Regulation as a means for the social control of technology

The argument that regulation is a necessary, though controversial, component of technology policy is discussed in detail. Ib addition to the regulation of technology, various other regulatory policies, such as market regulation, affect the development of technology. Various types of direct regulation and their conditions of operation are discussed. It is shown that regulation can afect technological innovation positively by providing a surrogate market. The paper serves as an introduction to this special issue and shows how the different contributions fit into a general framework of regulatory effects on technolgy. Regulation as a factor in competition is discussed, particularly in the context of developing countries.     

Interdependence between regulation and technological innovation in the telecommunications sector

Telecommunications has attracted increasing public attention because of technological and regulatory dynamics which have transformed this into the backbone of the future information society. This article foucses on the interrelationship between technological development and regulation in three sections. First, attention is paid to technological development and the question as to what degree regulation is determined by technology. Next is discussed the role of European Union regulation, which affects technological innovation and diffusion in many direct and indirect ways. The final section address the remaining role of national regulation.     

FDI流入对绿色技术创新的影响及区域比较

基于中国2007-2015年省级面板数据,将命令-控制型规制和市场激励型规制分别纳入中国FDI流入对绿色技术创新的非线性面板门槛模型中,探讨了东中西部地区两种环境规制门槛的时序变化情况,实证分析了FDI流入与绿色技术创新的复杂非线性关系。结果表明：样本期间东部地区绿色技术创新水平最高,中部次之,西部最差,故应着力发挥东部地区先发优势的带头作用;东、中、西部地区均存在显著的命令-控制型规制双重门槛,并分别存在市场激励型规制单一门槛、双重门槛和双重门槛,因此各地区应根据规制工具门槛特征,有效发挥环境规制驱动绿色创新的关键作用;各地区研发人员投入、自主研发创新和政府调控能力显著正向影响绿色技术创新,基于此,政府应鼓励创新人才引进,加大研发人员及资金投入力度,提高地区宏观调控能力。     

Incentives for firms to provide safety: Regulatory authority and capital market reactions

We investigate the relationship between the various incentives that firms have to act safely, focusing on the relationship between the equity losses experienced by a firm following a fatal, accident and the incentive effects created by government regulation. The major findings are that first, the capital market reactions vary dramatically by which agency has regulatory jurisdiction for the accident. And second, the capital market effects tend to be weak (equity values do not decline sizably) where federal agencies rely heavily on an ex ante inspection policy. On the other hand, where ex ante inspection policy is lax or nonexistent, capital market effects tend to be strong - up to an order of magnitude higher per fatality than willingness-to-pay estimates based on labor market data.     

Pooling of Uncertainty: Enforcing Tradable Permits Regulation when Emissions are Stochastic

An under-appreciated advantage of tradable permits regulation is its ability to create better decision-making when emissions are stochastic. In general, the distribution of stochastic actual emissions around intended emissions results in over- or under-compliance. Permit tradability reduces the extent to which actual aggregate emissions deviate from regulatory targets, by giving firms an additional mechanism for responding to uncertainty. We construct a two period model of permit regulation with ex post enforcement to demonstrate how the permit market distributes uncertainty, and to illustrate the importance of expectations toward permit market outcomes.     

THE MUNICIPAL WASTE MANAGEMENT SECTOR IN EUROPE: SHIFTING BOUNDARIES BETWEEN PUBLIC SERVICE AND THE MARKET

ABSTRACT: This paper provides a comparative assessment of the organization of urban waste management in selected European countries and discusses the regulatory implications of the ongoing evolution. Using an institutional economic approach, focused on governance of transactions along the value chain, we argue that: i) there is evidence of an increasing shift towards operator‐based integrated systems; ii) the emphasis put on material and energy recovery opens the market far beyond the traditional legal monopolies established for managing urban services. These results pose new challenges for economic regulation and make it more complicate to trace the boundary between the public service and the market domain. Spaces for competition in the market have become much larger, but the role of public regulation and planning are nonetheless more far‐reaching than in the past.     

略论政府规制与外资并购——基于技术转移和市场结构的分析

通过构建一个政府参与外资并购的古诺模型,论证了政府规制外资并购对跨国公司技术转移的负效应和东道国市场结构调节的正效应.指出我国政府在制定外资并购的规制政策时,需要综合权衡规制对技术转移和市场结构两方面的影响,并着眼本国具体行业的实际情况,选择适宜的规制方式,从而最大限度地利用外资并购,提升我国企业的竞争力.     

Competition with asymmetric regulation of mobile termination charges

The aim of this paper is to explore the effectiveness of asymmetric regulation, which allows a new mobile network operator to set higher termination rates than the incumbent operator. We assume that there are two market segments: one in which operators compete on equal terms, with a new technology, and the other in which the entrant is at a disadvantage since the technology it offers is inferior to the incumbent??s. Results show that asymmetric regulation can create favorable conditions that allow the entrant to strengthen its market positioning, and enhance consumer net utilities and social welfare. This highlights the importance of the degree of network asymmetry and the ways in which consumers are split between the two market segments. Lastly, we show that asymmetric regulation can create greater investment incentives for the entrant which could effectively enhance social welfare. These findings can provide useful insights for regulatory policy.     

