The Effects of German Wind and Solar Electricity on French Spot Price Volatility: An Empirical Investigation

We examine the relationship between German wind and solar electricity and French spot price volatility. Using hourly data, we find that French imports from Germany driven by German wind and solar electricity sometimes decrease, sometimes increase the volatility of French spot prices. These two opposing effects depend on the shape of the French supply function and on the French demand. We, therefore, estimate different coefficients for imports depending on different demand levels. We acknowledge the endogeneity problem in identifying these effects and employ instrumental variable techniques to circumvent this problem. Our results show the urgent need for further coordination of national energy policies in order to reduce the potential for negative spill over effects of nationally driven energy policies in neighbouring countries as European electricity markets are becoming more integrated.Series: Department of Economics Working Paper Serie

Facility- and Service-based Competition and Investment in Fixed Broadband Networks: Lessons from a Decade of Access Regulations in the European Union Member States

This paper employs firm-level panel data of 57 incumbent and entrant firms for 23 European countries in the decade from 2003 to 2012. We examine the impact of service- and facility-based competition on firm level investment as well as the strategic effects underlying infrastructure investment decisions. At the same time we explicitly model the structural dynamics of broadband investment using dynamic panel estimation techniques. We find that facility-based competition exerts a positive and significant impact on both incumbents and entrants implying that incumbents' and entrants' investment decisions are strategic complements. Moreover, this strategic complementarity is much more pronounced with respect to the entrants. Finally, we show that service-based competition appears to have no significant impact on the investment decision of incumbents and entrants and that there is no supportive evidence for the so-called "ladder of investment" hypothesis. With respect to the later phase of market regulation, service-based competition exerts a negative impact on entrants' investment. (authors' abstract)Series: Working Papers / Research Institute for Regulatory Economic

Effective Climate Policy Doesn't Have to be Expensive

We compare the effectiveness of different climate policies in terms of emissions abatement and costs in the British and German electricity markets. The two countries follow different climate policies, allowing us to compare the effectiveness of a relatively low EU ETS carbon price in Germany with a significantly higher carbon price due to a unilateral top-up tax (the Carbon Price Support) in the UK. We first estimate the emissions offsetting effects of carbon pricing and of subsidized wind and solar feed-in, and then derive the abatement costs of one tonne of CO2 for the different policies. We find that a reasonably high price for emissions is the most cost-effective climate policy, while subsidizing wind is preferable to subsidizing solar power. A carbon price of around EURO 35 is enough in the UK to induce vast short-run fuel switching between coal- and gas-fired power plants, leading to significant emissions abatement at low costs.Series: Department of Economics Working Paper Serie

The Development of Broadband in Kosovo and its Importance for the Economy

The better functioning of economy depends on the availability and quality of public services such as: outstanding education system, well-functioning health system, very good transportation system and other public services as well. The 21th century is seen as the century of information and communication technology. In this way the local and central governments have seen that the broadband is important like other public services. The purpose of this paper is the identification of the importance and the impacts of broadband on the development of the economy and the society. For this purpose we have surveyed in depth different theoretical and empirical literature. The literature shows that government intervention is necessary not only in the regulation of the market but also in providing broadband services and increasing the demand for these services, which in turn would enable the development of the broadband market at the same pace like other EU member states. In the last part of this paper we will show that the development of the broadband market requires a more active role of the government in the development of broadband by increasing the demand and the supply for broadband services. Regardless the fact that ARKEP is working on increasing the development level of the broadband, we will show that the existence of a well-designed governmental plan would make it possible to achieve the goal of an information society