renewable energy drivers a panel cointegration approach the expected gains from res deployment to the reduction of carbon dioxide emissions co2 and the cut off of external dependence of electricity sources could be important however it is crucial to

the impact of public information on insider trading abstract we study the impact of public information on insider trading in the context of kyle s speculative market the linear nash equilibrium is characterized analytically we find that public information is detrimental for the insider and beneficial for the liquidity traders the insider puts a negative weight on the public information in formulating his optimal strategy the equilibrium price becomes more informative when there exists public information

market wide attention trading and stock returns abstract market wide attention grabbing events record levels for the dow and front page articles about the stock market predict the trading behavior of investors and in turn market returns both aggregate and household level data reveal that high market wide attention events lead investors to sell their stock holdings dramatically when the level of the stock market is high such aggressive selling has a negative impact on market prices reducing market returns by 19 basis points on days following attention grabbing events

drivers and inhibitors of renewable energy a qualitative and quantitative study of the caribbean abstract we explore the factors that affect the development of renewable energy in the caribbean the caribbean region can serve as a laboratory in studying the institutional issues relating to energy development due to the differences in political jurisdictions over a short distance based on 12 case studies and 75 in depth interviews with a variety of stakeholders we identified five factors that appear to be critical for the development of renewable energy in the caribbean entrepreneurship attitudes the role of local champions the electric utility influence informal institutions and the influence of international agencies we built a multiple regression model to test these relationships through a survey of 34 political jurisdictions in the caribbean the statistical analysis we conducted suggests that informal institutions have a significant impact on the extent of renewable energy development while the incumbent electricity utilities influence may impede the development of renewable energy based on these findings we provide recommendations on how best to make use of these factors identified in order to develop effective energy policies throughout the caribbean

intertemporal emission permits trading under uncertainty and irreversibility this paper analyzes the effect of emission permit banking on clean technology investment and abatement under conditions where the stringency of the future cap is uncertain we examine the problem of heterogeneous firms minimizing the cost of intertemporal emission control in the presence of stochastic future pollution standards and emission permits that are tradable across firms and through time a firm can invest in clean capital an improved pollution abatement technology to reduce its abatement cost we consider two possibilities that investment is reversible or irreversible uncertainty is captured within a two period model only the current period cap is known we show that if banking is positive and marginal abatement costs are sufficiently convex there will be more abatement and investment in clean technology under uncertainty than there would be under certainty and no banking these results are at odds with the common belief that uncertainty on future environmental policy is a barrier to investment in clean capital moreover under uncertainty and irreversibility we find that there are cases where banking enables firms to invest more in clean capital

have fossil fuels been substituted by renewables an empirical assessment for 10 european countries abstract the electricity mix worldwide has become diversified mainly by exploiting endogenous and green resources this trend has been spurred on so as to reduce both carbon dioxide emissions and external energy dependency one would expect the larger penetration of renewable energies to provoke a substitution effect of fossil fuels by renewable sources in the electricity generation mix however this effect is far from evident in the literature this paper thus contributes to clarifying whether the effect exists and if so the characteristics of the effect by source three approaches generation capacity and demand were analysed jointly to accomplish the main aim of this study an autoregressive distributed lag model was estimated using the driscoll and kraay estimator with fixed effects to analyse ten european countries in a time span from 1990 until 2014 the paper provides evidence for the substitution effect in solar pv and hydropower but not in wind power sources indeed the generation approach highlights the necessity for flexible and controllable electricity production from natural gas and hydropower to back up renewable sources moreover the results prove that peaks of electricity have been an obstacle to the accommodation of intermittent renewable sources

emission trading with fiscal externalities the case for a common carbon tax for the non ets emissions in the eu a government is fiscally constrained if it is unable to raise sufficient tax revenue to finance the first best level of public spending when involved in emission trading a fiscally constrained government will potentially seek to close its fiscal gap through emission permit sales this fiscal incentive therefore generates a fiscal externality in the permit market that is endogenous to the extent of fiscal constrainedness among the participating countries our theory explains how and when fiscal externalities may be expected to arise moreover we show that in a permit market equilibrium with fiscal externalities the initial allocation of emission permits between countries will affect 1 the price of emission permits 2 the global distribution of abatement effort and 3 total greenhouse gas mitigation costs this is contrary to the textbook model of emission permit markets our findings are especially relevant for the eu which is about to allow for trading in emission rights between eu member countries for all emissions outside the european emissions trading system

durable goods monopoly with varying demand this paper solves for the proflt maximising strategy of a durable goods monopolist when incoming demand varies over time each period additional consumers enter the market these consumers can then choose whether and when to purchase we flrst characterise the consumer s utility maximisation problem and under a monotonicity condition show the proflt maximising allocation can be solved through a myopic algorithm which has an intuitive marginal revenue interpretation consumers ability to delay creates an asymmetry in the optimal price path which exhibits fast increases and slow declines this asymmetry pushes the price level above that charged by a flrm facing the average level of demand applications of this framework include deterministic demand cycles one ofi shocks and iid demand draws the optimal policy outperforms renting and can be implemented by a time consistent best price provision

energy security and renewable energy deployment in the eu liaisons dangereuses or virtuous circle abstract a large body of literature estimates the effect of energy security drivers on renewable energy deployment using import dependence as a proxy for energy security which is an approach that ignores the potential effect of other energy security strategies such as the diversification of energy sources using panel data for the energy sector across 21 eu member states we investigate the effect of different energy security concepts on the development of renewable energies we compare the results of applying different energy security indicators including the ones used in eu energy policymaking unlike previous studies this study reports a long term relationship between energy security and renewable deployment our findings suggest that the relationship between energy security policies and renewable energy sources res deployment is far from straightforward and depends on the chosen energy security strategy which is usually linked to different energy security conceptualizations our primary findings confirm i that res deployment is a consequence of a combination of energy security strategies including environmental concerns rather than being solely caused by a shift towards more sustainable energy policies and ii that among the different energy security strategies the diversification of energy sources through renewable energy deployment is a more coherent strategy than using res to reduce dependency

