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Author: Cesar Cancho Diez
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Languages : en
Pages :
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This dissertation contains two essays on the analysis of market imperfections. In the first essay, I empirically test whether in a three-level hierarchy with asymmetries of information, more competition among intermediaries leads to more deception against the principal. In this setting, intermediaries supervise agents by delegation of the principal, and compete among themselves to provide supervision services to the agents. They cannot be perfectly monitored, therefore allowing them to manipulate supervision results in favor of the agents, and potentially leading to less than optimal outcomes for the principal. Using inspection-level data from the vehicular inspection program in Atlanta, I test for the existence of inspection deception (false positives), and whether this incidence is a function of the number of local competitors by station. I estimate the incidence of the most common form of false positives (clean piping) to be 9% of the passing inspections during the sample period. Moreover, the incidence of clean piping -- passing results of a different vehicle fraudulently applied to a failing vehicle -- per station increases by 0.7% with one more competitor within a 0.5 mile radius. These results are consistent with the presence of more competitors exacerbating the perverse incentives introduced by competition under this setting. In the second essay, we test whether electricity consumption by industrial and commercial customers responds to real-time prices after these firms sign-up for prices linked to the electricity wholesale market price. In principle, time-varying prices (TVP) can mitigate market power in wholesale markets and promote the integration of intermittent generation sources such as wind and solar power. However, little is known about the prevalence of TVP, especially in deregulated retail markets where customers can choose whether to adopt TVP, and how these firms change their consumption after signing up for this type of tariff. We study firm-level data on commercial and industrial customers in Texas, and estimate the magnitude of demand responsiveness using demand equations that consider the restrictions imposed by the microeconomic theory. We find a meaningful level of take-up of TVP? in some sectors more than one-quarter of customers signed up for TVP. Nevertheless, the estimated price responsiveness of consumption is still small. Estimations by size and by type of industry show that own price elasticities are in most cases below 0.01 in absolute value. In the only cases that own price elasticities reach 0.02 in absolute value, the magnitude of demand response compared to the aggregate demand is negligible.
Author: Cesar Cancho Diez
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This dissertation contains two essays on the analysis of market imperfections. In the first essay, I empirically test whether in a three-level hierarchy with asymmetries of information, more competition among intermediaries leads to more deception against the principal. In this setting, intermediaries supervise agents by delegation of the principal, and compete among themselves to provide supervision services to the agents. They cannot be perfectly monitored, therefore allowing them to manipulate supervision results in favor of the agents, and potentially leading to less than optimal outcomes for the principal. Using inspection-level data from the vehicular inspection program in Atlanta, I test for the existence of inspection deception (false positives), and whether this incidence is a function of the number of local competitors by station. I estimate the incidence of the most common form of false positives (clean piping) to be 9% of the passing inspections during the sample period. Moreover, the incidence of clean piping -- passing results of a different vehicle fraudulently applied to a failing vehicle -- per station increases by 0.7% with one more competitor within a 0.5 mile radius. These results are consistent with the presence of more competitors exacerbating the perverse incentives introduced by competition under this setting. In the second essay, we test whether electricity consumption by industrial and commercial customers responds to real-time prices after these firms sign-up for prices linked to the electricity wholesale market price. In principle, time-varying prices (TVP) can mitigate market power in wholesale markets and promote the integration of intermittent generation sources such as wind and solar power. However, little is known about the prevalence of TVP, especially in deregulated retail markets where customers can choose whether to adopt TVP, and how these firms change their consumption after signing up for this type of tariff. We study firm-level data on commercial and industrial customers in Texas, and estimate the magnitude of demand responsiveness using demand equations that consider the restrictions imposed by the microeconomic theory. We find a meaningful level of take-up of TVP? in some sectors more than one-quarter of customers signed up for TVP. Nevertheless, the estimated price responsiveness of consumption is still small. Estimations by size and by type of industry show that own price elasticities are in most cases below 0.01 in absolute value. In the only cases that own price elasticities reach 0.02 in absolute value, the magnitude of demand response compared to the aggregate demand is negligible.
