The role of excess capacity in determining market power in natural gas transportation markets

The approval by FERC of a regulated natural gas pipeline’s market-based rate application depends upon the availability of substitute pipelines with sufficient capacity to maintain the current transport price. But how much alternate capacity is enough? Clearly, the price will not increase when alternate pipelines have unsubscribed capacity equal to the capacity of the applicant pipeline, since the applicant’s capacity is then perfectly substitutable. And indeed, FERC has approved market-based rates when this “complete-replacement” criterion has been met. However, complete-replacement is too stringent a condition and we determine precisely how much alternate capacity suffices to keep the price from rising.     

Time,Arbitrage, and the Law of One Price: The Case for a Paradigm Shift

Consider a Competitive, Efficient, and Frictionless Economy (CEFE) where resources are scarce at any date, and hence money as a valid claim against scarce resources is also scarce. In this economy, there is always price competition, which can at any date generate an unlimited number of arbitrage opportunities. For example, at any date, opportunities can exist to buy and sell each one of the contracts for delivery of the same good or asset at multiple prices currently as well as on an infinite number of future dates. I prove all arbitrage transactions, including “spot” transactions, tie up arbitrageurs’ capital representing money, good or asset such that this capital cannot be used for any other purpose for a non-zero quantity of time. This makes it impossible to exploit all arbitrage opportunities with the scarce capital available at any date and leads to an infinite number of unexploited opportunities and a non-negligible opportunity cost of the capital tied-up in arbitrage transactions, represented by each arbitrageur’s best missed arbitrage opportunity, if no better opportunity exits, hence the breakdown of the law of one price in its standard sense. This helps construct a new paradigm of CEFE which resolves long-standing theoretical, empirical, and experimental puzzles.     

俄罗斯金融市场套利交易的形成、影响及启示

20世纪90年代以来,俄罗斯在高度开放和自由的经济环境下,开展金融自由化改革,由此导致大量资本通过外债形式进入俄罗斯金融市场进行套利交易,套利资本推动俄罗斯经济、金融业的发展。而当套利资本迅速撤离俄罗斯市场时,俄罗斯金融市场就出现了银行业流动性吃紧、大规模抛售卢布现象,俄罗斯经济受到重创,最为典型的是1998年和2008年俄罗斯爆发的金融危机。文章试图通过研究俄罗斯的套利交易形成的影响因素,深刻理解俄罗斯金融危机。近年来,人民币不断升值,人民币跨境清算范围不断扩大,中国也面临着"热钱"监管压力,研究俄罗斯套利交易,对中国具有重要的借鉴意义。     

CROSS-CONTRACT CREDITING UNDER FERC ORDER 500

In remanding Federal Energy Regulatory Commission (FERC) Order 436, the US. Court of Appeals for the District of Columbia Circuit did not require the FERC to issue a new policy on "take-or-pay" contracts between interstate pipelines and natural gas producers. The court asked only that the FERC meet the standard of "reasoned decision making." FERC Order 500, in proposing the mechanism of cross-contract crediting to reformulate take-or-pay contracts, went far beyond the court's decision.
Take-or-pay contracts are but one component of an interrelated set of long-run commitments by both pipelines and gas producers upstream and downstream. The FERC's abrogating take-or-pay contracts would reverberate beyond the immediate consequences for pipelines and producers. Implementing Order 500 would change the conditions under which gas producers explore, develop, and extract. It would influence the terms of future lease and royalty contracts with owners of mineral rights, and it would have adverse consequences for end users of gas. Evidence exists that promulgating Order 500 increased spot gas prices. Most take-or-pay problems have been resolved through voluntary renegotiation by the parties. Nullifying the remaining contracts through regulation will not accomplish the pro-competitive goals that have guided the FERC's natural gas policy during the 1980s.     

Settling Utility Rate Cases: An Alternative Ratemaking Procedure

The U.S. Federal Energy Regulatory Commission (FERC) has long relied on settlement procedures to resolve its cases, and since the mid-1980s many state regulatory commissions have also adopted this utility ratemaking procedure. This paper examines the settlement practice at FERC to show that the flexibility of the settlement process could lead to settlement outcomes that Pareto dominate the litigation outcome. Negotiated settlements improve welfare because the players can make tradeoffs across the issues during the settlement negotiations. Rate moratorium, for example, arises endogenously as a settlement provision in about half of the major interstate natural gas pipeline rate cases.     