carbon pricing efficacy cross country evidence to date there has been an absence of cross country empirical studies on the efficacy of carbon pricing in this paper we present estimates of the contribution of carbon pricing to reducing national carbon dioxide co2 emissions from fuel combustion using several econometric modelling approaches that control for other key policies and for structural factors that are relevant for emissions we use data for 142 countries over a period of two decades 43 of which had a carbon price in place at the national level or below by the end of the study period we find evidence that the average annual growth rate of co2 emissions from fuel combustion has been around 2 percentage points lower in countries that have had a carbon price compared to countries without an additional euro per tonne of co2 in carbon price is associated with a reduction in the subsequent annual emissions growth rate of approximately 0 3 percentage points all else equal while it is impossible to fully control for all relevant influences on emissions growth our estimates suggest that the emissions trajectories of countries with and without carbon prices tend to diverge over time

optimal procurement contracts with pre project planning the paper studies procurement contracts with pre project investigations in the presence of adverse selection and moral hazard to model the procurer s problem we extend a standard sequential screening model to endogenous information acquisition with moral hazard the optimal contract displays system atic distortions in information acquisition due to a rent effect adverse selection induces too much infor mation acquisition to prevent cost overruns and too little information acquisition to prevent false project cancellations moral hazard mitigates the distortions related to cost overruns yet exacerbates those related to false negatives the optimal mechanism is a menu of option contracts that achieves the dual goal of providing incentives for information acquisition and truthful information revelation

renewable energy an efficient mechanism to improve gdp abstract this article analyzes the effects of renewable energy on gdp for 116 economies in 2003 through structural equation modeling sem approach in order to decipher the mechanism of how the use of renewables improves macroeconomic efficiency we decompose gdp by the expenditure approach although previous theory predicts positive effects of renewables on capital formation and trade balance the sem results show that renewables have a significant positive influence on capital formation only the result that renewables do not have a significant impact on trade balance implies that renewables do not have an import substitution effect thus we confirm the positive relationship between renewable energy and gdp through the path of increasing capital formation but not for the path of increasing trade balance

pollution permits and environmental innovation abstract this paper starts with a warning about the negative impact of plain pollution allowance markets on environmental pollution innovation stand alone spot markets enable the government to expropriate an innovation by offering a competing technology pollution permits that puts an arbitrary downward pressure on the licensing price advance allowances reduce expropriation but still create suboptimal incentives for innovation they have the further drawback that permits are inefficiently used when the innovation occurs options to pollute at a given striking price fare better than allowances because they create private incentives to phase out pollution in the case of innovation we characterize the social optimum and show that it can be implemented by issuing options to pollute inter alia finally the paper compares ex ante and ex post government procurement surprisingly ex post licensing by the innovator to the government may yield a higher licensing fee than an ex ante contract

green electricity market development lessons from europe and the us this study compares the development and implementation of green electricity policies in germany the netherlands sweden and the united states a set of countries applying a range of policy instruments to encourage electricity from renewable energy sources a general tendency is identified that policies shift emphasis from r d stimulation towards dissemination and market application of renewable energy technologies we argue that in light of the long term nature of policy goals on energy security mitigation of climate change and environmental protection the applied range of policy instruments may be lacking in providing incentives for the long term development of new technologies clarifying policy objectives would allow careful selection of policy instruments including support for r d improved capacity building for policy implementation is also important

investor attention overconfidence and category learning abstract motivated by psychological evidence that attention is a scarce cognitive resource we model investors attention allocation in learning and study the effects of this on asset price dynamics we show that limited investor attention leads to category learning behavior i e investors tend to process more market and sector wide information than firm specific information this endogenous structure of information when combined with investor overconfidence generates important features observed in return comovement that are otherwise difficult to explain with standard rational expectations models our model also demonstrates new cross sectional implications for return predictability

environmental policy incentives to adopt advanced abatement technology abstract we investigate incentives through environmental policy instruments to adopt advanced abatement technology first we study the case where the regulator makes long term commitments to policy levels and does not anticipate arrival of new technology we show that taxes provide stronger incentives than permits auctioned and free permits offer identical incentives and standards may give stronger incentives than permits second we investigate scenarios where the regulator anticipates new technologies we show that with taxes and permits the regulator can induce first best outcomes if he moves after firms have invested whereas this does not always hold if he moves first

renewable generation and electricity prices taking stock and new evidence for germany and austria abstract economic theory predicts that the increase of renewable electricity production should reduce the price of electricity in the short run which is also known as the merit order effect although the merit order effect is only one of several consequences of renewable production on the electricity system it is crucial to determine its size for the economic evaluation of renewable energies in this paper we present a comprehensive overview of relevant past research results on the price effect of renewables additionally we conduct a new empirical analysis of the price effect of renewable production for the austrian german region a market that clearly qualifies for a merit order effect analysis given its characteristics based on the review and our own analysis we show that the merit order effect varies depending on the region and the assessment method chosen we also find that the size of this effect is less dispersed throughout different markets than previously suggested by the literature

nonconventional renewable energy governance in brazil lessons to learn from the german experience abstract this paper presents a comparative analysis of energy governance regarding nonconventional renewable energy sources ncres in brazil and germany brazil is a world leader in the use of conventional renewable energy sources such as hydro power while germany has been achieving outstanding results in fostering ncres the focus is on two critical issues the legal and regulatory framework and the institutions created to support the ncres market development the comparison shows that despite the very different energy situations and policy drivers valuables lessons can be extracted from the german experience the main lesson for brazil is to think ncres as a strategic opportunity to rely less on fossil fuel and large hydroelectric power plants to decentralize the electric power sector to use the huge solar biomass and wind power potential available in the country and to create a environment friendly ncres industry to this end three critical points were identified 1 the legal and regulatory framework should be improved 2 long term energy planning taking into account social economic and climate issues and 3 the current institutions supporting ncres in brazil should be upgraded and or new ones such as more specific energy agencies should be created

environmental policy compliance and innovation abstract this note provides an industrial organization perspective on the use of tradeable emissions permits in the context of so2 pollution in the usa and reports on some of our ongoing work on compliance and innovation in pollution abatement

