IDEAS home Printed from https://ideas.repec.org/a/eee/energy/v35y2010i12p5185-5191.html
   My bibliography  Save this article

A quantitative model of regulator’s preference factor (RPF) in electricity–environment coordinated regulation system

Author

Listed:
  • Ren, Yulong
  • Fu, Shijun

Abstract

This paper explores quantification of regulator’s preference factor (RPF) in electricity–environment coordinated regulation system. Based on social welfare economics, we articulately depict RPF’s qualitative concept and its economic meaning. Then, applying abstract functions (i.e., abstract social welfare function, abstract utility function, and abstract production function), we deduce the partial-social-welfare elasticity, and build the mathematics model of maximizing social welfare. We nest this elasticity into the model’s Kuhn–Tucker conditions, and obtain RPF’s definition formula. By solving the Kuhn–Tucker conditions, we get RPF’s quantitative formula, which solves the problem of hard to quantify regulator’s preference in electricity–environment coordinated regulation system. The result shows that RPF only has relationship to subsystems’ production function, and is independent of social welfare function and subsystems’ utility function. Finally, we provide an empirical research based on the western region of China from year 1995 to 2004. It reveals that regulator has relative stability preference to mitigating pollutants. And validity test confirms that the empirical result is fit well to the practice. The RPF is truly a more general and valid instrument to measure regulator’s preference in its regulated field.