Price effects of independent transmission system operators in the United States electricity market

In 1996, the Federal Energy Regulatory Commission (FERC) sought to “remove impediments to competition in the wholesale bulk power marketplace and to bring more efficient, lower cost power to the Nation’s electricity consumers” through a series of market rules. A product of these rules was the establishment of regional transmission organizations (RTOs) and independent system operators (ISOs) charged with facilitating equal access to the transmission grid for electricity suppliers. Whether these changes in market structure have succeeded in achieving FERC’s goal to provide “lower cost power to the Nation’s electricity consumers” remains an open question. This paper utilizes a panel data set of the 48 contiguous United States and a treatment effects model in first differences to determine whether there have been changes in delivered electric prices as a result of the establishment of ISOs and RTOs. To avoid the confounding effects of electric restructuring, the model is estimated with the full panel data set, and then again without the states that have restructured their electric markets. This estimation shows that electricity prices fall approximately 4.8 % in the first 2 years of an ISO’s operation and that this result is statistically significant. However, this result is dependent on the presence of states that restructured their electricity markets. When these restructured states are removed from the data set the price effects of RTOs become indistinguishable from zero. The paper concludes that rate agreements are the principal source of the observed decrease in prices and that RTOs have not had the desired effect on electricity prices.     

Optimal Nonlinear Income Taxation with Habit Formation

It has recently been shown that incorporating “keeping up with the Joneses” preferences into a prototypical two‐ability‐type optimal nonlinear income tax model leads to higher marginal tax rates for both types of agents. In particular, the high‐skill type faces a positive marginal tax rate, rather than zero as in the conventional case. In this paper, agents’ utility functions are postulated to exhibit “habit formation in consumption” such that the prototypical two‐ability‐type optimal nonlinear income tax model becomes a dynamic analytical framework. We show that if the government can commit to its future fiscal policy, the presence of consumption habits does not affect the standard results on optimal marginal tax rates. By contrast, if the government cannot precommit, the high‐skill type will face a negative marginal tax rate, while the low‐skill type’s marginal tax rate remains positive.     

商业银行监管资本套利的动因、模式与影响研究

监管资本套利产生于巴塞尔协议资本监管框架的缺陷,作为巴塞尔协议一个未曾预料的结果,在西方发达国家发展非常迅速。本文回答了三个逐层递进的问题:商业银行是否会进行监管资本套利?商业银行如何进行监管资本套利?商业银行进行监管资本套利会给经济带来怎样的影响?最后依据结论的政策含义,向监管部门提出了相应的参考建议。     

社会资本可以增进企业风险资本获取能力吗

以2009年10月到2015年12月在中国创业板上市的495家上市公司为研究对象，验证了社会资本对企业融资能力的影响。首先，将社会资本划分为政治关系资本和行业关系资本，然后，将其中的政治关系资本进一步细分为官员型政治关系资本和代表委员型政治关系资本，更加细致深入地验证了社会资本对企业融资能力的影响。研究结果如下：①无论是政治关系资本还是行业关系资本都有助于企业获得风险投资，表明社会资本可以向外界传递出反映企业高质量的信号，从而帮助其获取风险投资以缓解融资约束；②官员型政治关系资本同样有助于企业获得风险投资；③代表委员型政治关系资本对企业获得风险投资没有显著影响。     

Transboundary pollution,tax competition and the efficiency of uncoordinated environmental regulation

Under capital tax competition, surprisingly, Ogawa and Wildasin (2009) find that uncoordinated policymaking leads to a first‐best outcome even in the presence of transboundary pollution. However, I show that if the level of environmental regulation is endogenized, the regulation level becomes too loose compared with the optimum (“race to the bottom”). Thus, despite the efficiency result of Ogawa and Wildasin (2009), efforts to achieve international environmental policy coordination are needed. I then examine the dependence of this result on the level of decisive voter's capital endowment. The regulation is inefficiently loose in many cases, but it can be too strict if the decisive voter's capital endowment is above the average. Thus, the possibility of “race to the top” cannot be eliminated. The inefficiency result does not generally depend on the timing of policymaking, although the efficiency may be restored in the limit case where the decisive voter has no capital at all.     

