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311. The End of the Beginning: Paris COP 2015

Author:
David Runnalls
Publication Date:
11-2015
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation (CIGI)
Abstract:
The Paris Conference of the Parties (COP) 2015 is designed to produce the next round of climate change action. There are reasons to believe that the chances for success at the multilateral level are better now that they were before, but even under the most optimistic scenarios, Paris will not be the end of the negotiations. The Paris summit will be crucial to maintaining the momentum that has been building in the private sector and civil society on the issue of climate change. COP 21 has generated an enormous amount of public interest. Civil society actions both before and during the Paris meeting promise to be on a grand scale. In addition, COP21 has excited action from a number of other levels of government not normally seen at these events. Leaders of the IMF, the World Bank and the OECD have all stated that climate change is the principal economic issue facing the world this century. There is a growing realization among the world's economic decision makers that the shift to a low-carbon economy is not only a necessity, but also may be less costly than we believe. The need to identify both public and private financing solutions is the greatest hurdle facing the Paris COP. CIGI's climate change research is tackling the issue of financing sustainable development, in addition to how agreements can be reached by smaller countries, how to address the problems of the delayed benefits from mitigation, ways that China can exercise leadership in this arena, and how the world's financial institutions can help mobilize climate finance from the private sector.
Topic:
Civil Society, Climate Change, Energy Policy, Environment, International Monetary Fund, World Bank, Regulation, Financial Markets, and Climate Finance
Political Geography:
Global Focus

312. Constructing Quality: Producer Power, Market Organization, and the Politics of High Value-Added Markets.

Author:
Elizabeth Carter
Publication Date:
12-2015
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
Economists assume increased producer flexibility creates production advantages. So why do inefficient French quality wine producers dominate their flexible, efficient Italian counterparts? French AOC wine producers created “corporatist” producer organizations which served three purposes: encouraged increased product quality information across the supply chain; allowed for the emergence of a unique production style; and enabled producers to define their production methods as “quality” via state regulation. Italian DOC wine producers have fragmented political structures at both the regional and national levels, causing producers to rely more on the price mechanism and less on political structures to coordinate supply chain transactions. Market asymmetries persist across the supply chain, making it difficult for producers to guarantee quality and adversely shaping their potential production and brand strategies. Solving supply chain problems through representative political institutions yields superior economic outcomes than uncoordinated market transactions because the former corrects market power asymmetries.
Topic:
Economics, International Trade and Finance, Markets, Politics, and Regulation
Political Geography:
France, Italy, and Global Focus

313. Does EU Regulation Hinder or Stimulate Innovation?

Author:
Jacques Pelkmans
Publication Date:
01-2015
Content Type:
Working Paper
Institution:
Institute for Development and International Relations (IRMO)
Abstract:
‘Does EU regulation hinder or stimulate innovation’ is a frequently heard query in the EU, but there is little systematic analytical literature on the issue. Fragmented evidence or anecdotes dominate debates among EU regulatory decision-makers and in European business, insofar as there is a genuine debate at all. This text focuses on the multi-faceted, ambiguous and complex relationship between (EU) regulation and innovation in the economy, and discusses the innovation-enhancing potential of certain regulatory approaches as well as factors that tend to reduce incentives to innovate. We adopt an 'ecosystem' approach to both regulation and innovation and study the interactions between the two ecosystems. This general analysis and survey are complemented by seven case studies of EU regulation enabling and disabling innovation, two horizontal and five sectoral ones. The case studies are preceded by a broader contextual analysis of trends in EU regulation over the last three decades. These trends show the significant transformation of the nature as well as improvement of the quality of EU regulation, largely in the deepened internal market, which tend to have a favourable and lasting effect on the rate of innovation in the EU (other things being equal). Our findings include the following: Regulation can at times be a powerful stimulus to innovation. EU regulation matters at all stages of the innovation process. Different types of regulation can be identified in terms of innovation impact: general or horizontal, innovation specific and sector-specific regulation. More prescriptive regulation tends to hamper innovative activity, whereas the more flexible EU regulation is, the better innovation can be stimulated. Lower compliance and red-tape burdens have a positive effect on innovation. We recommend incorporating a specific test on innovation impacts in the ex-ante impact assessment of EU legislation as well as in ex-post evaluation. There is ample potential for fostering innovation by reviewing the EU regulatory acquis.
Topic:
European Union, Regulation, and Financial Markets
Political Geography:
Europe