Suggested Citation

  • Ren, Yulong & Fu, Shijun, 2010. "A quantitative model of regulator’s preference factor (RPF) in electricity–environment coordinated regulation system," Energy, Elsevier, vol. 35(12), pages 5185-5191.
    • Handle: RePEc:eee:energy:v:35:y:2010:i:12:p:5185-5191
    DOI: 10.1016/j.energy.2010.07.048
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0360544210004238
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.energy.2010.07.048?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Muller, Eitan, 1982. "On the existence of an arrow and a Bergson-Samuelson social welfare function," Mathematical Social Sciences, Elsevier, vol. 3(1), pages 1-7, July.
    2. Lund, P.D., 2007. "The link between political decision-making and energy options: Assessing future role of renewable energy and energy efficiency in Finland," Energy, Elsevier, vol. 32(12), pages 2271-2281.
    3. Arocena, Pablo & Waddams Price, Catherine, 2002. "Generating efficiency: economic and environmental regulation of public and private electricity generators in Spain," International Journal of Industrial Organization, Elsevier, vol. 20(1), pages 41-69, January.
    4. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    5. Komlos, John & Salamon, Peter, 2008. "The poverty of growth with interdependent utility functions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(6), pages 2242-2247, December.
    6. Hughitt, Jeremiah K., 1982. "Solar energy and utility regulation," Energy, Elsevier, vol. 7(1), pages 101-112.
    7. Fang, Yiping & Zeng, Yong, 2007. "Balancing energy and environment: The effect and perspective of management instruments in China," Energy, Elsevier, vol. 32(12), pages 2247-2261.
    8. Nielsen, Lene & Jeppesen, Tim, 2003. "Tradable Green Certificates in selected European countries--overview and assessment," Energy Policy, Elsevier, vol. 31(1), pages 3-14, January.
    9. Klein, Christopher C. & H. Sweeney, George, 1999. "Regulator preferences and utility prices: evidence from natural gas distribution utilities," Energy Economics, Elsevier, vol. 21(1), pages 1-15, February.
    10. Mu, Tao & Xia, Qing & Kang, Chongqing, 2010. "Input-output table of electricity demand and its application," Energy, Elsevier, vol. 35(1), pages 326-331.
    11. Banovac, Eraldo & Glavić, Mevludin & Tešnjak, Sejid, 2009. "Establishing an efficient regulatory mechanism—Prerequisite for successful energy activities regulation," Energy, Elsevier, vol. 34(2), pages 178-189.
    12. Schofield, Norman, 1980. "Generic properties of simple Bergson-Samuelson welfare functions," Journal of Mathematical Economics, Elsevier, vol. 7(2), pages 175-192, July.
    13. Lin, Q.G. & Huang, G.H., 2010. "An inexact two-stage stochastic energy systems planning model for managing greenhouse gas emission at a municipal level," Energy, Elsevier, vol. 35(5), pages 2270-2280.
    14. Peltzman, Sam, 1976. "Toward a More General Theory of Regulation," Journal of Law and Economics, University of Chicago Press, vol. 19(2), pages 211-240, August.
    15. Nelson, Randy A, 1982. "An Empirical Test of the Ramsey Theory and Stigler-Peltzman Theory of Public Utility Pricing," Economic Inquiry, Western Economic Association International, vol. 20(2), pages 277-290, April.
    16. Diakoulaki, D. & Zopounidis, C. & Mavrotas, G. & Doumpos, M., 1999. "The use of a preference disaggregation method in energy analysis and policy making," Energy, Elsevier, vol. 24(2), pages 157-166.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Valentini, Edilio, 2006. "Uncovering regulator's (implicit) social welfare weights under price cap regulation," Economics Letters, Elsevier, vol. 90(1), pages 1-5, January.
    2. Lucas W. Davis & Erich Muehlegger, 2010. "Do Americans consume too little natural gas? An empirical test of marginal cost pricing," RAND Journal of Economics, RAND Corporation, vol. 41(4), pages 791-810, December.
    3. Potters, Jan & Sloof, Randolph, 1996. "Interest groups: A survey of empirical models that try to assess their influence," European Journal of Political Economy, Elsevier, vol. 12(3), pages 403-442, November.
    4. Crone, Lisa & Tschirhart, John, 1998. "Separating economic from political influences on government decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 35(4), pages 405-425, May.
    5. Schnellenbach, Jan & Schubert, Christian, 2015. "Behavioral political economy: A survey," European Journal of Political Economy, Elsevier, vol. 40(PB), pages 395-417.
    6. Çetin, Tamer & Yasin Eryigit, Kadir, 2013. "The economic effects of government regulation: Evidence from the New York taxicab market," Transport Policy, Elsevier, vol. 25(C), pages 169-177.
    7. Shapiro, Jesse M., 2016. "Special interests and the media: Theory and an application to climate change," Journal of Public Economics, Elsevier, vol. 144(C), pages 91-108.
    8. Jiang, Haiyan & Hu, Yuanyuan & Zhang, Honghui & Zhou, Donghua, 2018. "Benefits of Downward Earnings Management and Political Connection: Evidence from Government Subsidy and Market Pricing," The International Journal of Accounting, Elsevier, vol. 53(4), pages 255-273.
    9. Hellman, Joel S. & Jones, Geraint & Kaufmann, Daniel, 2003. "Seize the state, seize the day: state capture and influence in transition economies," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 751-773, December.
    10. Nadeau, Louis W., 1997. "EPA Effectiveness at Reducing the Duration of Plant-Level Noncompliance," Journal of Environmental Economics and Management, Elsevier, vol. 34(1), pages 54-78, September.
    11. Polemis, Michael L., 2016. "New evidence on the impact of structural reforms on electricity sector performance," Energy Policy, Elsevier, vol. 92(C), pages 420-431.
    12. Ruiz Díaz, Gonzalo, 2019. "Opportunism and third-party influence on long-term public contracts," Utilities Policy, Elsevier, vol. 61(C).
    13. Gawel, Erik & Lehmann, Paul & Strunz, Sebastian & Heuson, Clemens, 2018. "Public Choice barriers to efficient climate adaptation – theoretical insights and lessons learned from German flood disasters," Journal of Institutional Economics, Cambridge University Press, vol. 14(3), pages 473-499, June.
    14. Shen, Xingchi & Lyu, Shoujun, 2019. "Wind power development, government regulation structure, and vested interest groups: Analysis based on panel data of Province of China," Energy Policy, Elsevier, vol. 128(C), pages 487-494.
    15. Cattaneo, Mattia & Meoli, Michele & Vismara, Silvio, 2015. "Financial regulation and IPOs: Evidence from the history of the Italian stock market," Journal of Corporate Finance, Elsevier, vol. 31(C), pages 116-131.
    16. Simshauser, Paul & Akimov, Alexandr, 2019. "Regulated electricity networks, investment mistakes in retrospect and stranded assets under uncertainty," Energy Economics, Elsevier, vol. 81(C), pages 117-133.
    17. Alejandro Castaneda, 2020. "Cronies, Rents, and Import Licenses: Non-tariff Trade Controls throughout Import Substitution Industrialization (ISI) in Mexico," Tiempo y Economía, Universidad de Bogotá Jorge Tadeo Lozano, vol. 7(2), pages 90-118, July.
    18. Liu, Wai-Man & Ngo, Phong T.H., 2014. "Elections, political competition and bank failure," Journal of Financial Economics, Elsevier, vol. 112(2), pages 251-268.
    19. Wallace E. Oates & Paul R. Portney & Wallace E. Oates & Paul R. Portney, 2004. "The Political Economy of Environmental Policy," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 1, pages 3-30, Edward Elgar Publishing.
    20. Lavezzolo, Sebastián & Rodríguez-Lluesma, Carlos & Elvira, Marta M., 2018. "National culture and financial systems: The conditioning role of political context," Journal of Business Research, Elsevier, vol. 85(C), pages 60-72.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:energy:v:35:y:2010:i:12:p:5185-5191. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/energy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.