quality competition with motivated providers and sluggish demand we study incentives for quality provision in markets where providers are motivated semi altruistic prices are regulated and firms are funded by a combination of block grants and unit prices competition is based on quality and demand adjusts sluggishly health or education are sectors in which the mentioned features are the rule we show that the presence of motivated providers makes dynamic competition tougher resulting in higher steady state levels of quality in the closed loop solution than in the benchmark open loop solution if the price is sufficiently high however this result is reversed if the price is sufficiently low and below unit costs sufficiently low prices also imply that a reduction in demand sluggishness will lead to lower steady state quality prices below unit costs will nevertheless be welfare optimal if the providers are sufficiently motivated

financing and funding health care optimal policy and political implementability health care financing and funding are usually analyzed in isolation this paper combines the corresponding strands of the literature and thereby advances our understanding of the important interaction between them we investigate the impact of three modes of health care financing namely optimal income taxation proportional income taxation and insurance premiums on optimal provider payment and on the political implementability of optimal policies under majority voting considering a standard multi task agency framework we show that optimal health care policies will generally differ across financing regimes when the health authority has redistributive concerns we show that health care financing also has a bearing on the political implementability of optimal health care policies our results demonstrate that an isolated analysis of optimal provider payment rests on very strong assumptions regarding both the financing of health care and the redistributive preferences of the health authority

reputational concerns with altruistic providers we study a model of reputational concerns when doctors differ in their degree of altruism and they can signal their altruism by their observable quality when reputational concerns are high following the introduction or enhancement of public reporting the less altruistic bad doctor mimics the more altruistic good doctor otherwise either a separating or a semi separating equilibrium arises the bad doctor mimics the good doctor with probability less than one pay for performance incentive schemes are unlikely to induce crowding out unless some dimensions of quality are unobservable under the pooling equilibrium a purchaser can implement the first best quality by appropriately choosing a simple payment scheme with a fixed price per unit of quality provided this is not the case under the separating equilibrium therefore policies that enhance public reporting complement pay for performance schemes

risk adjustment and prevention widespread integration of market based incentives into healthcare systems calls for and has elicited increasing adoption of risk adjustment by deterring selection risk adjustment helps to assure fair and efficient payments among health insurers or capitated provider groups however since conventional risk adjustment allocates funds among regions or insurers according to current population health status it does not reward indeed it penalizes preventive efforts that improve population health this prevention penalty of risk adjustment represents a hidden cost of unclear magnitude undermining provider incentives for health promotion we develop a theoretical model of selection and prevention demonstrating this problem with conventional risk adjustment and suggesting a simple alternative risk adjustment should be linked to pay for performance for prevention l integration generalisee d incitatifs mercantiles dans les systemes de soins de sante appelle et a engendre l adoption croissante d ajustements au risque en decourageant la selection l ajustement au risque aide a assurer des paiements justes et equitables entre les assureurs ou les groupes de fournisseurs finances par capitation cependant comme les ajustements conventionnels au risque allouent des fonds entre les regions ou les assureurs selon le statut sanitaire present de la population ils ne recompensent pas et meme penalisent les efforts de prevention qui ameliorent la sante des populations cette penalisation de la prevention dans les ajustements au risque represente un cout cache d une magnitude mal etablie qui mine l incitation des fournisseurs a s occuper de promotion de la sante on developpe un modele theorique de selection et de prevention mettant en lumiere ce probleme dans l utilisation de l ajustement au risque conventionnel et on suggere une solution de rechange ou l ajustement au risque est reliea une remuneration a la performance pour la prevention

the effects of hospitals governance on optimal contracts bargaining vs contracting we propose a two stage model to study the impact of different hospitals governance frameworks on the optimal contracts designed by third party payers when patients disease severity is the private information of the hospital in the second stage doctors and managers interact within either a bargaining or a contracting scenario in the contracting scenario managers offer a contract that determines the payment to doctors and doctors decide how many patients to treat in the bargaining scenario doctors and managers strategically negotiate on both the payment to doctors and the number of patients to treat we derive the equilibrium doctors payments and number of treated patients under both scenarios we then derive the optimal contract offered by the government to the hospital in the first stage results show that when the cost of capital is sufficiently low the informational rent is lower and the social welfare is higher in the contracting scenario

quality and quantity in primary care mixed payment models evidence from family health organizations in ontario abstract we study the impact of a mixed capitation model the family health organization fho on quality and quantity outcomes among primary care physicians in ontario using a panel of administrative data covering one year before and two years after the fho model was introduced we find that physicians in the fho model provide about 6 to 7 fewer services and visits per day but are between 7 and 11 more likely to achieve preventive care quality targets these results suggest that the mixed capitation model with contractible quality indicators may be welfare improving relative to the ffs model

price adjustment in the hospital sector we analyse the properties of optimal price adjustment to hospitals when no lump sum transfers are allowed and when prices differ to reflect observable exogenous differences in costs we find that a when the marginal benefit from treatment is decreasing and the cost function is the power function price adjustment for hospitals with higher costs is positive but partial if the marginal benefit is constant the price is identical across providers b if the cost function is exponential or it is separable in monetary and non monetary costs and linear in monetary costs price adjustment is positive even when the marginal benefit is constant c higher inequality aversion of the purchaser increases concentration in prices and lowers concentration in quantities d if some dimensions of costs are private information a higher correlation between the observable and unobservable cost component increases the optimal price for providers whose observable costs are above the average

security of electricity supply at the generation level problem analysis abstract since the very beginning of the restructuring process back in 1982 in chile the ability of an electricity market to provide the system with the required level of security of supply has been put into question the mistrust on the ability of the market left to its own devices to provide sufficient generation availability when needed is more and more leading to the implementation of additional regulatory mechanisms this matter is undoubtedly gaining importance and it has taken a key role in the energy regulators agendas in this paper we revisit this discussion under the light of thirty years of electricity market experience we analyze the different reasons why although ideally the market is supposed to provide itself an adequate security of supply at the generation level this result is still far from being achieved in practice

governing offshoring in a stringent environmental policy setting evidence from italian manufacturing firms this paper provides evidence of how environmental regulatory stringency relates to firms offshoring decisions while controlling for firms characteristics and environmental strategies relying on an original dataset of italian manufacturing firms a distinction is drawn between international outsourcing and foreign direct investments and between offshoring destinations in northern versus southern regions our estimates show that a stricter environmental regulation is related to a higher probability of production being outsourced to foreign suppliers in the south but not to foreign direct investments the magnitude of this effect is very low however offshoring decisions are mainly affected by firms ict endowment marketing and internationalization strategies and adoption of environmental product innovations and standards in particular eco innovative firms are found more likely to adopt governance decisions that enable a stricter control over the supply chain as in the case of foreign direct investments

