Feed-in-Tariffs Financed by Energy Taxes: When do They Lower Consumer Prices?

This paper develops a theoretical model to highlight the bearing of market structures on retail price effects of a sfgFIT induced market entrance from green electricity. Moving from perfect competition via Bertrand and Cournot oligopoly to monopoly, we find that retail electricity prices are more likely to decline, when market concentration as measured by the HHI (from perceived market shares) is larger. In the extreme cases, the price effect is unequivocally negative (monopoly) or positive (perfect competition). One should note, that this result only holds for a given market structure. When firms leave the market, market concentration increases and so do electricity retail prices. When running the full gamut from perfect competition to monopoly by increasing the sfgFIT and thus successively driving firms out of the market the total price effect will be positive: perfect competitors produce at the average cost minimum and the monopolist sells at a price above average costs, which have been increased by the additional costs of green energy. We also show that in Cournot oligopoly and in monopoly markets, a required proportional quota of green energy in electricity production induces larger prices than the sfgFIT system with the same induced total amount of green electricity

Application Costs and the Design of Licensing Procedures

License procedures are a common way of enforcing regulation of activities whose effects on social welfare depend on the specificities of the single case. Building permits may serve as an example, but many other licensing procedures follow the same structure. In particular in Germany, the long duration of such procedures and the low predictability of their outcomes have been identified as a major obstacle to economic progress. As a consequence, the German legislators have invoked legislation to accelerate the procedure. This paper investigates how the acceleration approaches affect not only the costs of citizens who already led an application but also how influence decisions on whether to apply and what projects to plan. I will show that acceleration may have unintended side effects which may more than offset the increase in welfare gained by lower application costs. I will also show that deterrence of applications based on illegal project need not be a better alternative: it may be impossible not to deter the legal projects as well.Regulation, Licensing Procedures, Administration Costs, Over-Deterrence,

Beschleunigung von Genehmigungsverfahren

Genehmigungsverfahren, Verwaltungsreform,

Inexpressive Law

According to expressive law theories, expression of values is an important function played by the law. Expressive laws affect behavior, not by threatening sanctions or promising rewards, but by changing individual preferences and tastes and, in some cases, by affecting social norms and values. New laws, however, can run against sticky social norms, failing to achieve their expressive effects. By developing a dynamic model, in this paper we show that inexpressive laws (laws whose expressive function is undermined by sticky norms) can not only be ineffective but can push the values of society away from those expressed by the law. We study the effects of legal intervention on the values shared by members of society, considering the feedback effects between laws and social norms. Just like expressive laws can foster consensus in heterogeneous groups, inexpressive laws can create a social divide, even in previously homogeneous societies.Social Norms, Countervailing Effect, Expressive Law, Civil Disobedience

Feed-in-tariffs financed by energy taxes: When do they lower consumer prices?

The share of renewable energies in the electricity sector ('green' electricity production) relative to overall electricity supply has been growing steadily over the last years in most industrialized countries. This expansion was due to economic support either by subsidies or quota requirements for green energy. Without such support, green electricity would not be competitive to electricity supply from conventional production capacities ('black' electricity production) - e.g. coal and gas fired or nuclear power plants. In this paper, we study the effects of the two most prominent forms of economic support: surcharge-financed guaranteed Feed-in Tariffs (sfgFIT) that are most common in European, and proportional quotas which are implemented in several U.S. American jurisdictions

The impact of market innovations on the evolution of norms: the sustainability case

That institutions matter is widely accepted among economists and so are social norms as an important category of informal institutions. Social norms matter in many economic situations, but in particular for markets. The economic literature has studied the interrelation between markets and social norms in both directions how social norms affect markets and how markets affect social norms. Starting from these two perspectives, we add to the literature, by suggesting a new link between product markets and the evolution of social norms: we analyze how the evolution of a social norm may be affected by a product innovation which adds to the variation of products with respect to their level of norm compliance. We derive necessary and sufficient conditions for a) a positive impact of the innovation on the level of norm adoption and b) for multiplicity of norm equilibria. Finally we discuss policy implications

A generalized condorcet jury theorem with two independent probabilities of error

The Condorcet Jury Theorem is derived from the implicit assumption that jury members only commit one type of error. If the probability of this error is smaller than 0.5, then group decisions are better than those of individual members. In binary decision situations, however, two types of error may occur, the probabilities of which are independent of each other. Taking this into account leads to a generalization of the theorem. Under this generalization, situations exists in which the probability of error is greater than 0.5 but the jury decision generates a higher expected welfare than an individual decision. Conversely, even if the probability of error is lower than 0.5 it is possible that individual decisions are superior

The impact of market innovations on the evolution of norms: The sustainability case

That institutions matter is widely accepted among economists and so are social norms as an important category of informal institutions. Social norms matter in many economic situations, but in particular for markets. The economic literature has studied the interrelation between markets and social norms in both directions - how social norms affect markets and how markets affect social norms. Starting from these two perspectives, we add to the literature, by suggesting a new link between product markets and the evolution of social norms: we analyze how the evolution of a social norm may be affected by a product innovation which adds to the variation of products with respect to their level of norm compliance. We derive necessary and sufficient conditions for a) a positive impact of the innovation on the level of norm adoption and b) for multiplicity of norm equilibria. Finally we discuss policy implications