learning about environmental damage implications for emissions trading in this paper the impact of adjusting the supply of tradeable emission permits on incentives for cleaner technology adoption is examined two policy rules for adjusting the supply of permits are considered open market operations and a proportional adjustment rule under which the regulator expropriates permits from individual firms in proportion to their existing permit holdings adjustment via open market operations is neutral with respect to cleaner technology investment decisions but may be politically difficult to implement the proportional adjustment rule is also neutral with respect to investment decisions and at the same time allows more flexibility from a political perspective

investor attention and market microstructure this paper develops the first economic model to study the impact of investor attention on the market microstructure in the kyle s 1985 setup our model strongly supports the empirical observation that higher investor attention leads to higher stock market volatility the first special case with one fully and one limited attentive traders explains that higher attention leads to higher trading intensity of retail investors market liquidity and stock market volatility the second special case with one fully inattentive and one limited attentive traders explains how investor attention affects buying and selling

optimal production planning with emissions trading emissions trading is a market based mechanism for curbing emissions and it has been implemented in europe north america and several other parts of the world to study its impact on production planning we develop a dynamic production model where a manufacturer produces a single product to satisfy random market demands the manufacturer has access to both a green and a regular production technology of which the former is more costly but yields fewer emissions to comply with the emissions regulations the manufacturer can buy or sell the allowances in each period via forward contracts in an outside market with stochastic trading prices while needing to keep a nonnegative allowance account balance at the end of the planning horizon we first derive several important structural properties of the model and based upon them we characterize the optimal emissions trading and production policies that minimize the manufacturer s expected total discounted cost in particular the optimal emissions trading pol

threshold effect of the economic growth rate on the renewable energy development from a change in energy price evidence from oecd countries this paper uses a panel threshold regression ptr model to investigate the influence that energy prices have on renewable energy development under different economic growth rate regimes the empirical data are obtained from each of the oecd member countries over the period from 1997 to 2006 we show that there is one threshold in the regression relationship which is 4 13 of a one period lag in the annual gross domestic product gdp growth rate the consumer price index cpi in so far as it relates to variations in energy is significantly positively correlated with the contribution of renewables to energy supply in the regime with higher economic growth but there is no relationship in the regime with lower economic growth therefore countries characterized by high economic growth are able to respond to high energy prices with increases in renewable energy use while countries characterized by low economic growth countries tend to be unresponsive to energy price changes when they come to their level of renewable energy

the regulation of environmental innovations abstract we offer mechanisms to regulate environmental r d projects that are intertemporal and indivisible and involve high monitoring cost screening and contracting the r d performer are based solely on the project completion time when the project duration is ex ante uncertain to all parties including the performing firm the mechanism is formulated in terms of a completion time limit the mechanism extends to other intertemporal public projects as well as to principal agent settings with dynamic agent s tasks

tradable allowances in a restructuring electric industry abstract the so 2 tradable allowance program has been introduced into an electric industry undergoing dramatic changes entry of nonutilities into the industry and the emergence of stranded costs are two major changes that are shown to have an impact on the market for allowances and the industry s incentives to switch to cleaner fuels the degree of impact depends on the extent to which consumers bypass traditional utilities and buy from entrants and on public utility commission policies regarding the recovery of stranded costs in turn the amount of stranded costs depends on fuel switching the results follow from simulations of a two utility model that illustrate the qualitative effects of changing policies

is the choice of renewable portfolio standards random this study investigated factors influencing the adoption or intention to adopt renewable portfolio standards rps by individual states in the united states u s theory of adoption of innovation was applied as a conceptual framework a logistic model was used to achieve the task gross state product gsp growth rate of population grp political party dominancy education level natural resources expenditure and share of coal in electricity generation were used as explanatory variables results indicated that the model predicts the dependent variable state s choice of adopting or not adopting rps 82 times correctly out of 100 results also suggested that education followed by political party dominancy gsp and grp are shown to have large impacts on the probability of rps adoption

factors affecting the efficiency of wind power in the european union countries abstract the study uses the two stage bias corrected dea approach of simar and wilson 2007 to assess the efficiency of the eu countries in terms of their wind power investment in 2015 the set of input variables includes installed wind power capacity and average wind power density while output variables include wind generated electricity and three additional aspects environmental economic and energy security next the study examines the effect of renewable energy policy regarding wind energy the energy mix and the offshore wind power utilisation on the wind power efficiency of the analysed countries the results obtained reveal that the united kingdom sweden denmark and ireland are the most efficient countries in terms of wind power investment the inclusion of additional aspects demonstrates the greatest improvement of efficiency in belgium cyprus the netherlands estonia and germany the results seem to indicate that economic instruments used within renewable energy policy have a positive effect on wind power efficiency while policy support and regulatory instruments might negatively impact moreover the results show that the energy mix explains the variation of the efficiency of the eu countries when their economic and environmental aspects are considered the analysis of the geographic location indicates that countries with a high share of offshore wind capacity are the most efficient

robust technology policy against emission leakage the case of upstream subsidies asymmetric regulation of a global pollutant between countries can alter the competitiveness of industries and lead to emissions leakage which hampers countries welfare in order to limit leakage governments consider supporting domestic trade exposed firms by subsidizing their investments in abatement technology the suppliers of such technologies tend to be less than perfectly competitive particularly when both emissions regulations and advanced technologies are new in this context of twin market failures we consider the relative effects and desirability of subsidies for abatement technology we find a more robust recommendation for upstream subsidies than for downstream subsidies downstream subsidies tend to increase global abatement technology prices reduce pollution abatement abroad and increase emission leakage on the contrary upstream subsidies reduce abatement technology prices and hence also emissions leakage

does moving towards renewable energy causes water and land inefficiency an empirical investigation this study investigates the effect of renewable energy production on water and land footprint in 58 developed and developing countries for the period of 1980 2009 utilizing the ecological footprint as an indicator the fixed effects difference and system generalized method of moment gmm approaches were employed and eight different models were constructed to achieve robustness in the empirical outcomes despite the use of different methods and models the outcome was the same whereby gdp growth urbanization and trade openness increase the water and land footprint moreover renewable energy production increases the water and land inefficiency because of its positive effect on ecological footprint additionally based on the square of gdp it is concluded that the ekc hypothesis does not exist while the square of renewable energy production indicates that renewable energy production will continue to increase water and land footprint in the future from the outcome of this study a number of recommendations were provided to the investigated countries