Pricing flexibility under rate-of-return regulation: Effects on network infrastructure investment

When a commodity market relies upon a regulated network service industry—e.g., telecommunications, electricity, or natural gas transmission—economic efficiency in that commodity market is a crucial consideration for regulatory design. This is because insufficient infrastructure investment relative to network demand results in congestion. The extraction of associated rents has distortionary effects on commodity spot market prices. Greater regulatory flexibility in network pricing can alleviate such issues by cultivating the incentives needed for stakeholders to invest in transmission capacity. To illustrate this effect I derive and numerically solve stylized optimality conditions for access and usage prices for a gas pipeline operator under alternative regulatory models. My results have general implications for regulation in network infrastructure industries, as energy and telecommunications markets are expected to expand considerably over the coming decades.     

SHOULD A MANDATORY SUBORDINATED DEBT POLICY BE INTRODUCED IN THE UNITED KINGDOM? EVIDENCE FROM THE ISSUANCE ACTIVITY OF BANKS AND BUILDING SOCIETIES

Current research is beginning to question the role and effectiveness of traditional rules‐based bank regulatory oversight in favor of incentive‐compatible regulatory design and market discipline and, in particular, mandatory subordinated debt market discipline. However, research on the suitability of a mandatory subordinated debt policy (MSNDP) has focused primarily on the United States. The primary aims of this article, therefore, are to examine the market for subordinated debt (SND) issued by UK credit institutions and to assess the suitability of introducing an MSNDP into UK banking regulation. A further contribution of this article is that it explores SND issuance and its characteristics at a bank level and, uniquely, considers them in relation to regulatory, structural, and economic events that either are specific to the UK or otherwise affect international banks. The article compares the UK findings with research on SND markets in the United States and Europe and, in so doing, raises concerns over whether an MSNDP for the largest global credit institutions would be feasible. Although the focus of this study is the UK banking industry, the country‐focused bank‐level approach provides conclusions that might be relevant to other countries considering the implementation of an MSNDP.(JEL G18, G28)     

Strategic experimentation and disruptive technological change

This paper studies the diffusion of a new technology that is brought to market while its potential is still uncertain. We consider a dynamic game in which an incumbent and a startup firm improve both a new and a rival old technology while learning about the relative potential of both technologies. The main findings are that (i) risk considerations make incumbents with higher market shares more likely to adopt the new technology and (ii) changes in market power are often preceded by a subpar performance of the new technology. We also show that introducing a better new technology or confronting a worse old technology may hurt the startup firm as its new technology is then adopted earlier by incumbents.     

Regulations and productivity: Long run effects and nonlinear influences

This study examines the impact of product market regulations on Total Factor Productivity (TFP) and explores whether regulatory reforms exert a nonlinear influence on TFP growth. It also distinguishes between short run and long run effects of regulation. The obtained empirical evidence reveals that lower regulations in the long run exert a significantly positive effect on TFP of OECD countries. Short run effects of regulation are not always statistically significant. The influence of regulatory changes is higher in countries with high levels of regulation. Also, the damaging effects of regulation are more intense in countries with low technology gaps. These results hold across a wide array of econometric specifications and variables that measure regulation and TFP.     

Why Credit Rating Agencies Exist

Although credit rating agencies exist and are important to the capital markets, there remains a question of why they should exist. Two standard theories are that rating agencies correct a problem of information asymmetry and that they de facto regulate investments. These theories do not fully answer the question. This paper suggests an alternative explanation. While rating agencies produce little new information, they sort information available in the credit market. This sorting function is needed due to the large volume of information in the credit market. Sorting facilitates better credit analysis and investment selection, but bond investors or a cooperative of them cannot easily replicate this function. Outside of their information intermediary and regulatory roles, rating agencies serve a useful market purpose even if credit ratings inherently provide little new information. This alternative explanation has policy implications for the regulation of the industry.     

Merchant and regulated transmission: theory, evidence and policy

Economists acknowledge the problems of regulated transmission but have different views on the likely efficiency of merchant transmission. This paper first examines the evidence on alleged market failure and regulatory failure as experienced in practice in Australia, where there have been both regulated and merchant interconnectors. Merchant transmission has generally not exhibited the standard examples of market failure but regulated transmission generally has exhibited the standard examples of regulatory failure. Imperfect information??more specifically, in the form of lack of coordination??has often been a challenge whatever the approach. Experience in Argentina suggests that transactions costs are not a barrier to negotiation and efficient investment determined by users. Policy should seek to improve the regulatory framework and to remove barriers to private initiatives. An important role for regulation is to facilitate coordination between potential providers and users of transmission lines.     