economics of pooling small local electricity prosumers lcoe self consumption abstract the arrival of small scale decentralized energy installations coincides with the emergence of so called prosumers entities households that are producer and consumer of energy in one this research focuses on an electricity prosumer model in the context of the uk market levelized cost of electricity lcoe for photovoltaic pv and wind energy will be modeled for six uk sites additionally self consumption levels for two different load profiles and technologies will be estimated per site the simulations are modeled with homer software and multiple inputs will be varied including natural resource equipment cost maintenance cost equipment life expectancy cost of capital project life and load profiles the modeled self consumption levels show significant differences and varied between 31 and 72 depending on load profile itself and re technologies mixes modeled the pooling of prosumers implied by lower load profile volatility proved to be beneficial to self consumption levels in the modeled scenarios up to 17 6 lcoe showed significant ranges depending on the input parameters and their combination 10 55 p kw h for pv and 2 19 p kw h for wind the combination of these factors is decisive for the final lcoe and the negative effects of less benign factors can be compensated by other parameters when compared to current electricity retail prices of around 15 p kw h around 97 of wind sites and around 4 of pv scenarios implied lcoe reached grid parity the self consumption levels and lcoe analysis indicate the viability of electricity prosumer models

the european renewable energy target for 2030 an impact assessment of the electricity sector abstract the european union set binding targets for the reduction of greenhouse gases ghg and the share of renewable energy re in final energy consumption by 2020 the european council agreed to continue with this strategy through to 2030 by setting a re target of 27 in addition to a ghg reduction target of 40 we provide a detailed sectoral impact assessment by analyzing the implications for the electricity sector in terms of economic costs and the regional distribution of investments and shares of electricity generated from renewable energy sources res e according to the impact analysis by the european commission the 27 re target corresponds to a res e share of 49 our model based sensitivity analysis on underlying technological and institutional assumptions shows that the cost effective res e share varies between 43 and 56 secondly we quantify the economic costs of these variants and those which would be incurred with higher shares the long term additional costs for higher res e shares would be less than 1 of total system costs the third aspect relates to the regional distribution of eu wide efforts for upscaling renewables we point out that delivering high res e shares in a cost effective manner involves considerably different efforts by the member states

selfish bakers caring nurses a model of work motivation abstract work contributes to people s self image in important ways we propose a model in which effort is unobservable and where individuals have a preference for being important to others this gives the following predictions 1 if a worker s effort is paid by his marginal productivity bakers effort is just like in the standard model 2 if a worker s wage is unaffected by his effort nurses more effort is provided than in the standard model 3 to prevent that shirkers become nurses nurses wages must be kept strictly lower than bakers income at this wage level there will be too few nurses 4 overinvestment in nursing equipment can be justified as a means to attract motivated nurses 5 even with full income compensation both nurses and bakers may experience a net utility loss when losing their job 6 similarly both nurses and bakers may prefer work to welfare even with full income compensation

representative evidence on lying costs abstract a central assumption in economics is that people misreport their private information if this is to their material benefit several recent models depart from this assumption and posit that some people do not lie or at least do not lie maximally these models invoke many different underlying motives including intrinsic lying costs altruism efficiency concerns or conditional cooperation to provide an empirically validated microfoundation for these models it is crucial to understand the relevance of the different potential motives we measure the extent of lying costs among a representative sample of the german population by calling them at home in our setup participants have a clear monetary incentive to misreport misreporting cannot be detected reputational concerns are negligible and altruism efficiency concerns or conditional cooperation cannot play a role yet we find that aggregate reporting behavior is close to the expected truthful distribution suggesting that lying costs are large and widespread further lab experiments show that this result is not driven by the mode of communication

assessment of transformation strategies for the german power sector under the uncertainty of demand development and technology availability abstract the long term energy strategy issued by the german government in 2010 and 2011 embraces a substantial reduction of co 2 emissions and high shares of renewable energy in electricity production along with energy efficiency improvements and an accelerated nuclear phase out while several studies illustrate scenarios reaching these targets there are substantial uncertainties pertaining to key assumptions particularly long term electricity demand and the large scale availability of offshore wind and carbon capture and storage ccs this paper explores conditions under which model based scenarios for the german electricity sector comply with the official targets for co 2 emission reductions and renewable shares we apply the energy system model limes d which allows for a joint optimization of generation and transmission capacities the results indicate that reducing electricity demand plays a crucial role for attaining the government s targets scenarios for which either offshore wind or ccs is not available show an even stronger need for a decreasing electricity demand to reach the targets and a different pattern of transmission capacity expansion than is the case with full technology availability hence a broad technology portfolio could in turn hedge against future power demand increases that may challenge the joint attainment of the german decarbonization and renewable energy targets

price adjustment in the hospital sector how should the nhs discriminate between providers a comment on miraldo siciliani and street miraldo et al 2011 have analyzed the price adjustment policy of a payer implementing a prospective payment system in the hospital sector in the presence of exogenous cost differences when no lump sum transfers are allowed they focus on deriving conditions for the price adjustment being positive in this paper using a result of miraldo et al we emphasize whether the price adjustment is larger or smaller than the marginal cost we show how the discrimination operates against either the low cost or the high cost hospitals according to the value of the elasticity of the additional marginal cost with respect to the quantity of services

quality competition with profit constraints abstract firms in markets such as health care and education are often profit constrained due to regulation or their non profit status and they are often viewed as being altruistic towards consumers we use a spatial competition framework to study incentives for cost containment and quality provision by altruistic firms facing profit constraints if prices are regulated profit constraints lead to lower cost containment efforts but higher quality if and only if firms are sufficiently altruistic under price competition profit constraints reduce quality and cost containment efforts but lead to lower prices if and only if firms are sufficiently altruistic profit constrained firms cost containment efforts are below the first best while their quality might be too high or too low if prices are regulated profit constraints can improve welfare and be a complement or substitute to a higher regulated price depending on the degree of altruism