interactions between the power and green certificate markets abstract the current trend of liberalising the power markets is combined with ambitious deployment plans for power production based on renewable energy supplies a new policy scheme to ensure this extension has been developed in the form of a green certificate system with a politically determined target of deployment in such a system producers of renewably based electricity receive tradable certificates in proportion to the electricity they produce the producer can thereby sell these certificates and receive additional revenue apart from the power price this paper studies the price and consumption effects of such a system with a simple model we show that the effects are ambiguous this ambiguity is caused by the interaction between the two markets therefore the green certificate system is difficult to manage if the state has parallel energy targets such as a desired deployment of renewably based energy and a stabilisation or reduction of the energy consumption in addition this complicates the regulation through a deployment target of renewably based power production as the regulator has to be aware of the different effects which follow a specific target until now these effects have not been considered in the analyses of the green certificate system when introducing the system even though it might have considerable consequences for the success of the system

exploiting the oil gdp effect to support renewables deployment the empirical evidence from a growing body of academic literature clearly suggests that oil price increases and volatility dampen macroeconomic growth by raising inflation and unemployment and by depressing the value of financial and other assets surprisingly this issue seems to have received little attention from energy policy makers in percentage terms the oil gdp effect is relatively small producing losses in the order of 0 5 of gdp for a 10 oil price increase in absolute terms however even a 10 oil price rise oil has risen at least 50 in the last year alone produces gdp losses that could they have been averted would significantly offset the cost of increased re deployment this paper draws on the empirical oil gdp literature which we summarize to show that i by displacing gas and oil renewable energy investments can help nations avoid costly macroeconomic losses produced by the oil gdp effect and ii that these avoided losses represent a significant external macroeconomic benefit of such investments we show that a 10 increase in re share avoids gdp losses in the range of 29 53 billion in the us and the eu 49 90 billion for oecd these avoided losses offset one fifth of the re investment needs projected by the erec and half the oecd investment projected by a g 8 task force for the us the figures further suggest that each additional kw of renewables on average avoids 250 450 in gdp losses a figure that varies across technologies as a function of annual capacity factors we approximate that the offset is worth 200 kw for wind and solar and 800 kw for geothermal and biomass while we focus only on renewables the gdp offset will apply in some measure to other non fossil technologies including energy efficiency dsm and nuclear the societal valuation of non fossil alternatives must reflect these avoided gdp losses whose benefit is not fully captured by private investors this said we fully recognize that wealth created in this manner does not directly form a pool of public funds that is easily earmarked for renewables support finally the oil gdp relationship has important implications for correctly estimating direct electricity generating cost for conventional and renewable alternatives and for developing more useful energy security and diversity concepts we also address these issues

wavelet based test of co movement and causality between oil and renewable energy stock prices abstract we studied co movement and causality between oil and renewable energy stock prices using continuous and discrete wavelets firstly to obtain information on dynamic correlations over time and for different time scales from wavelet coherence and secondly to obtain information on linear and non linear granger causality in the time frequency domain for general and sectoral renewable energy indices for the period 2006 2015 our findings indicate that dependence between oil and renewable energy returns in the short run was weak but gradually strengthened towards the long run mainly for the period 2008 2012 our causality tests provide evidence against linear causality at higher frequencies and in favour of unidirectional and bidirectional linear causality at lower frequencies in contrast we found consistent evidence of non linear causality running from renewable energy indices to oil prices at different time horizons and mixed evidence of causality running from oil to renewable energy prices these results have potential implications for investors in terms of hedging and for policymakers in terms of policy support decisions regarding the development of renewable energy

policies and market factors driving wind power development in the united states abstract in the united states there has been substantial recent growth in wind energy generating capacity with growth averaging 24 percent annually during the past five years about 1700 mw of wind energy capacity was installed in 2001 while another 410 mw became operational in 2002 during 2003 development activity has remained strong with an estimated 1600 mw of capacity installed with this growth an increasing number of states are experiencing investment in wind energy projects currently about half of all states host at least one wind power project this paper explores the key factors at play in the 12 states in which a substantial amount of wind energy capacity has been developed or planned some of the factors that are examined include policy drivers such as renewable portfolio standards rps federal and state financial incentives as well as market drivers such as consumer demand for green power natural gas price volatility and wholesale market rules

credibility may require discretion not rules abstract we reexamine the common argument that rules produce greater credibility than discretion rules limit the actions of agents restricting observations of the agents preferences or types in a second best world where rules cannot be everlasting a regime of discretion in some periods may produce superior credibility and dominate a regime of rules

the impact of economic globalization on renewable energy in the oecd countries abstract this paper analyzes the determinants of renewable energy consumption in the panel data of 30 oecd countries for the period from 1970 to 2015 the unique role is given to the effect of economic globalization on renewable energy we consider several measures of economic globalization and apply different econometric techniques we find the positive impact of the per capita income the per capita carbon dioxide emissions and the real price of oil on renewable energy also a higher level of economic globalization promotes renewable energy and the evidence is robust to the different measures of economic globalization in line with our findings promoting the economic aspects of globalization will enhance renewable energy thus it can suppress the adverse effect of climate change and global warming on living human beings and natural habitats in the long run therefore we need to enhance our knowledge of how globalization promotes renewable energy not only for the oecd countries but also for other developing and developed economies from a policy perspective we suggest that policymakers and governments in oced countries should consider economic globalization as a renewable energy promoting mechanism while designing their energy demand policy for the protection of natural environmental health

scope of economic incentives and abatement technologies to regulate a natural system s resilience in a general equilibrium model this paper discusses a general equilibrium model consisting of a productive sector generating externalities on another sector having clean production and on consumers affecting the property of resilience of a natural system that feeds the economic system the scope of efficiency of economic incentives is analyzed simultaneously with production activities in the polluting sector and the use of a pollution abatement technology our model predicts a boomerang effect the polluting sector could find itself in a worse situation in the equilibrium with externalities this sector initiated the problem but at the end it is highly affected in any case the use of economic incentives helps keep pollution levels to maintain more valuable equilibria of nature

