In this paper we address the issue of how to deal with water inter-temporal misallocation in electricity generation when two sources of externalities interact. Exploring a two-periods duopolistic framework, where a hydraulic and a thermal generator exert an inter-temporal and an environmental externality respectively, we assess the associated implications in terms of inter-temporal profile of quantities, prices and environmental damages. We then investigate how policy instruments such as an inter-temporal price cap and a Pigouvian tax can be simultaneously used for corrective purposes. This helps shed light on the relationship between regulatory schemes and taxation in imperfectly competitive settings that are characterized by relevant dynamic aspects.
Externalities, Regulation and Taxation in Electricity Generation
VINELLA, ANNALISA
2007-01-01
Abstract
In this paper we address the issue of how to deal with water inter-temporal misallocation in electricity generation when two sources of externalities interact. Exploring a two-periods duopolistic framework, where a hydraulic and a thermal generator exert an inter-temporal and an environmental externality respectively, we assess the associated implications in terms of inter-temporal profile of quantities, prices and environmental damages. We then investigate how policy instruments such as an inter-temporal price cap and a Pigouvian tax can be simultaneously used for corrective purposes. This helps shed light on the relationship between regulatory schemes and taxation in imperfectly competitive settings that are characterized by relevant dynamic aspects.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
