a regional energy hub for achieving a low carbon energy transition abstract the transition to a low carbon energy economy will remain a cornerstone of national energy policies of countries committed to the climate change accord for decades to come we think that transmission investment is one key policy instrument amongst other to help with this transition we propose an enhanced role for investing in transmission capacity for inter regional trade to allow effective fuel switching among countries through a physically connected market we develop a conceptual framework of regional energy hubs and propose a cost minimization model in support of a transmission investment strategy that integrates i a key geopolitical parameter for countries that are geographically close in a region but under different political jurisdictions judged as stable and receptive to firm trading arrangements ii an economic parameter related to the fuel mix where the differences in a country s supply and demand characteristics are significant enough for allow mutual benefits to be realized through cost reduction iii an environmental parameter linked to a country s carbon intensity that could benefit from the resources of a neighboring jurisdiction with lower intensities and iv a financial parameter for each country within a region capable of attracting investment capital a connected regional energy hub offers large economic and environmental benefit for transition to a low carbon energy economy

the impact of wind power generation on the electricity price in germany abstract this paper investigates the relationship between intermittent wind power generation and electricity price behaviour in germany using a garch model i evaluate the effect of wind electricity generation on the level and the volatility of the electricity price in an integrated approach the results show that variable wind power reduces the price level but increases its volatility this paper s results also indicate that regulatory change has stabilised the wholesale price the electricity price volatility has decreased in germany after a modification of the marketing mechanism of renewable electricity this gives confidence that further adjustments to regulation and policy may foster a better integration of renewables into the power system

evidence on discrimination in mortgage lending much of the controversy about whether mortgage lenders discriminate against minorities can be explained in terms of the confusion about how to define discrimination based on the legal definition careful studies of loan denial rates such as that done by the federal reserve bank of boston represent an appropriate method for testing for discrimination by lenders based on that study it is quite clear that lenders discriminate the fact that minorities have higher default rates on average than whites is irrelevant to the interpretation of the race coefficient in such models nonetheless more research on and discussion about the relationship between the race of the applicant and delinquencies defaults and losses would be desirable

sources procedures and microeconomic effects of innovation fabio arcangeli paul david frank engelman christopher freeman massimo moggi richard nelson luigi orsenigo nathan rosenberg michele salvati g n von tunzelman two anonymous referees and the participants at the meeting of the committee on distribution growth and technical progress of the italian national research council cnr rome november 16 1985 have helped with various redraftings a particularly grateful acknowledgment is for the insightful and patient help of moses abramovitz this work has been undertaken at the science policy research unit spru university of sussex as part of the research program of the designated research centre sponsored by the economic and social research council esrc earlier support to the research that led to this paper by the italian national research council cnr is also gratefully acknowledged the statistical research has been undertaken with the assistance of stephano brioschi ilaria fornari and giovannu prennushi

greener more integrated and less volatile a quantile regression analysis of italian wholesale electricity prices abstract this paper provides estimates of quantile regression models of the relationship between italian day ahead electricity prices the supply of renewables and the inception of a new cable sapei linking sardinia with the italian peninsula in the 2006 2015 time window the results confirm the merit order effects detected in the existing literature both for photovoltaics and wind power more strongly in market conditions characterised by moderately low price levels and with some implied increase in volatility the new cable has apparently challenged the ability of power generating companies to extract value through price spikes has mitigated volatility and its effects have been complementary with those of renewables effects from photovoltaics are more sensitive to robustness checks differences across zonal markets are nonetheless detected

strategic investment in merchant transmission the impact of capacity utilization rules abstract in this paper we look at the relative merits of two capacity utilization regimes in the merchant electricity transmission network must offer mo where the entire capacity installed has to be made available for transmission and non must offer nmo where some capacity could be withheld we look at two specific cases i demand for transmission varies across time and ii vertical integration is allowed between investors in transmission network and electricity generators in the case of time varying demand under mo we find that a monopolist may underinvest in transmission when compared to nmo although nmo may lead to more capacity withholding in the case of vertical integration we find that when the market power is with the generators of the exporting node without vertical integration no welfare enhancing merchant investment would occur neither under mo nor nmo further if the generators in the importing node have market power in case vertical integration is allowed mo is better than nmo finally we also argue that the incentive to collude among various transmission network investors is mitigated with mo in place