314. The Hybrid Legal-Scientific Dynamic of Transnational Scientific Institutions

Author:
Oren Perez
Publication Date:
04-2015
Content Type:
Journal Article
Abstract:
The objective of the present article is to develop a better understanding of the institutional dynamic of transnational regulatory scientific institutions (RSIs). RSIs play a significant role in the transnational regulatory process by mediating between the scientific community and policy-making bodies. I argue that RSIs have a hybrid structure involving both political-legal and epistemic authority. The hybrid structure of RSIs – their capacity to exert both normative and epistemic authority – constitutes an innovative response to the demand of modern society for scientific certainty and to the scarcity of normative power in the international domain. This hybrid nature has a triple structure involving three complementary pairs: law~science, law~non-law and science~pseudoscience. I examine the way in which RSIs cope with the challenge of maintaining their epistemic and legal authority against the tensions generated by their hybrid structure. The discussion of hybrid authority is related to the problem of scientific uncertainty. I examine this theoretical argument drawing on an in-depth analysis of three RSIs that reflect the institutional diversity of the RSI network: the Intergovernmental Panel on Climate Change, the International Commission on Non-Ionizing Radiation Protection and the European Committee of Homeopaths. I conclude with a discussion of some of the policy issues associated with the institutional design of RSIs. The policy discussion refers, first, to the risk posed by RSIs’ hybrid structure to their internal stability and, second, to some potential adverse social impacts that need to be considered alongside RSIs’ projected benefits.
Topic:
International Law, Science and Technology, Law, and Regulation
Political Geography:
Europe and Italy

315. Internet Freedom and Human Rights

Author:
Daniel Joyce
Publication Date:
04-2015
Content Type:
Journal Article
Abstract:
This article considers whether the Internet has become so significant, for the provision of, and access to, information and in the formation of political community and associated questions of participation, that it requires further human rights protection beyond freedom of expression. In short, should Internet freedom be configured as a human right? The article begins by considering the ubiquity of the Internet and its significance. A wider historical view is then taken to understand Internet freedom in terms of its lineage and development from earlier debates over freedom of expression and the right to communicate, through to the recognition of the significance of an information society and the need for Internet regulation on the international plane. The current debate over Internet freedom is then analysed with particular focus given to Hillary Clinton’s speech on Internet freedom and its subsequent articulation by Special Rapporteur Frank La Rue. The concluding part introduces the critical work of Evgeny Morozov and Jaron Lanier to an international law audience in order to deepen the debate over Internet freedom and to point to the concept’s limitations and dangers. It is too early to say whether a ‘right to Internet freedom’ has achieved universal recognition, but this article makes the case that it is worth taking seriously and that Internet freedom may need its own category of protection beyond freedom of expression.
Topic:
Human Rights, International Law, History, Regulation, Internet, and Freedom of Expression
Political Geography:
Europe, Global Focus, and United States of America

316. International Investment Law and the European Union: A Reply to Catharine Titi

Author:
Martins Paparinskis
Publication Date:
07-2015
Content Type:
Journal Article
Abstract:
Reasonable people might disagree whether the European Union (EU) is likely to make a significant and commendable contribution to international investment law. This article addresses two issues of relevance for this discussion. First, it considers the appropriateness of evaluating evelopments in international investment law in terms of balance between investor protection and the right to regulate. Second, the contribution of the recent EU practice is briefly examined, finding it less interesting and innovative than one might have expected.
Topic:
International Law, European Union, Regulation, and Finance
Political Geography:
Europe and European Union

317. Working Paper Exploring the Concept of Homeostasis and Considering its Implications for Economics

Author:
Antonio Damasio and Hanna Damasio
Publication Date:
09-2015
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The reality of human homeostasis expands the views on preferences and rational choice that are part of traditionally conceived Homo economicus and casts doubts on economic models that depend only on an “invisible hand” mechanism. In its standard format, the concept of homeostasis refers to the ability, present in all living organisms, of continuously maintaining certain functional variables within a range of values compatible with survival. The mechanisms of homeostasis were originally conceived as strictly automatic and as pertaining only to the state of an organism’s internal environment. In keeping with this concept, homeostasis was, and still is, often explained by analogy to a thermostat: upon reaching a previously set temperature, the device commands itself to either suspend the ongoing operation (cooling or heating), or to initiate it, as appropriate. This traditional explanation fails to capture the richness of the concept and the range of circumstances in which it can be applied to living systems. Our goal here is to consider a more comprehensive view of homeostasis. This includes its application to systems in which the presence of conscious and deliberative minds, individually and in social groups, permits the creation of supplementary regulatory mechanisms aimed at achieving balanced and thus survivable life states but more prone to failure than the fully automated mechanisms. We suggest that an economy is an example of one such regulatory mechanism, and that facts regarding human homeostasis may be of value in the study of economic problems. Importantly, the reality of human homeostasis expands the views on preferences and rational choice that are part of traditionally conceived Homo economicus and casts doubts on economic models that depend only on an “invisible hand” mechanism.
Topic:
Economics, Regulation, Models, and Homeostasis
Political Geography:
Global Focus

318. Using discrete choice experiments to regulate the provision of water services: Do status quo choices reflect preferences?