factors influencing renewable electricity consumption in china abstract renewable energy is an important factor in achieving a low carbon economic development path in china this paper investigates the factors influencing renewable electricity consumption in china specifically the factors that influence the share of renewable electricity in total electricity consumption in china is investigated using data from 1980 to 2011 and employing the johansen cointegration technique and vector error correction model the result of the analysis shows that there is a long run relationship between renewable electricity consumption and gdp per capita trade openness foreign direct investment financial development and share of fossil fuel in energy consumption economic development and financial development promotes renewable electricity consumption while foreign direct investment trade openness and the lobby of conventional energy sources undermine the share of renewables in total electricity consumption in china while the effects of shocks to the other variables appear to die out over time the lobby effect is persistent and explosive the results also show that there is a uni directional short run causality from financial development to renewable electricity consumption and from renewable electricity consumption to trade openness the chinese government should pursue policies that not only increase the amount of renewable electricity but also increase the share of renewables in total electricity consumption

overconfidence on public information abstract this work sets the market maker as overconfident and shows that this will lead to a higher informed trading intensity a more efficient market a larger informed profit and a lower adverse selection

efficiency inducing taxation for polluting oligopolists abstract we show that there exists a time independent tax rule that guides polluting oligopolists to achieve the socially optimum production path the optimal tax is dependent on the current pollution stock and it may be negative when the pollution stock is low a surprising result is that the optimal tax rule may give firms a subsidy for an initial time interval even though under laissez faire their output always exceeds the socially optimal output this subsidy however induces firms to produce less than they would under laissez faire

renewable energy consumption co2 emissions and oil prices in the g7 countries abstract economic and societal issues related to energy security and global warming is placing greater emphasis on the consumption of renewable energy this paper presents and estimates an empirical model of renewable energy consumption for the g7 countries panel cointegration estimates show that in the long term increases in real gdp per capita and co2 per capita are found to be major drivers behind per capita renewable energy consumption these results are robust across two different panel cointegration estimators oil price increases have a smaller although negative impact on renewable energy consumption deviations from equilibrium are driven mostly by the error correction term as opposed to short term shocks short term deviations from the long term equilibrium take anywhere from between 1 3 years france and 7 3 years japan to correct

the merit order effect a detailed analysis of the price effect of renewable electricity generation on spot market prices in germany the german feed in support of electricity generation from renewable energy sources has led to high growth rates of the supported technologies critics state that the costs for consumers are too high an important aspect to be considered in the discussion is the price effect created by renewable electricity generation this paper seeks to analyse the impact of privileged renewable electricity generation on the electricity market in germany the central aspect to be analysed is the impact of renewable electricity generation on spot market prices the results generated by an agent based simulation platform indicate that the financial volume of the price reduction is considerable in the short run this gives rise to a distributional effect which creates savings for the demand side by reducing generator profits in the case of the year 2006 the volume of the merit order effect exceeds the volume of the net support payments for renewable electricity generation which have to be paid by consumers

optimal bypass and cream skimming this paper develops a normative model of regulatory policy toward bypass and cream skimming it analyzes the effects of bypass on second degree price discrimination on the rent of the regulated firm and on the welfare of low demand customers it shows that pricing under marginal cost may be optimal for the regulated firm excessive cream skimming occurs if access to the bypass technology is not regulated and the prohibition of bypass may increase or decrease the regulated firm s rent jel 026 613 the regulation of natural monopolies is often associated with policies toward competition including restrictions on entry this paper is concerned with a common form of competition which threatens the regulated firm on its most lucrative markets examples abound in the telecommunications industry the development of microwave radio and communication satellites in the 1960 s introduced the possibility that big telecommunication customers might bypass the major common carrier att and the 1978 natural gas policy act in the united states has created the possibility for industrial plants to bypass the local distribution utilities by building direct connections to the pipelines gas producers or intermediaries

renewable generation across italian regions spillover effects and effectiveness of european regional fund abstract this paper investigates on the determinant factors that drive the italian regions toward a sustainable development path and evaluates the effectiveness of european regional development incentives in promoting investments in renewable energy sources res starting from the consideration that there are spillover effects between similar regions first we identify the factors that capture these similarities then we use them to evaluate their relevance in determining the success of the investments in res an econometric analysis based on the use of spatial panel specification model is implemented to support the hypotheses two important results emerge from the study the first is the identification of regional determinants of res production that are driven by the similarities between regions and that can be interpreted as guidelines in the policy choices in support of investments the second is the lack of effectiveness of the incentives in support of res results indicate that the capacity of some regional governments to direct the funds allocated by the central government or european commission towards efficient production of renewable energy is likely limited and these incentives have been undone

small streams diverse sources who invests in renewable energy in finland during the financial downturn this article addresses the investment gap in renewable energy sources identified by several authors examining the case of a country finland which introduced policy measures to diversify its renewable energy portfolio we analyse the development of investments in renewable heat and power in response to new policy measures and contextual factors during the downturn period 2009 2013 we investigate investor heterogeneity i e the diversity of logics employed by different types of res investors in spite of a severe financial recession we find an emergence of new sources of investment among these new investor types we find diversity in investment drivers and available options these include investors mobilized by the feed in tariff to seek profitable targets and investors such as real estate owners investing in heat pumps for their own use and benefiting from low interest rates we find that the diversification of investors supports the diversification in res sources and brings in new investors undeterred by the financial downturn our findings imply that policy makers should recognize that the responses to distinct incentives and pressures vary by investor types this also means that a mix of policies is required to maximize the contribution of different sectors to filling the renewable energy investment gap

a simple analysis of the us emission permits auctions we examine a stylized version of epa auctions when agents know the list of values of sellers and buyers there are inefficient equilibria where no goods are traded and efficient equilibria where all exchange occurs at a uniform price we also provide examples under incomplete information when the uniform price equilibrium holds and when it does not hold c 1999 elsevier science s a all rights reserved jel classification d44 q29