The Policy Ramifications of Capital as Ideas

In 1987, Baldwin Ranson wrote about capital and technology in economic growth. Ranson argued that capital should be defined as intangible ideas and technology that are not subject to supply and demand constraints. Thorstein Veblen (1908, 518) described his conception of capital as being “found in possession of something in the way of a body of technological knowledge, – knowledge serviceable and requisite to the quest of a livelihood.” John R. Commons (1934, 662) wrote in a similar vein that “capital is not an accumulation of past products of stored-up labor – these are transitory and aimless – capital is a going plant of industrial knowledge and experience.” More recently, Cesar Hidalgo (2015) and Paul Romer (1990, 1994) have also written about the idea of capital as ideas and the key to economic growth. Hidalgo (2015, 179) states that “the growth of information in the economy, which is ultimately the essence of economic growth, results from the coevolution of our species’ collective computation capacity.” The first section of this article explores the linkages between the older generation and more recent thinkers on the intersection of capital as technology and ideas. The second section explores the policy ramifications of this conceptualization of capital. Romer argues that temporary monopolies are needed to encourage investment in innovation. According to both Veblen and Ranson, these rules do not allow for the full social value of ideas to be utilized. The second part of this article also explores these differences using A. Allan Schmid’s situation-structure-performance (SSP) model.     

The empirical effects of competition on third‐degree price discrimination in the presence of arbitrage

Since Borenstein ( 1985 ) and Holmes ( 1989 ), a theoretical and empirical literature has emerged that examines the effects of competition on third‐degree price discrimination. Since transaction costs involved in conducting arbitrage are typically unobserved, empirical investigations in this area have largely been restricted to markets such as for air travel where arbitrage is difficult, if not impossible. Using an entirely novel dataset, this paper documents the effect of competition on price discrimination in the presence of arbitrage in the Canadian online sports betting market where prices for Canadian teams are higher than in the world market. I observe how the prices of Canadian teams change in real time in response to the presence of arbitrageurs that establish Canadian sportsbooks’ observable marginal opportunity costs. I exploit the existence of government betting outlets not subject to arbitrage to obtain reduced form counterfactual estimates of the extent to which competition affects price discrimination in the presence of arbitrage. In this new empirical environment, I find results consistent with the airline literature: competition reduces overall price dispersion and markups, but dispersion and markups shrink more for those in the “strong” market than the “weak” market.     

Tax cuts and enterprises’ R&D intensity: Evidence from a natural experiment in China

This paper studies the impact of tax cuts on enterprises’ R&D intensity. We use a natural experiment involving China’s business tax changing to value-added tax (“BT to VAT”) to identify any causality. The results reveal that this tax reform has prompted enterprises to increase their research and development (R&D) investment. Specifically, a stronger ability to transfer tax, results in this change having a more significant promotional effect on enterprises’ R&D intensity. Further analysis demonstrates that firms with different ownership types and in different industries respond differently to the “BT to VAT” policy. Our findings are only significant for non-state-owned and other modern service enterprises. This paper provides a theoretical and empirical basis for detailed analyses of the effects of “BT to VAT” policy, particularly the government’s subsequent improvement to the tax reform policy, to further stimulate enterprise investments in R&D as well as industrial upgrading.     

Accounting for the wealth of Denmark: a case study of Smithian growth using the emergence of modern accounting in Danish dairying

Abstract

The idea of “Smithian growth” rests on a “natural” development out of agriculture through capital accumulation, and the division of labour. We confront these concepts with an “historical experiment” and the case of Danish agriculture in the nineteenth century. Specifically, we look at how accounting was used to promote specialization, ultimately in butter production, leading to the massive increases in productivity that Smith predicted. We also observe the emergence of Smithian “philosophers”. This ultimately led to the capital-intensive industrialization of Danish agriculture through butter factories, and general development. We argue that this establishes the historical relevance of Smith’s theories.     

Output gaps

What is the output gap? I discuss three alternative definitions: the deviation of output from its long-run stochastic trend (i.e., the “Beveridge–Nelson cycle”); the deviation of output from the level consistent with current technologies and normal utilization of capital and labor input (i.e., the “production-function approach”); and the deviation of output from “flexible-price” output (i.e., its “natural rate”). Estimates of each concept are presented from a dynamic–stochastic–general-equilibrium (DSGE) model of the U.S. economy used at the Federal Reserve Board. Four points are emphasized: The DSGE model’s estimate of the gap (for each definition) is very similar to gaps from policy institutions, but the model’s estimate of potential growth has a higher variance and substantially different covariance with GDP growth; the change in the Beveridge–Nelson trend covaries negatively with the change in the gap in the DSGE model, providing a structural model estimate of a controversial parameter; in this model, estimates of the natural-rate concept are similar to those based on the Beveridge–Nelson and production function approaches; and the estimate of the output gap, irrespective of definition, is closely related to unemployment fluctuations.     

