Using real-time electricity data to estimate response to time-of-use and flat rates: an application to emissions

Using a generalized McFadden specification, we estimate the determinants of hourly response for the years 2006 through 2010 for all 16 standard retail customers who were on an optional real-time electricity rate offered by Duke Energy as of 2010, and provide a method to estimate how these customers would respond to time-of-use (TOU) and flat rates. We generalize the model to allow for inter-day response, as well as threshold prices, above which individual customer response may increase or decrease. With these inclusions, we find hourly elasticity for the group of customers to be as large as ?0.7, larger than previous studies. We apply the method to examine a recent finding that time-differentiated rates could increase electric utility emissions. However, that result did not differentiate between real-time and TOU rates, and furthermore held energy use constant in comparing flat rates and time-differentiated rates. We perform a case study to examine emissions of SO₂, NOx, Hg, and CO₂ based on predicted energy use changes as well as for an energy-neutral case for real-time, TOU and flat rates. Employing energy use predictions from the model, increased energy use results in increased emissions in almost all cases. For the energy-neutral case, time-differentiated rates increase CO₂ as compared to flat rates, and the TOU rate causes a larger increase than does real-time pricing. But both rates decrease other emissions in the majority of years, particularly SO₂ In addition, time-differentiated rates reduce NOx potency by shifting it to non-daylight hours when conditions for the formation of smog are less favorable. Our application leads to the conclusion that the effect of the rates on emissions must consider total energy use as well as the shift from peak to off-peak. Furthermore, the predictions require consideration of the generating mix at a more detailed level than was contained in previous studies.     

Towards a Closed Phosphorus Cycle

This paper stresses the need to address upcoming scarcity of phosphorus, a mineral nutrient that is essential for all life on Earth. Agricultural crops obtain phosphorus from the pool in the soil that can be replenished by recycling of organic material, or by application of inorganic fertilizer, originating from mines, largely concentrated in three countries only: Morocco/Western Sahara, China and USA. A complicating factor is that the phosphorus rock contains other substances as well, including the heavy metals cadmium and uranium. These substances currently end up in fertilizer and in phosphogypsum where they may pose threats to human and animal health. Hence scarcity and environmental considerations call for action to close the phosphorus cycle. The paper compares two options for intervention: mandatory recycling versus a ban on imports of contaminated phosphorus, and argues in favor of the second.     

Tax‐avoidance strategies of American multinationals: an empirical analysis

This paper analyzes the opportunities of American multinationals to reallocate their profits into tax havens. In contrast to previous papers, a comprehensive look on the profit‐shifting process is undertaken by proposing three different tests. Multinationals in high‐tax countries have a lower equity ratio than affiliates in tax havens, indicating that income is shifted by extensively financing subsidiaries in high‐tax countries with debt. Furthermore, the share of retained earnings is lower in high‐tax countries owing to the unattractiveness of tax deferral. When testing for the outcomes of profit shifting, the results show that the pre‐tax profitability of American multinationals is higher in tax havens. This relationship is consistent with the opportunities of multinationals to shift income outside high‐tax jurisdictions. Finally, the paper shows that profit shifting largely takes place into tax havens, whereas other countries do not benefit from profit‐shifting activities. Copyright © 2009 John Wiley & Sons, Ltd.     

Demand estimation and market definition for broadband Internet services

This paper analyses residential demand for Internet access in Austria with a focus on broadband Internet connections. Austria has cable network coverage of about 50% and is, therefore, a good candidate to analyse the elasticity of demand for DSL where cable is available and where it is not. We also include mobile broadband via UMTS or HSDPA in our analysis and estimate various nested logit models to derive conclusions for market definition. The estimation results suggest that demand for DSL is elastic and that cable networks are likely to be in the same market as DSL connections both at the retail and at the wholesale level. We discuss possible implications for the regulation of wholesale broadband access markets. All views expressed are solely the authors’ and do not bind RTR or the Telekom-Control-Kommission (TKK) in any way nor are they official position of RTR or TKK.     

Deficits and Divided Governments: The Case of the German ‘Bundesrat’

The hypothesis of divided government is applied to the development of deficits in Germany. Since the party system is relatively stable, divided governments emerge not from coalitional governments, but rather from the bicameral structure of the country. Different majorities in the two chambers promote deficits, especially in the case of central government deficits. The results suggest that under different majorities in the two chambers deficits are more than 0.5%-Point higher. Further, it is indicated, that only ideological polarization, but not unstable majorities per se induces higher deficits.

Federalism and horizontal equity across Switzerland and Germany: a new rationale for a decentralized fiscal structure

Higher wages in agglomerations often do not reflect an increase in purchasing power, because a high percentage of the wage increase has to be spend on housing. Thus, after housing is considered taxpayers may have identical disposable incomes, although gross as well as after-tax income may differ. This unequal treatment of taxpayers is due to the taxation of nominal incomes. If tax systems taxed income based on regionally adjusted purchasing power, horizontal equity would be assured. Since this is an unfeasible option, the differences could be corrected by allowing a deduction on housing costs. Given the large revenue losses, it seems unlikely that governments in OECD countries move to a system where rents are deductible in determining taxable income. Another alternative—taxation of potentially achievable income—is unfeasible due to political opposition. A final and less costly alternative is fiscal federalism. Granting autonomy to the lower levels of the government offers local governments the power to design the tax system in a way that reflects differences in living costs. Although this option does not necessarily imply that governments effectively design the tax schedule in that way, a comparison of Germany and Switzerland shows that governments are aware of these differences across regions. The paper concludes that granting tax autonomy to the lower tiers in Germany would make many citizens, especially in the Southern part, better off and would promote horizontal equity among German taxpayers.     

Multimarket and multiproject collusion

Summary If firms meet in a number of markets, they may respond to an action in one market by reacting in another market. Fear for such retaliation may induce multimarket firms to collude across markets. The paper assesses available theoretical and empirical evidence on the multimarket collusion theory. Moreover, the paper suggests that the theory can be fruitfully applied in the context of European integration. The focus is on collusion by firms which meet in product markets as well as in joint R&D projects. A model develops three propositions, which shed light on the subsequently provided (tentative) evidence on multidimensional contact in an integrating Europe. The discussion may serve as a framework for future research into both the theoretical and the empirical domain with applications to the issue of European integration.We gratefully acknowledge John Hagedoorn for providing access to the MERIT/CATI database, and two referees for their comments. Of course, the usual disclaimer applies