social cost benefit analysis of electricity interconnector investment a critical appraisal abstract this paper examines the economic analysis social cost benefit analysis underlying two decisions to build an interconnector norned and the east west interconnector in europe the main conclusion is that current interconnector and transmission investment decisions in europe are unlikely to maximize social welfare the arguments are as follows i it is unclear how much demand for transmission capacity and interconnectors actually exists and thus the benefits of investment are unclear ii both analyses underlying the investments studied are incorrect to the point where in one case even the sign may be wrong iii the main criticism concerns the fact that they do not take the resulting changes in generator investment plans into account and ignore the potential benefits of increased competition iv several smaller issues can be improved such as the discount rate used v decisions at the european level are taken very differently and approval may depend on which authority grants approval vi interconnector decisions receive the most attention although most money goes to transmission investments two research recommendations for future improvements are formulated

contemporary echoes of segregationist policy spatial marking and the persistence of inequality the home owners loan corporation holc established in the us during the great depression to provide relief to a failing housing market had a lasting effect through institutionalising the segreg

the visible hand race and online market outcomes we examine the effect of race on market outcomes by selling ipods through local online classified advertisements throughout the us each advertisement features a photograph including a dark or light skinned hand or one with a wrist tattoo black sellers receive fewer and lower offers than white sellers and the correspondence with black sellers indicates lower levels of trust black sellers outcomes are particularly poor in thin markets suggesting that discrimination may not survive competition among buyers and those with the most racial isolation and property crime consistent with channels through which statistical discrimination might operate economic outcomes in the us are highly correlated with race but the causal mechanisms underlying these correlations are not well understood in particular it remains unclear how much of the correlation is due to discrimination and how much is due to other characteristics that are correlated with race such as education there is an extensive literature on the effect of race on market outcomes focusing on both labour and goods including housing markets however discrimination is not a monolithic phenomenon and it is important to investigate its extent and causes in a variety of different contexts across which they may differ our study asks the following question when the typical person engages in a consumer transaction usually as a buyer does he or she try to avoid dealing with minority sellers and does she treat minority sellers differently

do landlords discriminate in the rental housing market evidence from an internet field experiment in us cities abstract this paper tests for racial discrimination in the rental housing market using matched pair audits conducted via e mail for rental units advertised on line we reveal home seekers race to landlords by sending e mails from names with a high likelihood of association with either whites or african americans generally discrimination occurs against african american names however when the content of the e mail messages insinuates home seekers with high social class discrimination is non existent racial discrimination is more severe in neighborhoods that are near tipping points in racial composition and for units that are part of a larger building

what s in a picture evidence of discrimination from prosper com abstract we find evidence of significant racial disparities in a new type of credit market known as peer to peer lending loan listings with blacks in the attached picture are 25 to 35 percent less likely to receive funding than those of whites with similar credit profiles despite the higher average interest rates charged to blacks lenders making such loans earn a lower net return compared to loans made to whites with similar credit profiles because blacks have higher relative default rates these results provide insight into whether the discrimination we find is taste based or statistical

a generalized valuation model for fixed rate residential mortgages this paper uses option pricing techniques to rationally price mortgage instruments subject to both default and prepayment risk attention is given to terminations due to purely financial consideration of the mortgage contract itself as well as to personally induced terminations explicit inclusion of default in the mortgage valuation procedure also permits the valuation of insurance against such default qualitatively it is found that default differs significantly in the behavior from either prepayment or nonfinancial termination quantitatively however there is significant substitution between prepayment and default so that the addition of a default feature to the contract has only a modest impact on mortgage values unless there is substantial price volatility in the housing market or a high loan to value ratio copyright 1992 by ohio state university press