Firm location,political geography and environmental information disclosure

As the subjective and objective factors that influence corporate behaviours, political region and firm location are of great importance to environmental information disclosure (EID). With spatial and political geography as a research perspective, this article makes a study by using the samples of manufacturing listed companies from 2009 to 2011. As a result, we determine that regulatory distance and political geography had negative effects on EID, while political geography weakens regulatory distance’s function. After considering an enterprise’s administrative rank, we determined that when the rank is higher, regulatory distance has negative effects on EID; when the rank is lower, the effects are the opposite. Regarding political geography, it always weakened the regulatory distance’s function. Moreover, the effects are significant only when the enterprises had low governmental regulation. The study shows the effects that firm location and political geography have made on EID. At the same time, this study also gives theoretical and empirical evidence to the necessity of raising governmental regulatory effectiveness.     

Control of SO2 emissions from power plants: A case of induced technological innovation in the U.S.

This paper investigates how the details of government actions induce innovation—the overlapping activities of invention, adoption and diffusion, and learning by doing—in “environmental technology,” products and processes that either control pollutant emissions or prevent emissions altogether. It applies multiple quantitative and qualitative measures of innovation to a case subject to several “technology-push” and “demand-pull” instruments: sulfur dioxide control technology for power plants. The study employs analyses of public R&D funding, patents, expert interviews, learning curves, conference proceedings, and experience curves. Results indicate that: regulation and the anticipation of regulation stimulate invention; technology-push instruments appear to be less effective at prompting invention than demand-pull instruments; and regulatory stringency focuses inventive activity along certain technology pathways. Increased diffusion of the technology results in significant and predictable operating cost reductions in existing systems, as well as notable efficiency improvements and capital cost reductions in new systems. Government plays an important role in fostering knowledge transfer via technical conferences, as well as affecting the pattern of collaborative relationships within the technical research community via regulatory changes that affect the market for the technology. Finally, the case provides little evidence for the claim that cap-and-trade instruments induce innovation more effectively than other instruments.     

Public utility valuation and risk under incentive regulation

The objective of providing inducements for public utilities to seek to improve the efficiency of their operations has been a longstanding regulatory concern. Among the evolving strategies for furthering that objective is a shift toward what has come to be referred to as incentive regulation. We examine here how this departure from past regulatory practice will affect the market value and market risk of the utility firm, and the specific manner in which an incentive mechanism can be implemented in order to achieve a desired valuation outcome. A particular focus is the establishment of boundaries on allowed rates of return under incentive regulation which are consistent with that desired outcome. The likely impact on utility ratepayers is considered.     

Price Regulation and Public Service Obligations under International Arbitrage

National regulation generates price differentials between countries stimulating arbitrage by international distributors. Harmed manufacturers counteract using vertical price-squeeze or non-price discrimination. We show that: (i) either under regulatory commitment or discretion, there are non-linear relationships between technology/market conditions and the first-movers pricing strategy; (ii) public service obligations on distributors allow regulators to manipulate parallel exports so as to improve national welfare; (iii) to prevent sabotage, regulation should provide manufacturers with adequate countervailing incentives; (iv) coordinating national agencies alleviates negative regulatory and market externalities. Therefore, static and dynamic efficiency concerns may arise within a regional exhaustion regime of intellectual property rights.We are grateful to the Editor Michael A. Crew, an anonymous referee, and Luigi Buzzacchi for valuable comments and suggestions. We have benefited from financial support granted by MIUR-FIRB Project MAIS.     

Shiftable Externalities: A Market Solution

In this paper we propose a regulatory scheme for what has become known as shiftable externalities (Not In My Backyard type garbage location problemswhere the externality is characterized by the absence of jointness in supply).The scheme facilitates the establishment of a market for the externality, and it isfeasible for a wider class of regulation problems and more information efficientthan the other regulatory schemes that have been proposed for this type ofexternality. Finally, we show that it is possible to decentralize the participationdecision so as to take account of verification costs.     

Liberalization,Regulatory Delays and Vulnerability to Systemic Banking Crisis

This work aims at contributing to the improvement of the early warning systems of banking crises using a new approach accounting for model uncertainty. We show that a multinomial logit model based on Bayesian model averaging (BMA) is a good strategy to predict banking crisis. To do this, we argue that differences in vulnerability to banking crisis can be largely explained by an asymmetry between financial market evolution and regulation update on a sample of 49 developed and developing countries between 1980 and 2010. When markets are liberalized, competition pushes bankers to take more risks and take advantage of regulatory delays thus increasing crises probabilities. Our empirical evidence supports that crisis probability is higher in country liberalizing their banking system when regulation is not updated. We developed an early warning system for systemic banking crises based on the multinomial logit model. Its main difference to existing prediction models and its contribution to the literature is that it is intended to identify and resolve what is called by Bussiere and Fratzscher [(2006). Towards a new early warning system of financial crises. Journal of International Money and Finance, 25(6), 953–973] as post-crisis bias in binomial models and to develop a new methodology of leading indicators selection based on BMA. Overall, our model predicts all banking crises during our sample period.