quantifying the long term economic benefits of european electricity system integration abstract this paper aims to quantify the long term economic benefits that arise from an increasing integration of the pan european electricity system by means of comparing model based decarbonization scenarios developed with the model limes eu it explicitly accounts for the interplay between transmission infrastructure and renewable generation capacity expansion we confirm earlier findings that on aggregate pan european transmission capacity expansion constitutes a no regret option for integrating increasing shares of variable renewables it leads to positive social returns on investment in all mitigation scenarios under analysis however the reduction in total discounted system costs stemming from transmission capacity expansion is modest in magnitude over the period 2010 2050 it reaches a maximum of 3 5 for a case with massive expansion compared to one in which the status quo remains in technical terms this means that the optimum is rather flat and taking into account regional and local benefits and distributional aspects could alter the evaluation of the economic benefits a crucial finding is that the configuration of pan european transmission infrastructure and the importance of specific country connections i e a southern versus a northern solution hinges on the relative development of specific investment costs for solar and wind technologies over the next decades

a review of uncertainties in technology experience curves abstract the use of log linear experience curves or learning curves relating reductions in the unit cost of technologies to their cumulative production or installed capacity has become a common method of representing endogenous technical change in energy economic models used for policy analysis yet there are significant uncertainties in such formulations whose impact on key model results have been insufficiently examined or considered this paper reviews the major types of uncertainty in log linear experience curves and their effect on projected rates of cost reduction uncertainties are found not only in the learning rate parameter of a log linear model but also in the functional form that determines the shape of an experience curve evidence for alternative forms such as an s shaped curve is reviewed along with case studies that demonstrate the uncertainties associated with cost increases during early commercialization of a technology a phenomena that is widely recognized but rarely quantified or incorporated in learning models additional factors discussed include the effects of learning discontinuities institutional forgetting and the influence of social economic and political factors we then review other models of causality which aim to improve modelers ability to explain and predict the influence of other underlying processes that contribute to technology cost reductions in addition to learning ignoring other types of underlying mechanisms can create a false sense of precision and overestimate the true contribution of learning currently however uncertainties in such multi factor models remain large due to the difficulties of estimating key parameters such as private sector r d investments and extending models of a specific technology to a broader suite of technologies and cost projections pending the development and validation of more robust models of technological change we suggest ways to significantly improve the characterization and reporting of current learning model uncertainties and their impacts on the results of energy economic models to help reduce the potential for drawing inappropriate or erroneous policy conclusions

what are the determinants of investment in environmental r d to face the challenges posed by climate change environmental rd yet investment in environmental r d remains below the social optimum the aim of this paper is to analyse the determinants of investment in environmental innovation and to detect the differences if any with the determinants of investment in general innovation in addition this paper examines the relationship between environmental innovation r d expenditure and a range of policy instruments including environmental regulation and other policy measures including r d subsidies and environmental taxes the empirical analysis is carried out for 22 manufacturing sectors in spain for the period 2008 2013 to overcome problems of data availability we construct a comprehensive database from different surveys the main implications from our results are 1 managerial strategy appears as a relevant driver of environmental r d investments 2 the establishment of a policy mix between environmental energy and technological regulatory measures is recommended 3 the promotion of self regulation through actions that encourage companies to follow a policy that affects their energy efficiency and is environmentally friendly

purchasing health care services from providers with unknown altruism cost sharing rules for paying physicians have been advanced as a way of generating incentives for the provision of quality care while recognizing their potential negative effects on production efficiency however the optimal sharing rate typically depends on the degree to which the physician acts in the interest of the patient what we identify as the physician s altruism since the degree of altruism is likely to vary across physicians and to be private information the standard rules for setting the cost sharing rate are unlikely to be optimal this paper derives conditions for the optimal non linear cost sharing mechanism in the presence of asymmetric information about altruism and shows how it can sometimes be implemented through a menu of linear cost sharing schemes the model can be used to rationalize the design of the fund holder system for general practictioners that operated in the 1990s in the united kingdom

european energy policy a review this article presents the implemented policies of the european union in the broader field of energy and provides a picture of the union s strategy on energy related issues a brief historical background is provided covering the period from the beginning of the union s creation in 1951 when coal was considered as the heart of its economic growth up to 2012 policy development principles as well as the consultations that take place before the proposal of each option are also discussed implemented policies are classified into seven broad categories renewable energy energy efficiency and savings internal energy markets security of energy supply environmental protection nuclear energy and research and development for each category an introduction covering important milestones towards its development is followed by the presentation of the relevant policies and a description of their purpose

environmental innovation and environmental performance abstract by estimating a simultaneous panel data model of environmental innovation and toxic air pollution this paper identifies bi directional causal links between the two we study a panel of 127 manufacturing industries over the period 1989 2004 pollutant emissions are an implicit measure of policy stringency and environmental patent counts are used to measure environmental innovation after accounting for the joint endogeneity we find that environmental innovation is an important driver of reductions in us toxic emissions conversely we find that tightened pollution targets induce environmental innovation however our estimates indicate that the environmental policy multiplier the proportionate contribution of induced innovation to long run emission reduction is small

economic and technical challenges of flexible operations under large scale variable renewable deployment abstract fundamental characteristics of solar and wind power have generated controversy about their economic competitiveness and appropriate techniques for assessing their value this research presents an approach to quantify the economic value of variable renewable capacity and demonstrates its dependence on renewable deployment levels regional resource endowments fleet flexibility and trade assumptions it assesses economic and technical impacts of large scale renewable penetration by linking two models representing electric sector investments and detailed operations model results for california and texas suggest that operational constraints and costs of dispatchable generators e g minimum load levels ramping limits startup costs can impact renewable integration costs but the temporal and spatial variability of solar and wind are larger determinants of their value restrictions on transmission and regional coordination in capacity planning and dispatch decrease the economic value of variable renewable energy highlighting the potential roles of market design and trade energy storage is shown to be a valuable balancing asset at higher solar and wind penetration levels but potential revenues diminish with increased storage deployment

designing an eu energy and climate policy portfolio for 2030 implications of overlapping regulation under different levels of electricity demand abstract the european union s current climate and energy policy has to operate under an ex ante unforeseen economic crisis as a consequence prices for carbon emission allowances in the eu emissions trading system collapsed however this price collapse may be amplified by the interaction of a carbon emission cap with supplementary policy targets such as minimum shares for renewables in the power sector the static interaction between climate and renewable policies has been discussed extensively this paper extends this debate by analysing the efficiency and effectiveness of a policy portfolio containing a cap and trade scheme and a target for a minimum renewable share in different states of aggregate electricity demand making use of a simple partial equilibrium model of the power sector we identify an asymmetric interaction of emissions trading and renewable quotas with respect to different states of aggregate electricity demand the results imply that unintended consequences of the policy interaction may be particularly severe and costly when aggregate electricity demand is low and that carbon prices are more sensitive to changes in economic activity if they are applied in combination with renewable energy targets our analysis of the policy interaction focuses on the eu yet the conclusions may also be of relevance for fast growing emerging economies like china