Author:
Bruno Lanz and Allan Provins
Publication Date:
02-2015
Content Type:
Working Paper
Institution:
Centre for International Environmental Studies, The Graduate Institute (IHEID)
Abstract:
Discrete choice experiments (DCE) are increasingly used to quantify the demand for improvements to services provided by regulated utility companies and inform price controls. This form of preference elicitation, however, often reveals a high frequency of status quo (SQ) choices. This may signal an unwillingness of respondents to evaluate the proposed trade-offs in service levels, questioning the welfare theoretic interpretation of observed choices and the validity of the approach for regulatory purposes. Using the methodology for DCE in the regulation of water and sewerage services in England and Wales, our paper contributes to the understanding of SQ choices in several novel dimensions. First, we control for the perception of the SQ and the importance of attributes in day-to-day activities. Second, we use a split sample design to vary both the description of the SQ and the survey administration mode (online vs. in-person). Third, the service attributes can both improve or deteriorate, so that the SQ is not necessarily the least-cost option. Fourth, we examine SQ choices in individual choice tasks and across all tasks so as to identify the determinants of serial SQ choices. Our results suggest that individual SQ choices mostly reflect preferences and thus represent important information for the regulator. However, serial SQ choices are mainly driven by cognitive and/or contextual factors, and these responses should be analysed as part of standard validity tests.
Topic:
Regulation, Economy, Decision-Making, Utilities, Cost-Benefit Analysis, and Status Quo
Political Geography:
Global Focus

319. Emissions Trading in the Presence of Price-Regulated Polluting Firms: How Costly Are Free Allowances?

Author:
Bruno Lanz and Sebastian Rausch
Publication Date:
01-2015
Content Type:
Working Paper
Institution:
Centre for International Environmental Studies, The Graduate Institute (IHEID)
Abstract:
We study whether to auction or to freely distribute emissions allowances when some firms participating in emissions trading are subject to price regulation. We show that free allowances allocated to price-regulated firms effectively act as a subsidy to output, distort consumer choices, and generally induce higher output and emissions by price-regulated firms. This provides a cost-effectiveness argument for an auction-based allocation of allowances (or equivalently an emissions tax). For real-world economies such as the Unites States, in which about 20 percent of total carbon dioxide emissions are generated by price-regulated electricity producers, our quantitative analysis suggests that free allowances increase economy-wide welfare costs of the policy by 40-80 percent relative to an auction. Given large disparities in regional welfare impacts, we show that the inefficiencies are mainly driven by the emissions intensity of electricity producers in regions with a high degree of price regulation.
Topic:
Climate Change, Regulation, Electricity, Pollution, and Price
Political Geography:
Global Focus

320. Avertive expenditures, endogenous quality perception, and the demand for non-market goods: An instrumental variable approach

Author:
Bruno Lanz
Publication Date:
08-2015
Content Type:
Working Paper
Institution:
Centre for International Environmental Studies, The Graduate Institute (IHEID)
Abstract:
In response to the perceived quality of a non-market good, households may choose to incur avertive expenditures as a substitute to its aggregate provision, thereby revealing an (inverse) demand function. When unobserved heterogeneity affects both perceived quality and avertive behavior, identification is plagued by a problem of endogeneity. In this paper, I propose to use a first stage model of perceived quality as a function of objective quality to address the endogeneity problem. The exclusion restriction is theoretically motivated, and requires people to have well-formed perceptions of the quality of the good. Moreover, the first stage quantifies the relationship between perceived and objective quality measures, so that this approach can provide micro-consistent marginal willingness to pay estimates for changes in the policy-relevant objective level of provision. As an illustration, I employ data on avertive expenditures for two qualitative aspects of household tap water supply: water hardness and aesthetic quality in terms of taste and odor.
Topic:
Water, Regulation, and Public Goods
Political Geography:
Global Focus