the inefficiency of refinancing why prepayment penalties are good for risky borrowers abstract this paper provides a theoretical analysis of the efficiency of prepayment penalties in a dynamic competitive lending model with risky borrowers and costly default when considering improvements in the borrower s creditworthiness as one of the reasons for refinancing mortgages we show that refinancing penalties can be welfare improving and that they can be particularly beneficial to riskier borrowers in the form of lower mortgage rates reduced defaults and increased availability of credit thus a high concentration of prepayment penalties among the riskiest borrowers can be an outcome of efficient equilibrium in a mortgage market we also provide empirical evidence that is consistent with the key predictions of our model

mortgage lending in boston interpreting hmda data the home mortgage disclosure act was enacted to monitor minority and low income access to the mortgage market the data collected for this purpose show that minorities are more than twice as likely to be denied a mortgage as whites yet variables correlated with both race and creditworthiness were omitted from these data making any conclusion about race s role in mortgage lending impossible the federal reserve bank of boston collected additional variables important to the mortgage lending decision and found that race continued to play an important though significantly diminished role in the decision to grant a mortgage copyright 1996 by american economic association

are emily and greg more employable than lakisha and jamal a field experiment on labor market discrimination we study race in the labor market by sending fictitious resumes to help wanted ads in boston and chicago newspapers to manipulate perceived race resumes are randomly assigned african american or white sounding names white names receive 50 percent more callbacks for interviews callbacks are also more responsive to resume quality for white names than for african american ones the racial gap is uniform across occupation industry and employer size we also find little evidence that employers are inferring social class from the names differential treatment by race still appears to still be prominent in the u s labor market jel j71 j64

welfare and competition effects of electricity interconnection between ireland and great britain this study analyzes the effects of additional interconnection on welfare and competition in the irish electricity market i simulate the wholesale electricity markets of the island of ireland and great britain for 2005 i find that in order for the two markets to be integrated in 2005 additional interconnection would have to be large the amount of interconnection decreases for high costs of carbon since this causes the markets to become more similar this suggests that in the absence of strategic behavior of firms most of the gains from trade derive not from differences in size between countries but from technology differences and are strongly influenced by fuel and carbon costs social welfare increases with interconnection although at a decreasing rate as the amount of interconnection increases there are also positive effects on competition in ireland the less competitive of the two markets finally it is unlikely that private investors will pay for the optimal amount of interconnection since their returns are significantly smaller than the total social benefit of interconnection

the effect of a new power cable on energy prices volatility spillovers abstract in this paper we estimate volatility spillovers before and after the introduction of a new cable linking different electricity market zones using wholesale electricity prices for sardinia and two neighbouring italian market zones for the period 2005 2015 we focus on the effects of the sapei cable fully operational since march 2011 var garch estimates indicate that the sapei cable allowed for stronger volatility transmission towards sardinia a smaller zone and a net importer from its new neighbour the central southern zone albeit the effect was significant only off peak higher conditional correlations between zonal prices are also observed after the cable was introduced some implications are drawn about the interaction between market size export positions congestion and volatility transmission

optimal security design and dynamic capital structure in a continuous time agency model we derive the optimal dynamic contract in a continuous time principal agent setting and implement it with a capital structure credit line long term debt and equity over which the agent controls the payout policy while the project s volatility and liquidation cost have little impact on the firm s total debt capacity they increase the use of credit versus debt leverage is nonstationary and declines with past profitability the firm may hold a compensating cash balance while borrowing at a higher rate through the credit line surprisingly the usual conflicts between debt and equity asset substitution strategic default need not arise in this paper we consider a dynamic contracting environment in which a riskneutral agent or entrepreneur with limited resources manages an investment activity while the investment is profitable it is also risky and in the short run it can generate arbitrarily large operating losses the agent will need outside financial support to cover such losses and continue the project the difficulty is that while the probability distribution of the cash flows is publicly known the agent may distort these cash flows by taking a hidden action that leads to a private benefit specifically the agent may i conceal and divert cash flows for his own consumption and or ii stop providing costly effort which would reduce the mean of the cash flows therefore from the perspective of the principal or investors that fund the project there is the concern that a low cash flow realization may be a result of the agent s actions rather than the project s fundamentals to provide the agent with appropriate incentives investors control the agent s wage and may also withdraw their financial support for the project and force its early termination we seek to characterize an optimal contract in this framework and relate it to the firm s choice of capital structure we develop a method to solve for the optimal contract given the incentive constraints in a continuous time setting and study the properties of the credit line debt and equity that implement the contract as in the discrete time model of demarzo and fishman 2003 the continuous time setting offers several peter m demarzo is from stanford university and yuliy sannikov is from u c berkeley we