Author: Christina Maria Ursula Korting
Publisher:
ISBN:
Category :
Languages : en
Pages : 188
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As awareness regarding the adverse climate and health impacts of fossil-based energy sources grows around the world, so does the need for rigorous evaluation of possible interventions aimed at promoting the use of renewable energy alternatives. The introduction of renewable resources often creates unforeseen tensions because they differ from the fossil-based energy sources they replace either in physical composition (as in the case of biofuels) or due to the nature and timing of their production (as in the case of renewable electricity sources). In this dissertation, I use numerical simulation methods and experiments to study two such challenges in detail-blending constraints for biofuels in transportation and contracts aiming to address solar-induced peaks in electricity demand. The analyses developed here aim to inform regulatory decision making by quantifying the potential challenges and highlighting previously undocumented effects of renewable energy integration. This dissertation consists of three essays. The first two chapters study the market effects and incidence of a physical constraint on biofuel blending; the so called "ethanol blend-wall". The existence of this constraint substantially affects the chosen compliance channels and hence welfare implications of the Renewable Fuel Standards (RFS) which mandate the use of biofuels in transportation in the US. The third chapter provides experimental evidence for the existence of a "control premium" (an intrinsic preference for retaining control over a decision right above and beyond its instrumental value) in a context relevant to solar electricity integration: due to the timing of solar production, an increasing share of solar generation exacerbates demand peaks in the early evening relative to demand during the surrounding hours. Peak demand creates the need for costly short-term generation capacity which is often associated with higher marginal costs and increased emissions. One demand-side tool to address these peaks are Direct Load Control (DLC) contracts which strive to reduce or shift peak electricity demand by compensating consumers for granting utilities the right to turn off certain appliances remotely in times of tight supply. However, I experimentally show that the compensation which consumers require to adopt this type of contract exceeds the value of the usage benefits they forgo due to an intrinsic preference to retain control. The first chapter, "Demystifying RINs: A Partial Equilibrium Model of U.S. Biofuels Markets," co-authored with David Just, examines the available compliance channels under the RFS and highlights how their relative use depends on the prevailing mandate requirements. As market pressures increase due to rising total renewable mandates in the presence of binding ethanol infrastructure constraints, the simulation results provide evidence for two important compliance channels not usually emphasized in the literature: overage from nested mandate categories and a contraction of the market for low-ethanol blend fuels such as E10 in order to reduce the overall compliance base. In fact, I show that the overall markets for motor gasoline and diesel fuel may contract in order to accommodate the mandates. In addition, the paper studies the price formation of the main mandate compliance instrument, so called Renwable (Renewable) Identification Numbers (RINs), and points out important inconsistencies in the usual practice of equating the price of RINs to the gap between ethanol supply and demand evaluated at the mandate level. The second chapter, "Who Will Pay for Increasing Biofuel Mandates? Incidence of the Renewable Fuel Standard Given a Binding Blend Wall," coauthored with David Just and Harry de Gorter, extends this analysis to study the resulting welfare implications. This analysis fills an important gap in the literature by explicitly taking the nested mandate structure and joint compliance into account. We show that these two regulatory features effectively create a dual link between gasoline and diesel markets with the result that the cost of increasing biofuel mandates given a binding ethanol blend wall falls disproportionately on diesel fuel consumers. This result is likely to have significant general equilibrium ramifications through indirect channels such as inflation since the main consumers of diesel fuel in the U.S. are trucks and trains. Overall, these two chapters provide important insights into the market and welfare consequences of the ethanol blend wall which has important implications for the future implementation of the RFS. The third chapter, "Taking a Load Off: Experimental Evidence of Preferences for Control with an Application to Residential Electricity Demand," uses a novel experimental design to show that intrinsic preferences for control can significantly impact the rewards required to encourage consumers to participate in DLC-style contracts. My findings relate to earlier work outside of the energy domain showing that individuals value retaining control over payoffds or delegation rights above instrumental value. This paper makes important contributions to both the behavioral economics literature and the literature on the cost and effectiveness of demand response programs. First, I provide evidence for the existence of a control premium in a novel experimental setting that speaks directly to the energy context. More broadly, my findings apply to instances of interruptible service or non-price rationing in which the reliability of service differs between consumers depending on their contract choices, such as the quality of alternative WIFI options in a hotel. Unlike existing research on the acceptability of DLC contracts, this result is based on incentive-compatible decisions in a controlled laboratory environment. Second, I replicate earlier findings regarding the sensitivity of control premia to stake size. Third, I extend the literature by testnig whether control premia respond to probabilities: while existing research focuses on one-shot delegation settings, I allow the probability of losing control to vary within subject. Lastly, I explore whether individuals exhibit an endowment effect with respect to control, i.e. whether increasing the probability of losing control triggers a stronger emotional response than regaining a commensurate amount of control. I find that participants, on average, exhibit a control premium of 9-32%, and are sensitive to both the stakes and probability of losing control.