the economic impact of energy saving retrofits of residential and public buildings in croatia abstract the purpose of this paper is to estimunate the impact of energy saving investment in residential and public buildings in croatia for the period 2015 2020 the aim is to assess the overall socio economic impact of energy saving renovation measures defined in croatian strategic documents in terms of the direct indirect and induced growth of gross value added employment and government revenues an estimate of the avoided costs of air pollution is also included the overall economic impact assessment is based on an input output methodology from the point of view of individual investors the benefits in terms of reduced future expenses related to energy products are usually below energy efficient renovation investment costs making an investment financially viable only if government support is provided if the benefits for society as a whole are included energy efficient renovation could be assessed as viable even in the short run energy saving retrofits of residential and public buildings positively contribute to economic growth employment and protection of the environment because of economic growth the tax revenues induced by these investments could compensate for government expenditures and the overall impact on the public deficit is expected to be neutral even in the short run

strategies against shocks in power systems an analysis for the case of europe abstract electricity systems are constantly exposed to geopolitical techno economic and natural uncertainties that may endanger security of supply therefore it is crucial that policy makers concerned about it consider a variety of possible futures and not only the one that is perceived as the most likely in particular they should account for the possibility of sudden shocks in their decisions with the goal of making the system more robust however long term power system models which are an important pillar of policy decision making are typically designed to determine the cost minimal power system for a specific expected future such a system is not necessarily the most robust one by combining the classic investment optimization approach with the tools of robust decision making we analyze the viability of different strategies that may potentially increase the robustness of a power system for the case of the european power system we pursue a dedicated analysis with the european power system model limes eu based on a total of more than 40 000 model runs we find that strategies promoting the ability of countries to always produce at least 95 of their electricity demand domestically significantly help to reduce the loss of load in case of shocks such a strategy is not cost optimal for the expected future without shocks but the additional costs about 0 1 of total system costs are low compared to the benefits of significantly increasing the power system s robustness

modeling hourly electricity dynamics for policy making in long term scenarios abstract energy policies are often related to the global effort in reducing greenhouse gas emissions through increased use of renewable energies in electricity production the impact of these policies is usually calculated by energy planning tools however the modeling methodologies most currently used are not adequate to simulate long term scenarios while considering the hourly dynamics of supply and demand this paper presents an extension of the times energy planning tool for investment decisions in electricity production that considers seasonal daily and hourly supply and demand dynamics the inclusion of these dynamics enables the model to produce more accurate results in what concerns the impact of introducing energy efficiency policies and the increased use of renewable energies the model was validated in sao miguel azores portugal for the years 2006 2009 where a comparison with real data showed that the model can simulate the supply and demand dynamics further the long term analysis shows that the inclusion of these dynamics contributes to a better assessment of the renewable energy potential suggests the postponement of investments in new generation capacity and demonstrates that using fine time resolution modeling is very valuable for the design of effective policy measures under high renewable penetration energy systems

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

decarbonization scenarios for the eu and mena power system considering spatial distribution and short term dynamics of renewable generation we use the multi scale power system model limes eu to explore coordinated long term expansion pathways for renewable energy re generation long distance transmission and storage capacities for the power sector of the europe and middle east north africa mena regions that lead to a low emission power system we show that ambitious emission reduction targets can be achieved at moderate costs by a nearly complete switch to re sources until 2050 if transmission and storage capacities are expanded adequately limiting transmission capacities to current levels leads to higher storage requirements higher curtailments and to an increase in temporal and spatial electricity price variations results show an escalation of electricity prices if emission reductions exceed a critical value adequate expansion of transmission and storage capacities shift this threshold from 70 to 90 emission reductions in 2050 relative to 2010

impact of renewables on electricity markets do support schemes matter abstract rising renewable shares influence electricity markets in several ways among others average market prices are reduced and price volatility increases therefore the missing money problem in energy only electricity markets is more likely to occur in systems with high renewable shares nevertheless renewables are supported in many countries due to their expected benefits the kind of support instrument can however influence the degree to which renewables influence the market while fixed feed in tariffs lead to higher market impacts more market oriented support schemes such as market premiums quota systems and capacity based payments decrease the extent to which markets are affected this paper analyzes the market impacts of different support schemes for this purpose a new module is added to an existing bottom up simulation model of the electricity market in addition different degrees of flexibility in the electricity system are considered a case study for germany is used to derive policy recommendations regarding the choice of support scheme

lead markets and regulation a framework for analyzing the international diffusion of environmental innovations abstract environmental regulations are often intended to stimulate the generation and adoption of eco efficient innovations an important argument in the public debate is also the creation of new markets for environmentally benign products processes and services in other countries and the generation as a result of export opportunities for the pioneering country lead markets research on lead markets has not however focused on environmental innovations to date we therefore extend the lead market model to environmental innovations and take particular account of the peculiarities of such innovations in particular the public good character of environmental benefits and the role of regulations this approach is applied to two case studies wind energy and fuel efficient passenger cars in both cases the innovation was initially adopted in one country other countries subsequently adopted the same innovation design favored by the lead market which in turn developed into a large exporter in the wind generation and car industries respectively we discuss the regulations employed and the reasons for the international success of the innovations induced by them our findings demonstrate that when supported by global demand or regulatory trends strict regulation results in the creation of lead markets finally we provide recommendations on how our model could be used for further research and in the development of a coordinated environmental and innovation policy

three new empirical tests of the pollution haven hypothesis when environmental regulation is endogenous the validity of existing empirical tests of the pollution haven hypothesis phh is constantly under scrutiny due to two shortcomings first the issues of unobserved heterogeneity and measurement error in environmental regulation are typically ignored due to the lack of a credible traditional instrumental variable second while the recent literature has emphasized the importance of geographic spillovers in determining the location choice of foreign investment such spatial effects have yet to be adequately incorporated into empirical tests of the phh as a result the impact of environmental regulations on trade patterns and the location decisions of multinational enterprises remains unclear in this paper we circumvent the lack of a traditional instrument within a model incorporating geographic spillovers utilizing three novel identification strategies using state level panel data on inbound u s fdi relative abatement costs and other determinants of fdi we consistently find i evidence of environmental regulation being endogenous ii a negative impact of own environmental regulation on inbound fdi in pollution intensive sectors particularly when measured by employment and iii larger effects of environmental regulation once endogeneity is addressed neighboring environmental regulation is not found to be an important determinant of fdi

