Emissions trading and the European electricity market: Consequences of emissions trading on prices of electricity and competitiveness of basic industries

In 2001 the European Commission proposed the introduction of a European system of trading in greenhouse gases. This proposal is currently subject to fierce debates. Opponents to the proposal of the Commission do not question the efficiency effects of emissions trading in general. The economic benefits of trading in emission permits compared to other instruments for climate policy are broadly recognized. Likely distributional effects of emissions trading, however, are the origin of fierce controversies. The European Commission has proposed a method of direct allocation while others, like representatives of large industries, plead for an indirect method. In the former approach, permits are distributed directly to the group of firms that emit the gases. End-users of energy receive their permits in the latter method. Emitters and end-users of energy are the same group of firms only when use of energy coincides directly with emissions. This is valid for the burning of natural gas for instance, but not for the generation and consumption of electricity. Emissions of carbon dioxide result from electricity production when power is generated by means of coal, oil, or gas fired plants. Consumption of electricity does not generate any emissions. Consequently, the direct allocation of permits implies that power plants receive the permits while electricity users obtain them when the indirect approach is followed. The debate on the method of allocation concerns its effects on the price of electricity and the competitiveness of large users of electricity. Questions that have to be answered are: ‘will power producers raise their prices if they obtain their permits free of charge?', and ‘to which extent does a rise in electricity price affect industries such as Steel, and Aluminium?'. The Netherlands' Committee ‘Allocating emission permits" has asked the CPB to answer these questions.

Mobile license renewal : what are the issues? what is at stake ?

A major challenge facing regulators in industrial and developing countries alike is the need to strike the right balance between ensuring certainty for market players and preserving flexibility of the regulatory process to accommodate the rapidly changing market, technological, and policy conditions. This challenge applies across a wide range of regulatory instruments and vehicles including license renewal, which is the focus of this paper. The authors provide an overview of mobile license renewal issues covering the legal regime of license renewal, the renewal process, the non-renewal context, and the changes in licensing conditions, including spectrum implications of the renewal process. They draw best practices that started to emerge in recent renewal practices, to ensure that the renewal process leads to the best outcome for all stakeholders. As much as possible, policymakers and regulators should strive to promote investors'confidence and give incentives for long-term investment. They can do this by favoring the principle of"renewal expectancy,"but also by promoting regulatory certainty and predictability through a fair, transparent, and participatory renewal process. For example, by providing details for license renewal or reissue, clearly establishing what is the discretion offered to the licensing body, or ensuring sufficient lead-times and transitional arrangements in the event of non-renewal or changes in licensing conditions. Public consultation procedures and guaranteeing the right to appeal regulatory decisions maximizes the prospects for a successful renewal process. As technological changes and convergence and technologically neutral approaches gain importance, regulators and policymakers need to be ready to adapt and evolve licensing procedures and practices to the new environment.Industrial Management,Public Sector Economics&Finance,Technology Industry,Urban Economics,Public&Municipal Finance

Product Launch in a Declining Environment: The Blu-ray Disc – Opportunities and Struggle