Author: Zhongmin Wang
Publisher:
ISBN:
Category : Power resources
Languages : en
Pages : 228
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Author: United States. Federal Energy Regulation Study Team
Publisher:
ISBN:
Category : Energy policy
Languages : en
Pages : 158
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Author: Daniel Cullenward
Publisher:
ISBN:
Category :
Languages : en
Pages :
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As U.S. climate policy begins to emerge at the state and federal levels, new technological, economic, and legal challenges follow close behind. With the aim of contributing to effective, science-based climate policy, this dissertation portfolio draws on insights from energy economics and environmental law to address current policy debates. My research comprises two sets of projects. One category, which deals with national-level climate policy, focuses on front-end policy design choices and fundamental arguments over the merits of competing mitigation strategies. The other category addresses California's evolving climate policy regime, providing scientific and legal input into ongoing policy development processes. Both approaches demonstrate an expansion on conventional approaches to academic research, bridging the gap between applied and theoretical research in a way that graduate students from a range of backgrounds can adopt in their own work. PART I -- NATIONAL ENERGY DATA AND MODELING Projects in the first category integrate economic analysis and energy modeling to inform federal policy, which is just beginning to grapple with the climate challenge. Within this category, I explore two related problems: (1) the inadequacy of national energy data and (2) the challenges of using energy models to assess prospective climate policies. Data (Chapters 1-2): I identify significant conceptual mistakes that result from improperly extrapolating policy conclusions from semi-empirical energy consumption data. This issue is particularly important for research addressing the potential of energy efficiency to reduce greenhouse gas emissions. Because empirical energy data are so limited, many researchers rely on secondary data series to calibrate models or develop policy insights. My work shows how prominent criticisms of the potential for energy efficiency are based on major conceptual misunderstandings of the available data. Modeling (Chapters 3-4): My colleague Jordan Wilkerson and I set up a fully functioning copy of the U.S. Department of Energy's National Energy Modeling System (NEMS) at Stanford. In one study, we show how the model's treatment of end-use energy efficiency economics in the residential and commercial buildings sectors is driven in large part by non-price parameters. This finding has important implications for the model's ability to project energy efficiency responses to price-based policies, such as a carbon tax. Working with faculty in law and engineering, we also use NEMS-Stanford to model the economic and environmental implications of a carbon fee-and-dividend bill introduced in the U.S. Senate in the spring of 2013. Our work breaks down the expected economic impacts across household income levels and census regions, offering the first distributional analysis of recent carbon tax proposals using the government's official energy model. PART II -- CLIMATE POLICY IN CALIFORNIA Projects in the second category focus on the climate policy regime in California, where regulators are in the process of implementing a comprehensive cap-and-trade system. I completed research on three related policy issues, working in close collaboration with Stanford's Environmental Law Clinic: (1) participation in a lawsuit, in which I defended the constitutionality of State regulators' use of lifecycle assessment methods, (2) the development of carbon offset protocols, and (3) the regulation of resource shuffling in the electricity sector, an issue that has important implications for the State's carbon market. Litigating science (Chapters 5-7): In December 2011, a federal court struck down part of California's climate policy as unconstitutional. The primary reason was that the judge found that the policy's use of lifecycle assessment methods impermissibly discriminated against interstate commerce, violating the Commerce Clause of the U.S. Constitution. In response, my colleague David Weiskopf and I represented two groups of scientists on appeal to the Ninth Circuit, providing science-based arguments to address the legal questions in the case. Offset protocols (Chapters 8-9): California's climate law allows regulated entities to use carbon offsets to meet their emissions reduction targets, earning credit for actions taken to reduce emissions outside of the regulated system. Crucially, offset projects must be "additional" when compared against the counterfactual scenario that would have taken place in the absence of the offset project. This means that absent the financial incentive provided by the offset credit, the project activities would not otherwise have taken place. I wrote comment letters critiquing offset protocols for forestry projects in Mexico and coalmine methane destruction in the U.S., providing technical and legal analysis to improve the protocols' treatment of additionality. Resource shuffling (Chapter 10): State law requires its climate regulations to minimize leakage, which is defined as a reduction of emissions within the state system that is linked to a corresponding increase in emissions outside of the system. Yet the electricity sector is owned and operated across state boundaries, and thus readily subject to a form of leakage called resource shuffling. Resource shuffling occurs when companies in the electricity sector swap their contracts for high-emitting resources with low-emitting replacements, without any change in the physical operation of the electricity system. Because this kind of exchange creates leakage, the California Air Resources Board banned resource shuffling. Recently, however, the Board introduced draft rules that exempt many activities from the prohibition. My colleague David Weiskopf and I critique the State's proposed regulatory structure, showing how a creative lawyer could exploit loopholes to permit leakage in almost any situation. We present the fullest accounting to date for leakage risks associated with early divestment from out-of-state coal, which provides a significant amount of California's electricity supply. We find that if California companies are permitted to offload the emissions liability associated with these plants to companies that do not face reporting requirements under California's climate law, this could result in significant amounts of leakage--potentially even more leakage than the cumulative mitigation requirements expected under the cap-and-trade market through 2020. We also offer a fully developed proposal for revised regulations that expand compliance options while reducing the leakage risks we identify.