contracting for health services when patient demand does not reflect quality this paper analyses contracts to keep down costs while maintaining quality of health services when patient demand does not reflect quality there is then a natural role for forms of contract that have emerged during the reforms of the nhs in britain that differ from pure fixed price or cost reimbursement contracts the optimal form depends on whether the provider is entirely self interested or benevolent in having genuine concern for patient welfare with fully benevolent providers there are roles for block and cost and volume contracts with partially benevolent providers some degree of cost sharing is typically optimal

on the economics of renewable energy sources abstract with the global expansion of renewable energy re technologies the provision of optimal re policy packages becomes an important task we review pivotal aspects regarding the economics of renewables that are relevant to the design of an optimal re policy many of which are to date unresolved we do so from three interrelated perspectives that a meaningful public policy framework for inquiry must take into account first we explore different social objectives justifying the deployment of re technologies and review model based estimates of the economic potential of re technologies i e their socially optimal deployment level second we address pivotal market failures that arise in the course of implementing the economic potential of re sources in decentralized markets third we discuss multiple policy instruments curing these market failures our framework reveals the requirements for an assessment of the relevant options for real world decision makers in the field of re policies this review makes it clear that there are remaining white areas on the knowledge map concerning consistent and socially optimal re policies

efficient modeling and forecasting of electricity spot prices abstract the increasing importance of renewable energy especially solar and wind power has led to new forces in the formation of electricity prices hence this paper introduces an econometric model for the hourly time series of electricity prices of the european power exchange epex which incorporates specific features like renewable energy the model consists of several sophisticated and established approaches and can be regarded as a periodic var tarch with wind power solar power and load as influences on the time series it is able to map the distinct and well known features of electricity prices in germany an efficient iteratively reweighted lasso approach is used for the estimation moreover it is shown that several existing models are outperformed by the procedure developed in this paper

professional norms and physician behavior homo oeconomicus or homo hippocraticus abstract physicians treatment decisions determine the level of health care spending to a large extent the analysis of physician agency describes how doctors trade off their own and their patients benefits with a third party such as the collective of insured individuals or the taxpayers bearing the costs professional norms are viewed as restraining physicians self interest and as introducing altruism towards the patient we present a controlled experiment that analyzes the impact of professional norms on prospective physicians trade offs between their own profits the patients benefits and the payers expenses for medical care our data support the notion that professional norms derived from the hippocratic tradition shift weight to the patient in physicians decisions while decreasing their self interest and efficiency concerns

long run power storage requirements for high shares of renewables review and a new model abstract the purpose of this article is twofold first we review model based analyses that explore the role of power storage in energy systems with high shares of variable renewables second we introduce a new model that is specifically designed for exploring long term storage requirements the literature survey focuses on recent contributions in the peer reviewed energy economics and engineering literature we compare key characteristics of the different models provide an overview of model applications and summarize key findings on power storage requirements we also evaluate which system values of storage are covered by respective model analyses based on the literature survey we identify common findings and key model features required for a sound assessment of future storage requirements in order to raise complementary insights we introduce dieter a new dispatch and investment model the model contributes to the literature by capturing multiple system values of power storage related to arbitrage capacity and reserve provision further the model is designed as an open source tool that can be freely used and modified results of a first application of the new model are presented in a companion paper

technological learning in energy environment economy modelling a survey abstract this paper aims at providing an overview and a critical analysis of the technological learning concept and its incorporation in energy environment economy models a special emphasis is put on surveying and discussing through the so called learning curve both studies estimating learning rates in the energy field and studies incorporating endogenous technological learning in bottom up and top down models the survey of learning rate estimations gives special attention to interpreting and explaining the sources of variability of estimated rates which is shown to be mainly inherent in r d expenditures the problem of omitted variable bias the endogeneity relationship and the role of spillovers large scale models survey show that despite some methodological and computational complexity related to the non linearity and the non convexity associated with the learning curve incorporation results of the numerous modelling experiments give several new insights with regard to the analysis of the prospects of specific technological options and their cost decrease potential bottom up models and with regard to the analysis of strategic considerations especially inherent in the innovation and energy diffusion process in particular the energy sector s endogenous responses to environment policy instruments top down models

parametric study of variable renewable energy integration in europe advantages and costs of transmission grid extensions abstract wind and solar energy will play an important role in the decarbonization of the european electricity generation however high shares of these variable renewable energies vres challenge the power system considerably due to their temporal fluctuations and geographical dispersion in this paper we systematically analyze transmission grid extensions as an integration measure for vres in europe we show the effects of grid extensions for fundamental properties of the power system as a function of the penetration and mix of wind and solar energy backup capacity requirements and overproduction are reduced with a powerful overlay transmission grid we determine the costs of the grid extensions in dependence of the vre penetration and mix and find that the grid integration costs remain below 25 of the vre investment costs for all conceivable vre configurations furthermore robust design features of future power systems in terms of grid geometry and flexibility requirements for backup technologies are identified we apply a spatially and temporally highly resolved techno economic model of the european power system for our analysis

wholesale marginal prices in competitive generation markets wholesale marginal electricity prices are being used in several actual competitive generation markets worldwide both to remunerate generators and to charge consumption these prices must account not only for energy but also for guarantee of supply in the long and the short term this paper a provides a sound conceptual and quantitative foundation for wholesale pricing based on generation services where any existing restrictions in operation or planning in real power markets are accounted for b clearly establishes the relationship between short term marginal costs long term marginal costs and optimal wholesale electricity prices and c identifies the reasons for mismatches in cost recovery with marginal generation prices the theoretical results are verified with a detailed realistic power system model

bridging the scales a conceptual model for coordinated expansion of renewable power generation transmission and storage abstract to analyze the challenge of large scale integration of renewables during the next decades we present a conceptual power system model that bridges the gap between long term investment allocation and short term system operation decisions it integrates dynamic investments in generation transmission and storage capacities as well as short term variability and spatial distribution of supply and demand in a single intertemporal optimization framework large scale grid topology power flow distributions and storage requirements are determined endogenously results obtained with a three region model application indicate that adequate and timely investments in transmission and storage capacities are of great importance delaying these investments which are less costly than investments in generation capacities leads to system wide indirect effects such as non optimal siting of renewable generation capacities decreasing generation shares of renewables increasing residual emissions and hence higher overall costs