Applying a third party access model for China’s gas pipeline network: an independent pipeline operator and congestion rent transfer

This paper investigates third party access regulatory issues in China’s natural gas industry. We study the development of China’s gas market-oriented reform and how third party access becomes a pressing issue in that context. This paper aims to report stakeholders’ benefit and distributional effects during a hypothetical third party access process. To that end, we apply an oligopolistic equilibrium model, based on the mixed complementarity problem, to China’s gas pipeline network. We compare two scenarios: a scenario without third party access and the other scenario where an independent pipeline operator optimizes flows. This latter scenario aims to guarantee that the maximum social benefit is achieved. In addition, the latter scenario transfers the congestion rent to former integrated gas companies to compensate their actual loss control of the pipeline operation, in order to minimize the adverse distributional effects for pipeline companies. The solution of the model indicates that operational separation is feasible with Pareto improvement in China’s context. Moreover, it merits particular attention from policy makers in China that pipeline capacity scarcity should be properly evaluated and managed.     

Cross-subsidization and cost misallocation by regulated monopolists

While cross-subsidization is understood theoretically as involving the sustainability of a cost allocation scheme, it is invoked in regulatory policy contexts, such as the divestiture of AT&T, where costs of serving unregulated markets may be borne by ratepayers of regulated monopolies. We analyze two cross-subsidization tactics—cost misallocation and distorted technological choice — under a spectrum of regulatory cost allocation policies. These tactics lead to higher prices in regulated markets and inefficient production in unregulated markets. Welfare effects are discussed; we conclude with observations on strategic behavior and regulatory policy.     

Does the Entrepreneurship of the Parents Affect the Opportunities of their Offspring’s Entrepreneurship? Empirical Analysis Based on the CGSS 2010–2013 Data

The whole society is paying close attention to “entrepreneurship,” which urges researchers to find an explanatory perspective relatively independent and with causality on the intergenerational transfer of entrepreneurship. Based on the data of the Chinese General Social Survey (short for CGSS) during the years 2010–2013, this paper analyzes how parents’ entrepreneurship affects the probability of their offspring’s entrepreneurship, and the results show that compared with the offspring of parents who did not start their own business, those whose parents did are more likely to choose to start their own business. In view of historical facts such as the “lay-off wave” during China’s transformation into a market economy, we use “the annual number of unemployed back to work,” a provincial-level indicator, in the 1990s as an instrumental variable to correct possible endogenous problems. We find that parents’ entrepreneurship has significant positive effects on the probability of their offspring’s entrepreneurship, which may result from the informal transfer of human capital and wealth from parents to their offspring.     

套利行为、技术溢出介质与我国地方产业集群的升级困境与突破

我国地方产业集群内微观企业创新动力的集体缺失与升级动力不足,是与转型背景下集群内模仿--套利行为的普遍盛行至为相关.而这种模仿--套利机制得以实现的关键在于我国地方产业集群内基于人力资本介质流动和产品介质反向工程的特有技术溢出渠道.从实践来看,以人力资本为介质的流转渠道是其主要方式.本文通过构建一个先入企业与跟随企业的两方动态博弈模型,解析了这种模仿--套利机制与人力资本介质流动技术溢出效应的交互作用,以及其对双方企业自主创新动力产生抑制作用的内在机理,指明这种状况下集群微观企业创新动力集体缺失困境形成的必然性.并针对我国地方产业集群内模仿--套利机制的成因进行分解,据此提出扭转这种困境的相应对策.     

中国农业碳生产率变化的驱动因素与区域差异研究

利用产出距离函数将农业碳生产率变化分解为技术效率、技术进步和要素替代变化,并实证测算1995—2016年中国农业碳生产率的变化及其驱动因素,结果表明:(1)研究期中国农业碳生产率年均提高3.57%,单位GDP碳排放量年均下降3.31%,累计下降50.96%,主要归因于技术进步和要素替代效应。(2)中国农业资本深化对农业碳生产率提升有正向影响,劳动力价格上涨有负向影响。(3)中国农业碳生产率表现出“东高西低,阶梯分布”的空间特征,东南沿海省份和西北省份存在区域“农业碳生产率缺口”,且呈缺口扩大趋势。鉴于此,为提高农业碳生产率提出政策建议。