Author: United States. Federal Energy Administration. Task Force on Compliance and Enforcement
Publisher:
ISBN:
Category : Energy policy
Languages : en
Pages : 520
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Author: Tade Oyewunmi
Publisher: Bloomsbury Publishing
ISBN: 1509932925
Category : Law
Languages : en
Pages : 448
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This timely collection of essays examines the legal and regulatory dynamics of energy transitions in the context of emerging trends towards decarbonisation and low-carbon energy solutions. The book explores this topic by considering the applicable energy law and policy frameworks in both: (i) highly industrialised and major economies such as the US, EU, China and Australia; (ii) resource-rich developing countries such as Nigeria and regions like Southern Africa. Comprising 16 chapters, the book delves into the tradeoffs and regulatory complexities of carbon-constraints in conventional energy supply systems, while maintaining a reliable and secure energy system that is equally sustainable (ie decarbonised). It highlights the importance of ensuring affordable access to energy services in developing economies as the energy transitions unfold and explores the potentials of emerging technologies such as hydrogen networks, power-to-gas and Carbon Capture and Storage. Additionally, the book also considers the international investment law implications of energy decarbonisation. Focusing on the nexus between law, regulation and institutions, it adopts a contextual approach to examine how and to what extent institutions can effectively facilitate more reliable, sustainable and secure energy supply systems in the twenty-first century. This book portrays the conventional hydrocarbon-based energy supply industry in a largely international and interconnected context. It highlights the costs, benefits and losses that may arise as the transition towards decarbonisation unfolds depending on the pathways and solutions adopted. With chapters written by leading experts in energy law and policy, the reader-friendly style and engaging discussions will benefit an international audience of policymakers, academics, students and advisers looking for a more incisive understanding of the issues involved in energy transitions and the decarbonisation of energy systems.
Author: Yanming Sun
Publisher:
ISBN:
Category :
Languages : en
Pages : 102
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Reducing the Greenhouse Gas pollution and promoting energy efficiency among consumers' energy use have been major public policy issues recently. Currently, both the United States and the European Union have set up explicit percentage requirements that require energy generators or consumers to undertake a certain percentage of their energy production or consumption from renewable sources. To achieve their renewable targets, the Tradable Green Certificates (TGC) system has been introduced in their electricity markets. Moreover, in order to promote energy conservation and achieve energy efficiency targets, price policies and price changes derived from environmental regulations have played a more important role in reducing electricity consumption. My research studies problems associated with these policy implementations. In Chapter 1, I analyze a competitive electricity market with two countries operated under a common TGC system. By using geometric illustrations, I compare the two countries' welfare when the renewable quota is chosen optimally under the common certificate market with three different situations. The policy recommendation is that when the value of damage parameter is sufficiently small, full integration with a TGC market is welfare superior to full integration of an all fossil-fuel based market with an optimal emissions standard. In Chapter 2, by analyzing a stylized theoretical model and numerical examples, I investigate the performance of the optimal renewables policy under full separation and full integration scenarios for two countries' electricity markets operated under TGC systems. In my third chapter, I look at residential electricity consumption responsiveness to increases of electricity price in the U.S. and the different effect of a price increase on electricity use for states of different income levels. My analysis reveals that raising the energy price in the short run will not give consumers much incentive to adjust their appliances and make energy conservation investments to reduce electricity use, while in the long run, consumers are more likely to lower their electricity consumption, facing the higher electricity price induced from regulation policies. In addition, for states of higher per capita GDP, raising the electricity price may be more effective to ensure a cut in electricity consumption.
Author: United States. Department of Energy
Publisher:
ISBN:
Category : Energy policy
Languages : en
Pages : 24
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Author:
Publisher:
ISBN:
Category : Power resources
Languages : en
Pages : 272
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