the private and public economics of renewable electricity generation generating electricity from renewable sources is more expensive than conventional approaches but reduces pollution externalities analyzing the tradeoff is much more challenging than often presumed because the value of electricity is extremely dependent on the time and location at which it is produced which is not very controllable with some renewables such as wind and solar likewise the pollution benefits from renewable generation depend on what type of generation it displaces which also depends on time and location without incorporating these factors cost benefit analyses of alternatives are likely to be misleading other common arguments for subsidizing renewable power green jobs energy security and driving down fossil energy prices are unlikely to substantially alter the analysis the role of intellectual property spillovers is a strong argument for subsidizing energy science research but less persuasive as an enhancement to the value of installing current renewable energy technologies

profit or patients health benefit exploring the heterogeneity in physician altruism abstract this paper investigates physician altruism toward patients health benefit using behavioral data from hennig schmidt et al s 2011 laboratory experiment in the experiment medical students in the role of physicians decide on the provision of medical services the experimental setup allows us to identify the influence of profits and patients health benefit on the choice of medical treatment we estimate physician altruism the weight individuals attach to patients health benefit by fitting mixed logit and multinomial logit regression models to the experimental data estimation results provide evidence for physician altruism we find however substantial variation in the degree of physician altruism we also discuss some implications of our results for the design of physician payment schemes in the light of the theoretical literature

optimal price setting in pay for performance schemes in health care abstract the increased availability of process measures implies that the quality of health care is in some areas de facto verifiable optimal price setting for verifiable dimensions of quality is well described in the theoretical literature on incentive design we seek to narrow the large gap that remains between actual price setting behaviour in pay for performance schemes and the incentive design literature we present a stylised model for hospital price setting for process measures of quality and show that optimal hospital prices should reflect the marginal benefit of the expected health gains the weight given to patients benefit relative to profits and the opportunity cost of public funds based on published estimates we derive the optimal prices for three measures of quality that have been incentivised in the english national health service since april 2010 treatment in an acute stroke unit rapid brain imaging and thrombolysis with alteplase we then compare the optimal prices with the actual prices offered to hospitals in england under the best practice tariffs scheme for emergency stroke care

hospital competition and quality with regulated prices we analyse the effect of competition on quality in hospital markets with regulated prices considering the effect of both introducing competition monopoly versus competition and increasing competition through either lower transportation costs increased substitutability or a higher number of hospitals with semi altruistic providers and a fairly general cost structure we show that the relationship between competition and quality is generally ambiguous in contrast to the received body of theoretical literature this is consistent with and potentially explains the mixed empirical evidence

public rationing and private cost incentives this paper considers a public provider s strategic use of rationing in a market served by both public and private providers such a mixed market structure is common in many industries such as health care telecommunication postal service and public utilities the technology in the private sector exhibits increasing returns each firm can expend effort in the form of fixed cost to reduce the marginal cost firms in the contestable private sector compete and the market equilibrium is characterized by average cost pricing the equilibrium private sector market size is too low resulting in deficient cost effort efficient rationing forces more consumers to use the private sector restoring cost incentives and implementing the first best random rationing may reduce cost inefficiency but does not implement the first best

shadow prices environmental stringency and international competitiveness abstract empirical tests of the relationship between international competitiveness and the severity of environmental regulations are hampered by the lack of pollution abatement cost data for non u s countries the theory of the firm suggests that environmental stringency can be measured by the difference between a polluting input s shadow price and its market price we make a first attempt at quantifying such a measure for two industries located in nine european oecd countries overall we provide i a new approach to measure cross country regulatory differences in that we use a theoretically attractive measure of industry specific private compliance cost and ii empirical estimates that are an attractive tool for researchers and policymakers who are interested in examining how economic activity is influenced by compliance costs

globalization and the environment determinants of firm self regulation in china critics assert that globalization is detrimental to the environment because it encourages location of polluting industries in countries with low environmental regulations we suggest that globalization might also have positive environmental effects because global ties increase self regulation pressures on firms in low regulation countries using survey data from firms in china we find that multinational ownership multinational customers and exports to developed countries increase self regulation of environmental performance

integration of renewable energy sources in southeast europe a review of incentive mechanisms and feasibility of investments abstract incentivizing development and deployment of renewable energy sources res but also other low carbon technologies lct has been a successful way of promoting new technologies by creating a feasible investment case and making them competitive with traditional energy sources although different incentive mechanisms exist feed in tariffs have shown to be the best model for accelerating lct development guaranteeing producers preferential prices for the produced electricity over a period of time and enabling them access to the power network to sell inject produced electricity due to these benefits feed in tariff models are the most common model for stimulating res integration in southeast europe the paper reviews the current state of preferential tariffs for res in countries of southeast europe while some countries already have significant installed res capacity others are still in the planning stage the review shows that the amount of installed capacity of a specific technology has a strong impact on the support for the future projects for same technology this comprehensive review of legislative development supporting res as well as technologies preferred in different countries of the region is supported with feasibility assessment of investing in res using the example of two different technology projects wind and photovoltaic analysing the impact of the current tariffs on the return on investment for each country of the region

economic development as self discovery in the presence of uncertainty about what a country can be good at producing there can be great social value to discovering costs of domestic activities because such discoveries can be easily imitated we develop a general equilibrium framework for a small open economy to clarify the analytical and normative issues we highlight two failures of the laissez faire outcome there is too little investment and entrepreneurship ex ante and too much production diversification ex post optimal policy consists of counteracting these distortions to encourage investments in the modern sector ex ante but to rationalize production ex post we provide some informal evidence on the building blocks of our model

hospital quality choice and market structure in a regulated duopoly this paper analyzes the optimal structure of a regulated health care industry in a model in which the regulator cannot enforce what hospitals do unverifiable quality of health or does not know what hospitals know incomplete information about production costs or both we show that if quality is unverifiable the choice between monopoly and duopoly does not change with respect to the verifiable case but if there are fixed costs assumed to be quality dependent and the monopoly is the optimal market structure the quality level of the operative hospital decreases asymmetry of information introduces informational rents that can be reduced by increasing the most efficient hospital s market share a monopoly is chosen more often