determinants of renewable energy development in the eu countries a 20 year perspective abstract the objective of the paper is to identify factors which determine energy policy in the eu countries in the middle of 1990s this objective is achieved in three stages first the changes in the distribution of res in 26 eu countries in the period between 1995 and 2014 are investigated the analysis demonstrates that over the last 20 years the eu countries diversify the res they use which results in substantial changes in their distribution second the distribution of energy sources in 1995 is described as it is assumed that the distribution might be a crucial factor influencing energy policy in each country third several other factors related to energy security environmental concerns economy and politics are considered as potential determinants of renewable energy development two statistical methods of variable selection namely the best subset regression and the lars method reveal that the present in 2014 share of res in the energy mix significantly depends on the condition of the eu countries in the middle of 1990s the distribution of energy sources in 1995 is the crucial determinant of renewable energy development countries without their own fossil fuel sources are the ones which develop renewable energy to the greatest extent other important factors boosting re development include gdp per capita concentration of energy supply swi and the costs of consumption of energy obtained from fossil fuels in relation to gdp

long term contracting with markovian consumers to study how a firm can capitalize on a long term customer relationship we characterize the optimal contract between a monopolist and a consumer whose preferences follow a markov process the optimal contract is nonstationary and has infinite memory but is described by a simple state variable under general conditions supply converges to the efficient level for any degree of persistence of the types and along any history though convergence is history dependent in contrast as with constant types the optimal contract can be renegotiation proof even with highly persistent types these properties provide insights into the optimal ownership structure of the production technology

an ex post analysis of the effect of renewables and cogeneration on spanish electricity prices abstract growing concerns about climate change and energy dependence are driving specific policies to support renewable or more efficient energy sources such as cogeneration in many regions particularly in the production of electricity these policies have a non negligible cost and therefore a careful assessment of their impacts seems necessary in particular one of the most debated impacts is their effect on electricity prices for which there have been some ex ante studies but few ex post studies this article presents a full ex post empirical analysis by looking at use of technologies and hourly electricity prices for 2005 2009 in spain to study the effects that the introduction of renewable electricity and cogeneration has had on wholesale electricity prices it is particularly interesting to perform this study in spain where an active system of public support to renewables and cogeneration has led to a considerable expansion of these energy sources and electricity pricing is at the center of intense debate the paper reports that a marginal increase of 1 gwh of electricity production using renewables and cogeneration is associated with a reduction of almost 2 per mwh in electricity prices around 4 of the average price for the analyzed period

pollution permits and compliance strategies abstract this paper analyzes the impact of spot and futures markets for tradeable pollution permits on the potential polluters compliance decisions polluters can buy permits invest in pollution abatement or else stop production or source out we show that stand alone spot markets induce excessive investment the introduction of a futures market reduces this incentive to invest but is not the optimal way to control pollution a menu of options on pollution rights possibly coupled with intertemporally bundled sales yields higher welfare because of its focus on long run demand elasticities and rent extraction this paper can be applied to a variety of situations such as demand side management public transportation bypass in telecommunications or forward sales by a private monopolist

on reducing the windfall profits in environmental subsidy programs investment subsidies are widely used to induce adoption of new technologies that can lower the marginal cost of reducing emissions to economize on these subsidies governments would like to distinguish between firms that need to receive a subsidy to adopt a new technology and firms that would adopt that technology even without subsidies we show that policies consisting of a menu of emission taxes and investment subsidies can potentially induce firms to self select

the effect of the feed in system policy on renewable energy investments evidence from the eu countries abstract we study the effect of the feed in system fis policy on wind and solar photovoltaic energy investments in the european union eu over the time period between 1992 and 2015 considering the heterogeneity of the policies and market conditions across the eu countries we develop a fis subsidy performance indicator that distinguishes feed in tariff fit from feed in premium fip and considers other important aspects of each of these contracts such as the duration tariff price energy spot price and production costs as well as the market conditions we conclude that the mere existence of the fis policy does not necessarily enhance renewable energy investments it depends on the type of the fis contract and its features and may vary across the different sources of renewable energy some of our findings are new to the literature and can have important implications in the development of new public investment incentives to promote renewable energy

economic reform and dynamic political constraints in this paper we examine the impact of political constraints on economic reform plans with special reference to the transition from centrally planned to market economies we analyse the problem of an agenda setting reform minded government facing a bureaucracy or industrial sector for which allocative efficiency requires redundancies and an increase in work intensity the government also tries to minimize the rents conceded to its heterogeneous workforce we examine two types of political constraints unanimity rule and majority rule both in a one period and a two period horizon the main results are the following first of all we show how adverse selection and time consistency may generate the widely observed feature of gradualism as an ingredient of an optimal reform second under a majority rule it is shown to be possible for the government to obtain a majority vote for a reform scheme that intertemporally hurts majority interests indeed the government can improve rent extraction through the strategic use of the threat of future proposals the group which expects to be in the minority tomorrow may accept concessions while its votes can be used to extract rents from another group these results suggest that in a dynamic context democratic constraints should not be overestimated as an obstacle against efficiency enhancing economic reforms the results of this paper may throw some light on the political economy of current reforms in eastern europe governments and political decision makers in general always face political constraints when elaborating reform proposals they know that the need to overcome potential opposition from various groups of the population constrains proposals for change political constraints vary depending on the specific institutional structure of society and are clearly different under a military dictatorship than under a parliamentary democracy the role of political constraints seems particularly important in eastern europe today where new democratic governments face the huge task of achieving the transition to a market economy while the introduction of democracy may have removed some important obstacles to economic change namely the veto power of a powerful nomenclatura under communist one party rule fears are expressed that it could potentially jeopardize economic reforms which may during the transition period hurt a majority of the population what can economic theory tell us about optimal economic reform under political constraints this paper starts addressing this ambitious question by looking at structural reform focusing on a restructuring of economic sectors which requires massive redundancies and a significant rise in labour productivity our model illustrates the case of planning

