1,720,989 research outputs found
Bayesian-Nash vs dominant-strategy implementation with countervailing incentives: the two-type case
No full textWe extend the principal/one-agent model with countervailing incentives to a framework in which the principal deals with two agents behaving non-cooperatively and protected by limited liability. Focusing on the two-type case, we show that, beside the situation in which first best is effected even without relying on type correlation, dominant-strategy
implementation yields no penalty to the principal, with respect to Bayesian-Nash implementation, when the principal faces, on the opposite, very tight constraints
Targeted policy design in transportation: the case of the ferry market
No full textWe model a ferry market where passengers are heterogeneous in their valuation of waiting time and, unlike in previous studies, can take services from all operators. Analyzing their behaviour when two operators are active, each providing one service, we find that complex patterns of product differentiation emerge between two goods that (i) do not exactly correspond to the available services and (ii) display service frequencies as quality attributes. A (low-quality) basic good, coinciding with the cheaper service, attracts low-time-value passengers. A (high-quality) composite good, which is a bundle of the two available services, appeals to high-time-value passengers. Consequently, demand is positive for either operator so that an inefficient operator is not crowded out. In the specific case of a mixed duopoly, a price-aggressive public operator spans discipline over (but does not monopolize) the whole market; a soft one boosts "quality" (i.e., frequency) vis-à-vis a fraction of the population only, that is yet larger than under classical vertical differentiation. Policy-makers pursuing redistribution objectives should target the cheaper service, in general, privileging either a raise in its frequency (when it is low) or a cut in its price (when frequency is high), depending upon the group of passengers they wish to support
Asymmetric yardstick competition: traditional procurement versus public-private partnerships
Full text linkWe consider local jurisdictions where rent-seeking administrators undertake identical infrastructure projects, choosing between two contractual arrangements: traditional procurement (TP) and public-private partnership (PPP). A yardstick competition mechanism is triggered through retrospective voters’ electoral decisions. A regime with TP in one jurisdiction and PPP in the other is likely to arise when projects are mildly lucrative and/or jurisdictions have moderate fiscal capacity. In this equilibrium, incumbents provide different levels of public services, face different re-election probabilities, and obtain different rents. By differentiating the project governance, incumbents specialize in rent extraction over time, thus hindering yardstick competition although jurisdictions are otherwise identical
Co-Production in Local Public Service Delivery: The Case of Waste Management
No full textIn a simple model of waste management, we analyse the basic aspects of co-production in local public service delivery. Our results suggest that citizen involvement may lead to an expansion of the production possibility frontier, if waste sorting is made sufficiently convenient, relative to work, through an appropriate tax policy. However, by diverting time away from work, this policy
may trigger a tax base erosion phenomenon. We find that the incentive power of the tax should be high (low) when local preferences for the service are very high (low) relative to local incomes. In the intermediate situation, two cases arise. First,
when preferences are (not very) low relative to incomes, taxation should pursue resource collection purposes and be deprived of its incentive effects. Second, when preferences are middle-to-high relative to incomes, the trade-off between incentive
provision and tax base erosion causes the optimal tax rate to first increase, then decrease
On the financial structure and the contractual length of public-private partnerships
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Regolamentazione Parziale di Quantità
No full textPublic utilities have recently undergone a major process of reorganization. Competitive segments have been liberalized, (eventually) privatised and tend to evolve into partially regulated oligopolies. In the latter, former monopolists are subject to regulatory duties whereas competitors operate unregulated, although endowed with market power. Having these scenarios in
mind, we propose a mechanism of partial regulation that is suitable for private Cournot oligopolies. Iterated over time, this scheme, which relies upon data about current costs and past performance, converges to the equilibrium of a Nash-Cournot mixed oligopoly
Water Misallocation and Environmental Externalities in Electricity Generation
Full text linkFlorence School of RegulationWe explore the interactions between environmental externalities and intertemporal market power in electricity generation industries where thermal operators imperfectly compete with operators using scarce water stored in dams. Relying upon a two-period model, we show that, in countries where demand peaks at the first (resp.ly, second) period after water renewal, dynamic market power worsens (resp.ly, ameliorates) resource allocation and environmental health. We then address policy issues. We show that, in general, second best is not decentralized by means of standard tools such as price cap. We argue that the hydraulic process requires specific regulation. We put forward a quantity-based version of the contracts for price difference increasingly used in power pools, to be adopted jointly with either a flexible form of taxation or an intertemporal price cap
Externalities, Regulation and Taxation in Electricity Generation
No full textIn this paper we address the issue of how to deal with water inter-temporal misallocation in electricity generation when two sources of externalities interact. Exploring a two-periods duopolistic framework, where a hydraulic and a thermal generator exert an inter-temporal and an environmental externality respectively, we assess the associated implications in terms of inter-temporal profile of quantities, prices and environmental damages. We then investigate how policy instruments such as an inter-temporal price cap and a Pigouvian tax can be simultaneously used for corrective purposes. This helps shed light on the relationship between regulatory schemes and taxation in imperfectly competitive settings that are characterized by relevant dynamic aspects
A critical assessment of the governance structure of the transport sector in Albania and in the other Balkan Countries
No full textWithin the process of democratization, modernization and development that is currently going on in the Balkan region, Albania is called upon to play a fundamental and delicate role, also due to its geographical location. To be up to this role, Albania should be equipped with an adequately dimensioned and efficient transport system, well connected with those of the neighbouring countries. In this article, we first make a critical assessment of the governance structure of the transport sector in Albania, ranging from railway, road and local public transport to maritime and air transport. We then provide guidelines for the sequel of the restructuring process, arguing that they are suitable not only for Albania, but also for all other Balkan countries
Long-term contracting in hydro-thermal electricity generation: Welfare and environmental impact
No full textWe consider electricity generation industries where thermal operators imperfectly compete with hydro operators that manage a (scarce) water stock stored in reservoirs over a natural cycle. We explore how the exercise of intertemporal market power affects social welfare and environmental quality. We show that, as compared to the outcome of spot markets, long-term contracting either exacerbates or alleviates price distortions, depending upon the consumption pattern over the water cycle. Moreover, it induces a second-order environmental effect that, in the presence of a thermal competitive fringe, is critically related to the thermal market shares in the different periods of the cycle. We conclude by providing policy insights
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