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

quality and outside capacity in the provision of health services abstract this paper studies the effects of non contractibility of investment on the choices made by a health authority and a hospital which supplies a specific service non contractibility determines inefficiencies compared with any pareto efficient outcome the quality of the service chosen by the hospital is too low and the health authority relies too much on outside providers

variable renewable energy technologies in the turkish electricity market quantile regression analysis of the merit order effect abstract the share of variable renewable energy sources in power supply has increased significantly in many countries however this increase has also created problems in electricity markets while the average day ahead market price has declined in several markets the merit order effect the remuneration mechanisms in some countries have to be revised due to the surge in financial costs yet further research is needed to understand the implications of the merit order effect for remuneration mechanisms thoroughly accordingly this study aims to contribute to the literature through employing a quantile regression model to analyze the merit order effect and discuss its implications for the remuneration mechanism in turkish electricity market model results show significant negative merit order effect for both wind and run of river hydro technologies however this effect varies with respect to demand price level and technology moreover the contribution of these technologies to the total welfare in the turkish electricity market does not favor fixed price payments in conclusion it is recommended that the remuneration mechanism is revised to include the temporal value of variable renewable energy sources and electricity market design should reflect the locational value of variable renewable energy sources in turkey

competition and waiting times in hospital markets this paper studies the impact of hospital competition on waiting times we use a salop type model with hospitals that differ in geographical locationand potentially waitingtime andtwotypesofpatients high benefitpatientswhochoosebetweenneighbouring hospitals competitive segment and low benefit patients who decide whether or not to demand treatment from the closest hospital monopoly segment compared with a benchmark case of monopoly we find that hospital competition leads to longer waiting times in equilibrium if the competitive segment is sufficiently large given a policy regime of hospital competition the effect of increased competition depends on the parameter of measurement lower travelling costs increase waiting times higher hospital density reduces waiting times while the effect of a larger competitive segment is ambiguous we also show that if the competitive segment is large hospital competition is socially preferable to monopoly only if the regulated treatment price is sufficiently high 2008 elsevier b v all rights reserved

the market value of variable renewables the effect of solar wind power variability on their relative price this paper provides a comprehensive discussion of the market value of variable renewable energy vre the inherent variability of wind speeds and solar radiation affects the price that vre generators receive on the market market value during windy and sunny times the additional electricity supply reduces the prices because the drop is larger with more installed capacity the market value of vre falls with higher penetration rate this study aims to develop a better understanding on how the market value with penetration and how policies and prices affect the market value quantitative evidence is derived from a review of published studies regression analysis of market data and the calibrated model of the european electricity market emma we find the value of wind power to fall from 110 of the average power price to 50 80 as wind penetration increases from zero to 30 of total electricity consumption for solar power similarly low value levels are reached already at 15 penetration hence competitive large scale renewable deployment will be more difficult to accomplish than as many anticipate

renewable energy sources in european energy supply and interactions with emission trading abstract this paper presents a model based approach which allows to determine the optimised structure and operation of the eu 15 electricity supply under different political and economic framework conditions with a focus on the integration of renewable energy sources for electricity generation res e in the eu 15 countries the approach is designed to take into account the characteristics of power production from both renewable and conventional sources including the technological and economic characteristics of existing plants as well as those of future capacity expansion options beyond that fuel supply structures are modelled as well as the international markets for power and co 2 certificates with their restrictions thus a profound evaluation of the exploitation of mid term renewable potentials and an assessment of the market penetration of the various renewable power generation technologies under the normative premise of a cost optimised evolution of the power system becomes possible results show that a promotion of renewable energies reduces the scarcity of co 2 emission allowances and thus lowers marginal costs of co 2 reduction up to 30 in 2030 despite the higher overall costs a diversification of the energy resource base by res e use is observed as primarily natural gas and nuclear fuels are replaced

choice of contracts in the british national health service an empirical study following major reforms of the british national health service nhs in 1990 the roles of purchasing and providing health services were separated with the relationship between purchasers and providers governed by contracts using a mixed multinomial logit analysis we show how this policy shift led to a selection of contracts that is consistent with the predictions of a simple model based on contract theory in which the characteristics of the health services being purchased and of the contracting parties influence the choice of contract form the paper thus provides evidence in support of the practical relevance of theory in understanding health care market reform

case study evidence that direct regulation remains the main driver of industrial pollution avoidance and may benefit operational efficiency abstract environmental regulation is required to reduce industrial pollution to levels that are socially acceptable and economically efficient but there is debate over the most efficient form of such regulation typically a limited range of environmental and economic parameters are accounted for in the econometric studies that inform that debate this paper integrates evidence from two separate studies to assess a broad range of parameters related to the efficiency of industrial environmental regulation questionnaire responses from 25 italian manufacturers of building chemicals and 28 irish pharmaceutical manufacturers provided evidence on the environmental effectiveness and operational impacts of different regulatory instruments combined with extensive emissions data from irish pharmaceutical manufacturers survey results enabled a quantitative estimation of pollution avoidance specifically attributable to direct regulation the monetised social benefit of avoided pollution was found to be equal to direct compliance costs chemical manufacturers in italy and ireland stated that direct regulation is a more important driver of industrial environmental performance than economic or voluntary regulation and their responses indicated that direct compliance costs may be countered somewhat by stimulated operational improvements it was concluded that direct regulation is an effective approach for multi pollutant control in an industrial context and that the efficiency of such regulation may be underestimated in studies that do not consider the full range of pollutants and operational effects

cost effectiveness of renewable electricity policies we analyze policies to promote renewable sources of electricity a portfolio standard rps raises electricity prices and primarily reduces gas fired generation a knee of the cost curve exists between 15 and 20 goals for 2020 in our central case and higher natural gas prices lower the cost of greater reliance on renewables a renewable energy production tax credit lowers electricity price at the expense of taxpayers which limits its effectiveness in reducing carbon emissions and it is less cost effective at increasing renewables than a portfolio standard neither policy is as cost effective as a cap and trade policy for achieving carbon emission reductions

environmental regulation and mnes location does csr matter abstract we investigate whether firms with relatively low environmental standards are more often located in countries that are poor corrupt or have weak environmental regulations we find new empirical evidence in favor of the pollution haven hypothesis which states that mnes are transferring their dirty operations to countries with weak environmental regulation our findings suggest that these are not necessarily the poorest or most corrupt countries we establish that mnes with strong social responsibility avoid locating their operations in countries with weak environmental regulation