discrimination in mortgage lending evidence from a correspondence experiment we design and implement an experimental test for differential response by mortgage loan originators mlos to requests for information about loans our e mail correspondence experiment is designed to analyze differential treatment by client race and credit score our results show net discrimination by 1 8 of mlos through non response we also find that mlos offer more details about loans and are more likely to send follow up correspondence to whites the effect of being african american on mlo response is equivalent to the effect of having a credit score that is 71 points lower

institutional reform and technological practice the case of electricity this article proposes a framework for categorizing possible interrelations between technological and institutional change and applies this framework to the case of the restructuring of the electricity sector it is argued that there is a need for coherence between institutions and technological practice so as to safeguard the satisfactory functioning of electricity infrastructure the identification of possible incoherences between institutions and technological practice allows for a better understanding of the potential drivers for change and the evolutionary processes of which they may be part this article attempts to elaborate the nature of this co evolution in somewhat more detail using specific levels of analysis that are exemplified in a four level model in the case of the restructuring of the electricity sector the institutional framework has changed from a public utility oriented towards a market oriented system however the technological practice remained unchanged a system oriented approach that relies on centralized planning control and operation this discrepancy between institutions and technological practice leads to significant frictions in the functioning of the electricity sector but it also offers opportunities for innovation in order to make liberalization a success it might be necessary to stimulate certain technical developments i e distributed generation and intelligent networks

adverse selection in a model of real estate lending we provide a rationale for the presence of points in mortgage loan contracts our analysis builds on two key features first insurance markets are unavailable for labor income second the due on sale clause allows banks to offer loan contracts which partially insure against fluctuations in labor income if explicit prepayment penalties are prohibited by law points serve effectively as prepayment penalties we also examine environments where such penalties are not prohibited and show that points will be used if interest rates cannot depend on the size of the loan conventional home mortgage contracts contain a vast array of contingent clauses the most controversial of these is the due on sale clause that gives the lender the contractual right to declare the loan fully payable if all or part of the mortgaged property is sold dunn and spatt 1985 argue that the due on sale clause can provide insurance to the borrower they consider an environment where individuals face uninsurable risk in their income if incomes are high when borrowers move they will prefer a contract which imposes a prepayment penalty when they sell their property in return for a subsidy perhaps in the form of lower interest rates when they stay dunn and spatt characterize the optimal contract when the income of borrowers is unobservable to the lender however all borrowers are ex ante identical in this paper we examine a market where individuals differ in the riskiness of their potential gains from selling their property if this information is private to the borrower the kind of insurance arrangement described above must be modified to deal with the obvious selection problems that arise any lender must therefore ensure that any insurance contract offered to individuals with riskier income streams does not offer so much insurance at such a favorable price that individuals with less risky income also accept the same contract the classic analysis of this type of problem is by rothschild and stiglitz 1976 and our analysis follows theirs in order to focus attention on the nature of the adverse selection problem we assume two types of individuals both types have the same expected income stream for simplicity we assume that type i individuals do not

racial and ethnic price differentials in the housing market do minorities pay more than whites for similar housing we revisit this important question using a rich new dataset that covers two million repeat sales housing transactions drawn from four major metropolitan areas our analysis applies a repeat sales framework including house and neighborhood by time fixed effects to control for unobserved differences in the quality of homes and their associated neighborhoods in contrast to most of the recent literature we find that black and hispanic homebuyers pay premia of around 2 on average across the four cities differences not explained by variation in buyer income or access to credit we also show black and hispanic buyers pay more for housing regardless of the race or ethnicity of the seller suggesting that the estimated premia are unlikely to be driven by a very direct form of racial prejudice our estimates have implications for the levels and persistence of racial differences in home ownership the segregation of neighborhoods and the dynamics of wealth accumulation