governance and renewable energy investment in mena countries how does trade matter abstract the middle east and north africa mena countries have recently developed renewable energy re markets however their rate of investment in renewable energy remains small compared to other regions in the world despite their relatively abundant endowments particularly in wind and solar while the literature identifies some barriers to investment in renewable energy we assume that the investment of mena countries could be impeded by specific governance factors furthermore we consider recent literature showing that trade openness reduces the negative effects of weak governance in this paper we empirically investigate the link between governance openness and renewable energy investment in the mena region using panel data for 15 mena countries over the period 1996 2013 our results prove that high institutional quality is associated with re investment in mena countries in addition this relationship seems to be conditional on the trade regime our results are robust to several measures of renewable energy investment and governance as well as to an alternative econometric set up

optimal pollution standards and non compliance in a dynamic framework in this paper we present a stackelberg differential game to study the dynamic interaction between a polluting firm and a regulator who sets pollution limits overtime at each time the firm settles emissions taking into account the fine for non compliance with the pollution limit and balances current costs of investments in a capital stock which allows for future emission reductions we derive two main results first we show that the optimal pollution limit decreases as the capital stock increases while both emissions and the level of non compliance decrease second we find that offering fine discounts in exchange for firm s capital investment is socially desirable we numerically obtain the optimal value of such discount which crucially depends on the severity of the fine in the limiting scenario with a very large severity of the fine the optimal discount implies that no penalties are levied since the firm shows adequate adaptation progress through capital investment

editor s choice financial attention this paper investigates financial attention using novel panel data on daily investor online account logins we find support for selective attention to portfolio information account logins fall by 9 5 after market declines investors also pay less attention when the vix volatility index is high the level of attention and the attention return correlation are strongly related to investor demographics gender age and financial position wealth holdings using a new statistical decomposition we show how aggregate and individual household trading are related to investor attention

a note on environmental policy and innovation when governments cannot commit abstract it is widely accepted that one of the most important characteristics of an effective pollution control policy is to provide firms with credible incentives to make long run investments in r d that can drastically reduce pollution recognizing that a government may be tempted to revise its policy design after innovations become available this note shows how the performance of two policy instruments prices uniform taxes and quantities tradeable pollution permits differ in such a setting i also discuss the gains from combining either instrument with subsidies to adopting firms

dynamic incentives by environmental policy instruments a survey abstract in this paper i survey and discuss recent developments on the incentives provided by environmental policy instruments for both adoption and development of advanced abatement technology a main conclusion to be drawn from the literature is that under competitive conditions market based instruments usually perform better than command and control moreover taxes may provide stronger long term incentives than tradable permits if the regulator is myopic if the government can anticipate new technology or is able to react on it optimally regulatory policies by virtue of administered prices taxes and policies by setting quantities issuing tradable permits are almost equivalent the literature also shows that under competitive conditions there is no difference between auctioning permits and grandfathering moreover timing and commitment of environmental policy is not crucial for adoption under competitive conditions commitment has positive incentive effects however if an r d sector has market power in the presence of market imperfections the ranking of the different policy instruments is ambiguous

public policy influence on renewable energy investments a panel data study across oecd countries this paper examines the impact of public policy measures on renewable energy re investments in electricity generating capacity made by institutional investors using a novel combination of datasets and a longitudinal research design we investigate the influence of different policy measures in a sample of oecd countries to suggest an effective policy mix which could tackle failures in the market for clean energy the results call for technology specific policies which take into account actual market conditions and technology maturity to improve the conditions for institutional investments advisable policy instruments include economic and fiscal incentives such as feed in tariffs fit especially for less mature technologies additionally market based instruments such as greenhouse gas ghg emission trading systems for mature technologies should be included these policy measures directly impact the risk and return structure of re projects supplementing these with regulatory measures such as codes and standards e g rps and long term strategic planning could further strengthen the context for re investments

the relationship amongst energy consumption foreign direct investment and output in developed and developing countries abstract the current study inspects the nexus amongst energy consumption fdi inflows and output in 75 countries meantime the period 1990 2010 we further examine this relationship with regard to developed as well as developing countries assembled from diverse geographic regions from the world the present results display that there is proof of bidirectional linkage concerning fdi and output per capita concerning renewable energy consumption and gross domestic product per capita and concerning non renewable energy and gross domestic product per capita in the three groups of countries developed all and developing in addition the judgments detect a bidirectional linkage concerning renewable energy consumption and fdi in developed countries an increase of 1 rate in renewable energy participates to improving fdi by 0 185 and at the same time an increase of fdi contributes to enhancing renewable energy by 0 292 nevertheless in the case of all and developing countries the results discover unidirectional link moving from foreign inflows to both sorts of energy in conclusion the policy recommendations of our empirical results are taken into consideration

factors impacting diverging paths of renewable energy a review abstract considered an essential factor for countries development energy demand is growing worldwide unlike conventional sources the use of renewable energy sources has multiple benefits including increased energy security sustainable economic growth and pollution reduction in particular greenhouse gas emissions nevertheless there is a considerable difference in the share of renewable energy sources in national energy portfolios this study conducts a systematic literature review to identify drivers and barriers which could help understanding the diverging paths of renewable energy deployment for countries among a total of 1431 academic studies 60 qualitative and quantitative studies were identified using a multistage selection process designated manuscripts were explored in detail including publication years length of the studies countries represented and renewable energy sources referenced factors explaining countries renewable energy deployments were defined and organized into seven main categories economic environmental political regulatory social technical potential and technological within these categories economic considerations appeared most frequently across manuscripts while environmental factors were least represented these categories were then classified as drivers barriers or undetermined towards renewable energy deployment based on a one sample proportion statistical test economic environmental and social factors were found to be drivers whereas political regulatory technical potential and technological factors were not classified as either a driver or a barrier i e undetermined each main category contains several subcategories among which only national income was found to have a positive impact whereas all other subcategories were considered undetermined no significant barriers to the deployment of renewable energy sources were found over the analyzed period