environmental regulation and the export dynamics of energy technologies abstract the pollution haven hypothesis affirms that an open market regime will encourage the flow of low technology polluting industries toward developing countries because of potential comparative advantages related to low environmental standards in contrast the hypothesis suggested by porter and van der linde claims that innovating firms operate in a dynamic competitive situation which allows global diffusion of environmental friendly technologies environmental regulation may represent a relevant mechanism through which technological change is induced in this way countries that are subject to more stringent environmental regulations may become net exporters of environmental technologies this paper provides new evidence on the evolution of export flows of environmental technologies across different countries for the energy sector advanced economies particularly the european union have increasingly focused on the role of energy policies as tools for sustaining the development path the kyoto protocol commitments together with growing import dependence on energy products have brought attention to the analysis of innovation processes in this specific sector the analysis uses a gravity model in order to test the determinants and the transmission channels through which environmental technologies for renewable energies and energy efficiency are exported to advanced and developing countries our results are consistent with the porter and van der linde hypothesis where environmental regulation represents a significant source of comparative advantages what strongly emerges is that the stringency of environmental regulation supplemented by the strength of the national innovation system is a crucial driver of export performance in the field of energy technologies

renewable electricity generation in germany a meta analysis of mitigation scenarios german energy policy targets envision a share of electricity from renewable energy sources res e of at least 80 in 2050 how can the transformation of the german electricity sector be achieved and at what costs this paper addresses these questions by means of a meta analysis of 10 recent model based mitigation scenarios for germany it turns out that the scenarios exploit the three basic strategic options of increasing the share of res e domestic res e generation electricity demand reductions and res e imports to substantially different extents domestic res e generation increases in all scenarios particularly from onshore and offshore wind scenarios that rely heavily on reducing electricity demand require a relatively low expansion of domestic res e generation despite detailed technical analyses insights on the costs of the transformation remain limited a discussion of underlying scenario assumptions reveals that it is unclear whether i res e and system integration technology development will be as cost competitive as postulated ii implicitly assumed institutional requirements will be realized and iii relevant actors in the transformation process will be incentivized accordingly therefore future research should pursue a thorough assessment of strategic options for transforming the german electricity system that consistently integrates technologies institutions and actors

paying for performance and motivation crowding out abstract we investigate how prices affect output when publicly funded providers differ in altruism and enjoy being perceived as good and not as greedy a higher price increases output for low and high altruism providers intermediate altruism providers do not respond or reduce output

renewable electricity production costs a framework to assist policy makers decisions on price support abstract despite recent progress the production costs for renewable electricity remain above those for conventional power expectations of continuous reductions in production costs typically underpin governments policies for financial support they often draw on the technology focused versions of the experience curve model this paper discusses how national contextual factors also have a strong influence on production costs such as geographic infrastructural institutional and resource factors as technologies mature and as they reach significant levels of diffusion nationally sustained increases in production costs might be recorded due to these nationally contextual factors poorly accounted for in policy making decisions for price support the paper suggests an analytical framework for a more comprehensive understanding of production costs based on this it recommends that the evolution of specific cost levels and factors be monitored to locate sources of changes the paper also suggests policy instruments that governments may use to facilitate cost decreases whenever possible the application of the framework is illustrated for the diffusion of wind power in spain during the past three decades

renewable energy deployment in europe up to 2030 and the aim of a triple dividend abstract renewable energy sources res play a key role in the european commission s 2030 climate and energy framework which aims for a low carbon economy that increases the security of the eu s energy supplies and creates new opportunities for growth and jobs among other benefits we assess whether renewable energy deployment in europe can provide this triple dividend at which ambition levels of 2030 res targets and what the role of the support policy scheme for electricity is we apply two types of models a detailed techno economic sector model of the deployment of res and two macroeconomic models our findings suggest that up to 2030 our triple dividend hypothesis holds even under a declining role of europe as technology provider for the rest of the world additional emission reductions of up to 1040 mt co 2 as compared to a baseline scenario in 2030 are possible demand for fossil fuels can likewise be reduced due to the deployment of renewable energy sources by up to 150 mtoe more ambiguous is the order of magnitude of the effects on gdp and employment which differs noticeably depending on the economic theory applied in the different models nevertheless both models predict slightly higher gdp and employment in 2030 when implementing ambitious res targets

competition and quality in health care markets a differential game approach we investigate the effect of competition on quality in health care markets with regulated prices taking a differential game approach in which quality is a stock variable using a hotelling framework we derive the open loop solution health care providers set the optimal investment plan at the initial period and the feedback closed loop solution providers move investments in response to the dynamics of the states under the closed loop solution competition is more intense in the sense that providers observe quality in each period and base their investment on this information if the marginal provision cost is constant the open loop and closed loop solutions coincide and the results are similar to the ones obtained by static models if the marginal provision cost is increasing investment and quality are lower in the closed loop solution when competition is more intense in this case static models tend to exaggerate the positive effect of competition on quality

a tale of two market failures technology and environmental policy abstract market failures associated with environmental pollution interact with market failures associated with the innovation and diffusion of new technologies these combined market failures provide a strong rationale for a portfolio of public policies that foster emissions reduction as well as the development and adoption of environmentally beneficial technology both theory and empirical evidence suggest that the rate and direction of technological advance is influenced by market and regulatory incentives and can be cost effectively harnessed through the use of economic incentive based policy in the presence of weak or nonexistent environmental policies investments in the development and diffusion of new environmentally beneficial technologies are very likely to be less than would be socially desirable positive knowledge and adoption spillovers and information problems can further weaken innovation incentives while environmental technology policy is fraught with difficulties a long term view suggests a strategy of experimenting with policy approaches and systematically evaluating their success

comparing the costs of intermittent and dispatchable electricity generating technologies economic evaluations of alternative electric generating technologies typically rely on comparisons between their expected life cycle production costs per unit of electricity supplied the standard life cycle cost metric utilized is the levelized cost per mwh supplied this paper demonstrates that this metric is inappropriate for comparing intermittent generating technologies like wind and solar with dispatchable generating technologies like nuclear gas combined cycle and coal levelized cost comparisons are a misleading metric for comparing intermittent and dispatchable generating technologies because they fail to take into account differences in the production profiles of intermittent and dispatchable generating technologies and the associated large variations in the market value of the electricity they supply levelized cost comparisons overvalue intermittent generating technologies compared to dispatchable base load generating technologies they also overvalue wind generating technologies compared to solar generating technologies integrating differences in production profiles the associated variations in the market value of the electricity supplied and life cycle costs associated with different generating technologies is necessary to provide meaningful comparisons between them this market based framework also has implications for the appropriate design of procurement auctions created to implement renewable energy procurement mandates the efficient structure of production tax credits for renewable energy and the evaluation of the additional costs of integrating intermittent generation into electric power networks