spatially uneven development and low carbon transitions insights from urban and regional planning the ageing of existing energy system infrastructure the threat of climate change and uncertainty in the movement of energy prices have resulted in a widespread agreement on the need for a transition to a low carbon energy system yet the nature of this transition i e what when how and where and its socio economic outcomes at different scales are not well understood the interdependence of the energy sector and economic growth has been mostly studied at the national level via some general equilibrium or econometric models whilst sub national studies at community or urban levels mostly focus on the governance of transitions hence we suggest that a regional perspective to energy policy and research promises to integrate these two approaches by providing a more robust and comprehensive understanding of the implications of low carbon transitions as well as contributing to the development of more effective policies by building on recent ideas on geographical aspects of energy transitions this article offers insights on the changing relationship between the spatial organisation of economic activities and energy systems and identifies tools and methods from urban and regional planning to help with the delivery of efficient and equitable policy outcomes

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

the adoption of state electricity regulation the role of interest groups this paper examines the adoption of state electricity regulation around the beginning of the 20th century i model this decision as a hazard rate to determine what influenced the adoption of state regulation i find that adoption is positively correlated with capacity shortages greater wealth and lower residential electricity penetration rates these results suggest that state regulation responded to regulatory inefficiencies and residential consumer interests in addition adoption rates were higher in states that had a strong industrial and coal mining presence these results are consistent with the interest group and contracting theories of regulation states began replacing municipal regulation of electric utilities with state regulation in 1907 despite the long history surprisingly little is known about the causes of the regime shift in this paper i estimate a hazard model that defines the probability of adopting state regulation as a function of variables that measure the potential benefits and costs of a number of interest groups the shortage of installed capacity and concurrent levels of electricity prices and profits the results shed light on which theories of regulation are most consistent with the data i find evidence that is consistent with the interest group theory of regulation which began with peltzman 1976 and the contracting theory of regulation attributed to priest 1993 the interest group theory of regulation centers around private interest group competition regulators respond to the pressures of interest groups one testable implication of the interest group theory is that if state regulation benefited a certain class of consumers such as residential consumers at the expense of another class of consumers the

the effects of renewables in space and time a regime switching model of the italian power price abstract renewable energy production can exercise a downward pressure on electricity prices by partly crowding out conventional units characterized by higher marginal costs merit order effect yet congestion induced by renewables would partly offset the merit order effect in the congested zone unless renewables reduce the need for imports and allow the emergence of prosumers these congestion effects of renewables are hereby jointly tested with the merit order effect by means of an endogenous regime switching model wherein a regime corresponds to the observable status congested non congested of the grid the model is taken to data from the italian power exchange observed in 2012 and 2013 with a focus on the line connecting sicily with the south zone a frequent bottleneck in the italian transmission grid the results confirm the merit order effect previously detected in the literature and highlight a negative congestion effect i e renewables relieve congestion from sicily a systematic importer but not from the italian peninsula the exporting region this effect is mainly driven by the wind power in feed

how renewables will change electricity markets in the next five years photovoltaic pv cells onshore wind turbines internet technologies and storage technologies have the potential to fundamentally change electricity markets in the years ahead photovoltaic cells are the most disruptive energy technology as they allow consumers of all sizes to produce power by themselves new actors in the power market can begin operating with a new bottom up control logic unsubsidised pv markets may start to take off in 2013 fuelling substantial growth where pv power is getting cheaper than grid or diesel backup electricity for commercial consumers managing loads and achieving a good match between power consumption and weather dependent power production will likely become a key issue this consumption production balance may trigger massive innovation and investment in energy management technologies involving different kinds of storage and controls increasing autonomy and flexibility of consumers challenges the top down control logic of traditional power supply and pushes for a more decentralised and multi layered system how rapidly and smoothly this transformation occurs depends to a large extent on the adaptation speed of the regulatory framework and on the ability of market players to develop appropriate business models the paper discusses conflicts of interest hurdles and drivers opportunities and traps for this perspective

