 2013–2018. The results show that macroprudential regulatory policies diminish bank efficiency. This finding applies to both borrower-targeted and financial institutions-targeted
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Cost efficiency and endogenous regulatory choices: evidence from the transport industry in France J. Regul. Econ (IF 1.553) Pub Date : 2021-01-05 Joanna Piechucka
We study the impact of different regulatory designs on the cost efficiency of operators providing a public service, exploiting data from the French transport industry. The distinctive feature of the study is that it considers regulatory regimes as endogenously determined choices, explained by economic, political, and institutional variables. Our approach leans on a positive analysis to study the determinants
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Self-regulation and governmental oversight: a theoretical and experimental study J. Regul. Econ (IF 1.553) Pub Date : 2021-01-03 Silvester van Koten
A self-regulatory organization (SRO) is a non-governmental organization owned and operated by its members, with the power to create and enforce industry regulations and standards for its members. A key question is whether oversight by an SRO can replace governmental oversight, or whether supplementary governmental oversight is necessary. Using a formal model for the financial sector, and solving simultaneous
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Measuring technical efficiency and shadow price of water pollutants for the leather industry in India: a directional distance function approach J. Regul. Econ (IF 1.553) Pub Date : 2021-01-03 Aparajita Singh, Haripriya Gundimeda
This paper measures the cost of reducing pollution from the Kanpur leather industry which is a prime source of pollution in India’s largest river basin of Ganges. The study uses directional distance function approach to examine the efficiency of leather firms in abating two undesirable pollutants (total suspended solids and chromium) while expanding the desirable leather output, and provides robust
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Loyalty taxes in retail electricity markets: not as they seem? J. Regul. Econ (IF 1.553) Pub Date : 2020-11-23 Bruce Mountain, Kelly Burns
A common view in retail electricity markets is that retailers discriminate based on consumers’ loyalty: loyal consumers pay more and switchers can (and do) select the cheapest offers) when they switch. The premium is colloquially known as a “loyalty tax” or “loyalty premium”. Reflecting this understanding Australia’s governments, regulators and consumer advocates have encouraged consumers to switch
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The relationship between capital and liquidity prudential instruments J. Regul. Econ (IF 1.553) Pub Date : 2020-11-22 Martin Hodula, Zlatuše Komárková, Lukáš Pfeifer
Basel III introduced unweighted capital standard and new regulatory liquidity standards to complement the revised risk-weighted capital requirements. This change in banking sector regulation raised questions on how the capital and liquidity requirements interact and how they should be jointly treated. In the paper, we assess how a regulatory and a subsequent economic shock, and banks’ subsequent response
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The strategic impact of voluntary vs. mandated vertical restraints and termination restrictions on exclusion of rivals J. Regul. Econ (IF 1.553) Pub Date : 2020-11-12 Jacob Burgdorf
It has been shown that manufacturers can employ vertical practices and restraints to prevent entry in markets where upstream entrants require downstream accommodation. I show that if downstream product investment is important and encouraged by the restraint, foreclosing entry this way may not be credible. Additionally, publicly mandated vertical restraints and termination restrictions could prevent
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Has the affordable care act affected health care efficiency? J. Regul. Econ (IF 1.553) Pub Date : 2020-10-15 Russ Kashian, Nicholas Lovett, Yuhan Xue
We utilize health care input and output data to evaluate how state-level efficiency in health care has changed in the wake of the Affordable Care Act (ACA). We use a Stochastic Frontier model to estimate annual measures of technical and cost efficiency before, and after, ACA implementation. Results show that following the ACA, states’ technical efficiency scores improved and converged across states
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An alternative to natural monopoly J. Regul. Econ (IF 1.553) Pub Date : 2020-10-01 Oriol Carbonell-Nicolau
We consider a shared ownership arrangement among consumers/owners as a means to organize production with an underlying decreasing average cost function typical of natural monopolies. The resulting output allocation yields a lower deadweight loss than the monopoly allocation, and is, in some cases, efficient.
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Self-regulation versus government regulation: an externality view J. Regul. Econ (IF 1.553) Pub Date : 2020-09-09 Chang Ma
Who should be responsible for industry regulation, a private self-regulatory agency or a public agency? This paper provides a simple framework to analyze the optimal scope of a private self-regulatory organization (SRO) versus government regulation. The trade-off depends on three key elements: externalities, monopoly distortions, and the degree of asymmetric information. Self-regulation is more desirable
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Competition under revenue-cap regulation with efficiency benchmarking: tariff related incentives for gas transmission system operators in merged markets J. Regul. Econ (IF 1.553) Pub Date : 2020-08-29 Jann T. Keller, Gerard H. Kuper, Machiel Mulder
In Europe, gas market mergers aim at reducing restrictions on gas wholesale markets. Market mergers also allow network users to book transport capacity at different gas transmission system operators (TSOs), which may give rise to inter-TSO competition. Our theoretical analysis reveals the incentive for TSOs, operating under a revenue-cap regulation in merged markets, to charge lower tariffs at borders
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Does locational marginal pricing impact generation investment location decisions? An analysis of Texas’s wholesale electricity market J. Regul. Econ (IF 1.553) Pub Date : 2020-08-26 David P. Brown, Jay Zarnikau, Chi-Keung Woo
Using data from Texas’s wholesale electricity market, we investigate the relationship between nodal prices and investment location decisions of utility-scale generation. We find some evidence that new investment arises in areas with recently elevated nodal prices. However, we find no evidence that new generation resources receive a nodal price premium post-entry as projected by the expectation of higher
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Does electricity competition work for residential consumers? Evidence from demand models for default and competitive residential electricity services J. Regul. Econ (IF 1.553) Pub Date : 2020-07-30 Agustin J. Ros
Residential electricity competition is under investigation in a number of U.S. states due to alleged market imperfections including consumer behavior that is supposedly inconsistent with rational, economic decision-making. In this paper, I examine these issues and use a panel data of distribution utilities in Illinois during the period 2011–2017 to estimate demand models for regulated and competitive
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TOTEX Malmquist index for CPI-X regulation: Does it correctly estimate the true frontier shift? J. Regul. Econ (IF 1.553) Pub Date : 2020-07-23 Roland Meyer, Gert Brunekreeft, George Elias
The X in CPI-X regulation aims to adjust price or revenue allowances to changes in total factor productivity and input prices. If calculated correctly, both terms together correspond to the change in efficient costs which can be determined by applying a cost Malmquist index. However, regulators typically lack the required data on input quantities and prices. As an alternative, regulation authorities
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Banning information in hiring decisions J. Regul. Econ (IF 1.553) Pub Date : 2020-07-16 Anthony M. Marino
Over the past decade, federal, state and local governments have restricted the types and uses of information in hiring and promotion decisions. Examples include the banning of credit reports and criminal records. This paper presents a simple microeconomic model of a competitive labor market and studies the economic effects of information bans. The key trade off is between allocative efficiency and