Increasingly ICT-based virtual products are challenging physical products and markets. Obsolescence has become a real effect for an augmented number of established industries due to the facilitation of access, consumption, and permanent, immediate availability, which dematerialised products provide. Once again, Schumpeter’s Wind of Creative Destruction intensifies organisations’ permanent struggle for survival (1950). This paper presents long-term research in the optical disc industry, which has presented the optical disc format of Blu-ray as its latest innovation. It is an example of how an established industry launches a new product for finding new opportunities, but fights desperately against market resistance. The degree of innovation, the Blu-ray represents, may not be sufficient in the overarching battle of the physical place versus the virtual space (Kotler et al. 2002, Lam. 2004, Lamont et al. 1993, Scardigli et al. 1988). As the US market research institute In-Stat highlights, the optical disc market has declined for the 10th year in sequence (Kaufhold. 2010, IFPI. 2010). Sufficient evidence is available that the replication industry of optical discs may be confronted with an endgame scenario. The market climate may already be too hostile to support this industry’s desire for a renewal of consumers’ acceptance of the physical product, here the Blu-ray disc, and to create new market opportunities in the struggle against the industry’s potential obsolescence (Harrigan et al. 1983). Despite strong efforts of promotion and powerful market approaches, the Blu-ray disc could not find inroads to markets yet making this format sustainably successful. Evidence is that after a short period of time, Blu-ray discs’ available manufacturing capacities outperform consumers’ demand by >30%, consumer and replication prices fall sharply and many of the Home Entertainment’s content providers have little or no use for this format being a commodity and based on mass production (dvd-intelligence. 2010a, Kaufhold. 2010, Killer-Korff. 2010). Therefore, as research among the replication industry indicates, it presently seems more as though the Blu-ray format may not fulfil this industry’s needs and, with reference to Abernathy et al.’s research, may not lead to the renewal of industrial dynamics in a declining marketplace (1983, 1984). Further explanation for reasons can be found in the theories of innovation based on Utterback’s, Christensen’s and Christensen et al.’s studies of disruptive and discontinuous innovation (1996, 2003, 2003, 2004). Following the paper presented at the Sixteenth Annual South Dakota International Business Conference, this paper presents research about the Blu-ray format’s market problems. The introduction of the Transilience Organisation Innovation Map provided a conceptual approach for the initial explanation of the underlying reasons (Oestreicher. 2009). Research among European replication firms since concludes for Blu-ray that innovation in technology alone is not sufficient, when innovation’s second stream of market linkages is involved (Abernathy et al. 1983, 1984). The paper presents explanations, why the Blu-ray disc may not be sufficiently strong to support the replication industry in overcoming the odds impacting their strategic opportunities in a declining and eventually disruptive environment (Lamont et al. 1993, Yoo. 1992). The research methods applied are grounded theory and case study (Goulding. 2002, Charmaz. 2009, Eisenhardt. 1989, Davies. 2006). The overall intention of this long-term research is to contribute to a theory, which may also be relevant for other industries, like the publishing industry, whose struggle against dematerialisation of content is presently starting (Picard. 2003). Key Words: Radical vs. marginal innovation, Ideal Final Result, endgame strategies, theories of innovation, Blu-ra

Solving Spectrum Gridlock: Reforms to Liberalize Radio Spectrum Management in Canada in the Face of Growing Scarcity

Canada lags other countries in solving the problem of spectrum scarcity amid rising demand driven by cellphones and other wireless products. In this study, the authors call for reforms to liberalize the allocation of spectrum in Canada with a market-based approach, to increase competition, for the benefit of consumers and other end users.Economic Growth and Innovation, radio spectrum, wireless technology, Industry Canada

Network Rules

Crawford compares the debate between the telcos and the online companies over broadband access regimes often called the network neutrality debate to the ongoing tussle between intellectual property maximalists and free culture advocates which are strikingly parallel sets of arguments. The maximalists claim that creativity comes from lone genuises (the romantic author) who must be given legal incentives to works but intellectual property scholars have carefully examined the incentives of their arguments and have pointed out that granting overly strong property rights to copyright holders might not be socially appropriate. Moreover, the network providers claim that they (the romantic builders) must be allowed by law to price-discriminate vis-a-vis content sources in order to be encouraged to build the network

General Purpose Technologies

Electricity and Information Technology (IT) are perhaps the two most important general purpose technologies (GPTs) to date. We analyze how the U.S. economy reacted to them. The Electricity and IT eras are similar, but also differ in several important ways. Electrification was more broadly adopted, whereas IT seems to be technologically more "revolutionary." The productivity slowdown is stronger in the IT era but the ongoing spread of IT and its continuing precipitous price decline are reasons for optimism about growth in the 21st century.

Boom and bust in telecommunications

Telecommunication

The limits of open acess as a regulatory yardstick in the regulation of utilities in Latin America

This paper contends that the identification of a pro-competitive agenda in the process of regulatory reform undertaken in many developing countries, particularly in the field of utilities regulation, ultimately rests on the vision held by the authority about the sources of market failures. Conventional Industrial Organization theory assumes that the exercise of market power by incumbent firms limits the access of potential competitive entrants, and therefore, government regulation should curb such power. However, the existence of market “power” is an inference from conventional “equilibrium” thinking on markets and competition, where such power is associated with the static conditions of markets, away from the efficient equilibrium epitomized by the Perfect Competition model. By logical inference, an alternative “market process” view that regards markets as entities subject to constant disequilibrium should lead to alternative normative conclusions. Under this alternative view, exploring the role of rules and institutions is essential for the analysis of “efficient” market outcomes. Such efficiency is related to the capacity of market participants to coordinate their productive activities, and complementary entrepreneurial synergies. This paper outlines an alternative network competition perspective, focused on the integration of complementary capabilities, as a regulatory yardstick. This view balances the rights of incumbent firms to exploit their rights, and the possibilities of third parties to integrate into the network concerned on a non-discriminatory basis, thereby preserving the investments of incumbents on a more equitable basis. It also explores the experience of selected Latin American countries in the development of this network competition approach.