a regulatory assessment of the electricity merchant transmission investment in eu current eu energy policy calls for a well integrated internal energy market by 2020 aimed at achieving interconnection of at least 10 of the installed electricity production capacity for all member states ms in 2030 this target will increase to 15 expanding to include the construction of electricity highways to connect ms and non eu neighbouring countries in order to fulfil energy and climate goals while most cross borders interconnections are envisaged as regulated lines private players will play a significant role in increasing interconnection via the merchant transmission investment mti exception by reviewing the procedural and substantive treatment of the existing five mti interconnectors this paper evaluates whether the existing legal and regulatory framework adopted in the eu represents a suitable model for the development of cross border interconnections further the paper explores the mti exception as a potential model for cross border interconnection with non eu neighbouring countries this analysis demonstrates that mti s potential contribution would not significantly impact the achievement of the 2020 target moreover the existing regulatory framework for merchant lines among ms is not apt for mti developed between ms and non eu countries since the interconnection developed with non eu neighbouring countries to date has necessitated non market characteristics too extraordinary to be practical on a continuing basis

independent regulatory agencies and rules harmonization for the electricity sector and renewables in the mediterranean region the paper analyses the existing regulatory framework for the electricity and renewables sectors and the role of regulatory agencies in northern africa and middle east countries under the promotion by the european union using data collected through an original survey directed at regulators ministry departments and energy companies of the southern mediterranean the study is aimed at assessing the extent of agencies independence looking at three main dimensions of independence regulatory instruments available to regulators and decision making autonomy regulators organizational autonomy and regulators accountability results show that those countries having established an independent regulator have a more credible regulatory framework than those countries in which such a body does not exist in particular the analysis shows that turkey croatia and jordan have defined a regulatory framework that limits administrative expropriation and consequently creates an environment more suitable for attracting investments in the electricity and renewables sector on the institutional ground this is probably related with the harmonization of regulatory standards promoted by the european union through the neighboring policy for the jordan case and the membership perspective in the turkish and croatian cases

the arguments for and against ownership unbundling of energy transmission networks abstract the question this paper addresses is what is the evidence for the superiority of the ownership unbundled transmission models i e uk or nord pool hybrid over other models we assess the theoretical costs and benefits of ownership unbundling and judge these to be generally positive though these may be potentially offset by the actual reorganisation costs of the ownership unbundling process next we assess the empirical evidence this is in two forms econometric evidence from samples of countries and case studies of reforms in particular jurisdictions the econometric evidence is weak due to problems with simultaneity of reform steps and a lack of studies but the case study evidence is compelling we conclude with a discussion of the issues faced by countries considering implementing ownership unbundling we conclude that evidence seems to be that ownership unbundling of transmission is a key part of energy market reform in the most successful reform jurisdictions

measuring the competitiveness benefits of a transmission investment policy the case of the alberta electricity market transmission expansions can increase the extent of competition faced by wholesale electricity suppliers with the ability to exercise unilateral market power this can cause them to submit offer curves closer to their marginal cost curves which sets market clearing prices closer to competitive benchmark price levels these lower wholesale market clearing prices are the competitiveness benefit consumers realize from the transmission expansion this paper quantifies empirically the competitiveness benefits of a transmission expansion policy that causes strategic suppliers to expect no transmission congestion using hourly generation unit level offer output market clearing price and congestion data from the alberta wholesale electricity market from january 1 2009 to july 31 2013 an upper and lower bound on the hourly consumer competitiveness benefits of this transmission policy is computed both of these competitiveness benefits measures are economically significant which argues for including them in transmission planning processes for wholesale electricity markets to ensure that all transmission expansions with positive net benefits to electricity consumers are undertaken

measuring racial discrimination with fair housing audits caught in the act a survey technique called a fair housing audit provides a direct measure of racial discrimination in housing this paper examines the econometric issues raised by audit data measures the discrimination uncovered by a 1981 boston study and tests hypotheses about the causes of discrimination the estimated level of discrimination is high black housing seekers are told about 30 percent fewer available housing units than are whites the hypothesis tests indicate that the primary cause of this discrimination is that housing agents illegally promote their economic interests by catering to the racial prejudice of their current or potential white customers