in the transformation of energy systems what is holding australia back abstract australia has had a strong gdp growth rate is endowed with a diversity of renewable energy resources yet has been unable to unshackle its dependency on fossil fuels our study identifies causes underlying australia s underachievement in its transformation towards a renewable energy economy we apply a combined mixed methods case study and multi criteria analysis to evaluate the greenhouse gas emissions and energy targets policies and programs of four australian prime ministers between 1996 and 2015 we identify four high impact factors that contribute to australia s underachievement the prime minister s political stance on climate and energy is critical in setting the direction of government the absence of target driven policy frameworks results in less effective policy outcomes orderly and cost effective energy system transformation requires bipartisan strategic long term planning and substantial capital investment to provide policy certainty and stability that can induce new investment in renewable technologies and industries energy policy is primarily a political and ideological issue not one driven by underlying economic conditions going forward australia must achieve a bipartisan position on climate and energy policy at both federal and state levels this will provide long term certainty and stability to support investment in renewable energy and so doing achieve international emission reduction obligations

adoption of solar and wind energy the roles of carbon pricing and aggregate policy support abstract this paper analyzes the roles of policies and preferences in national adoption of solar and wind energy technologies we use cross sectional and panel regressions for both the european union and a broader international sample we find that countries that price carbon emissions have gone on to adopt more solar and wind energy the aggregate level of policy support measured in euros per megawatt hour appears to have been important for solar energy adoption we also find that solar energy adoption has been larger in countries with higher proportions of people concerned about climate change in addition we assess the effects of other key explanators including financial system size and income levels

determinants of renewable energy growth a global sample analysis abstract we investigate factors influencing country level renewable energy growth by applying fevd and pcse estimation methods in a unique sample analysis with a longer time series 1990 2010 and a broader sample size of countries including brazil russia india china and south africa than previous studies our results reveal new insights the results suggest that certain government backed energy policies impede renewable energy investments thus implying significant failures in policy design these policies may be failing mainly because of uncertainty and the likelihood of discontinuity weak voluntary approaches are introduced in order to satisfy public demand for more sustainable investments and programmes we find that these may have negative influences on the growth of renewables as well the insight gained is consistent over the estimation methods employed

portfolio rebalancing and asset pricing with heterogeneous inattention can households inattention to the stock market quantitatively account for the inertia in portfolio rebalancing i address this question by introducing an observation cost into a production economy with heterogeneous agents in this environment inattention changes endogenously over time and across agents i find that inattention explains the inertia in portfolio rebalancing and its heterogeneity across households inattention also rationalizes the limited stock market participation observed in the data and improves the asset pricing performance of the model finally i present a novel testable implication linking the effects of inattention on portfolio choices and asset prices to households funding liquidity

volume autocorrelation information and investor trading this study investigates whether the widely documented daily correlated trading volume of stocks is driven by individual investor trading institutional trading or both we find that at least 95 of nyse and amex stocks exhibit statistically significant positive serial correlation volume autocorrelation decreases with the level of institutional ownership of a stock we also show that the rate of arrivals of new information to the market contributes to the clustering of trades when there is high information flow to the market institutional trading generates a more pronounced effect on volume autocorrelation than individual investor trading our results are broadly consistent with the predictions of trading volume patterns suggested by most theoretical models of stock trading and by empirical research on investor trading

impact of public policy uncertainty on renewable energy investment wind power and the production tax credit abstract it is generally understood that the pattern of repeated expiration and short term renewal of the federal production tax credit ptc causes a boom bust cycle in wind power plant investment in the us this on off pattern is detrimental to the wind industry since ramp up and ramp down costs are high and players are deterred from making long term investments it is often assumed that the severe downturn in investment during off years implies that wind power is unviable without the ptc this assumption turns out to be unsubstantiated this paper demonstrates that it is not the absence of the ptc that causes the investment downturn during off years but rather the uncertainty over its return specifically it is the dynamic of power purchase agreement ppa negotiations in the face of ptc renewal uncertainty that drives investment volatility with contract negotiations prevalent in the renewable energy industry this finding suggests that reducing uncertainty is a crucial component of effective renewable energy policy the ptc as currently structured is not the only means existing or potential for encouraging wind power investment using data from a survey of energy professionals various policy instruments are compared in terms of their perceived stability for supporting long term investment

state renewable energy electricity policies an empirical evaluation of effectiveness over the past decade state governments have emerged as us energy policy leaders across the country states are adopting policy instruments aimed at carbon mitigation and renewable energy deployment one of the most prevalent and innovative policy instruments is a renewable portfolio standard rps which seeks to increase the share of renewable energy electrification in the electricity market this analysis evaluates the effectiveness of state energy programs with an empirical investigation of the linkage between state rps policy implementation and the percentage of renewable energy electricity generation across states we use a variant of a standard fixed effects model referred to as a fixed effects vector decomposition with state level data from 1998 to 2006 results indicate that rps implementation is not a significant predictor of the percentage of renewable energy generation out of the total generation mix yet for each additional year that a state has an rps policy they are found to increase the total amount of renewable energy generation these findings reveal a potentially significant shortcoming of rps policies political institutions natural resource endowments deregulation gross state product per capita electricity use per person electricity price and the presence of regional rps policies are also found to be significantly related to renewable energy deployment

implications of rational inattention abstract a constraint that actions can depend on observations only through a communication channel with finite shannon capacity is shown to be able to play a role very similar to that of a signal extraction problem or an adjustment cost in standard control problems the resulting theory looks enough like familiar dynamic rational expectations theories to suggest that it might be useful and practical while the implications for policy are different enough to be interesting

time series properties of the renewable energy diffusion process implications for energy policy design and assessment confronted by increasingly tight budgets and a broad range of alternative options policy makers need empirical methods to evaluate the effectiveness of policies aimed at supporting the diffusion of renewable energy sources res rigorous empirical studies of renewable energy policy effectiveness have typically relied on panel data models to identify the most effective mechanisms a common characteristic of some of these studies which has important econometric implications is that they assume that the contribution of res to total electricity generation will be stationary around a mean this paper reviews such assumptions and rigorously tests the time series properties of the contribution of res in the energy mix for the presence of a unit root to that end we use both individual and panel unit root tests to determine whether the series exhibit non stationary behavior at the country level as well as for the panel as a whole the analysis applied to a panel of 19 oecd countries over the period 1990 2012 provides strong evidence that the time series of the renewable share of electricity output are not stationary in 17 of the 19 countries examined this finding has important implications for energy policy assessment and energy policy making which are discussed in the paper