IDEAS home Printed from https://ideas.repec.org/a/kap/regeco/v49y2016i2d10.1007_s11149-016-9294-6.html
   My bibliography  Save this article

Impact of environmental regulation and the 2011 earthquake on the Japanese electricity industry

Author

Listed:
  • Shigeharu Okajima

    () (Waseda University)

  • Hiroko Okajima

    (Towson University)

Abstract

Abstract Environmental regulations may erode competition owing to additional costs of compliance. To investigate the impact of such regulations in the Japanese electricity market, we analyze the effects of the environmental quality threshold set for public sector procurement. Using data on electricity procurement auctions from 2005 to 2012, we employ an endogenous switching regression model. We show that the environmental quality threshold lowers the participation of new power suppliers in auctions but does not increase their winning bids as long as competition is maintained. In fact, compliance with the quality threshold has made new power suppliers competitive in green auctions. By contrast, electricity utilities have suffered increased compliance costs since the Great East Japan Earthquake in 2011 owing to the shutdown of nuclear power plants and increased reliance on fossil fuels.

Suggested Citation

  • Shigeharu Okajima & Hiroko Okajima, 2016. "Impact of environmental regulation and the 2011 earthquake on the Japanese electricity industry," Journal of Regulatory Economics, Springer, vol. 49(2), pages 223-249, April.
  • Handle: RePEc:kap:regeco:v:49:y:2016:i:2:d:10.1007_s11149-016-9294-6
    DOI: 10.1007/s11149-016-9294-6
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11149-016-9294-6
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.

    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. Paul Lanoie & Michel Patry & Richard Lajeunesse, 2008. "Environmental regulation and productivity: testing the porter hypothesis," Journal of Productivity Analysis, Springer, vol. 30(2), pages 121-128, October.
    2. Hosoe, Nobuhiro & Takagi, Shingo, 2012. "Retail power market competition with endogenous entry decision—An auction data analysis," Journal of the Japanese and International Economies, Elsevier, vol. 26(3), pages 351-368.
    3. Paul Joskow & Jean Tirole, 2006. "Retail electricity competition," RAND Journal of Economics, RAND Corporation, vol. 37(4), pages 799-815, December.
    4. repec:dau:papers:123456789/12068 is not listed on IDEAS
    5. Dakshina G. De Silva & Timothy Dunne & Georgia Kosmopoulou, 2003. "An Empirical Analysis of Entrant and Incumbent Bidding in Road Construction Auctions," Journal of Industrial Economics, Wiley Blackwell, vol. 51(3), pages 295-316, September.
    6. Maddala,G. S., 1986. "Limited-Dependent and Qualitative Variables in Econometrics," Cambridge Books, Cambridge University Press, number 9780521338257.
    7. Eric Maskin & John Riley, 2000. "Asymmetric Auctions," Review of Economic Studies, Oxford University Press, vol. 67(3), pages 413-438.
    8. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, January.
    9. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
    10. Timothy Besley & Robin Burgess, 2004. "Can Labor Regulation Hinder Economic Performance? Evidence from India," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 91-134.
    11. Krishna, Vijay, 2009. "Auction Theory," Elsevier Monographs, Elsevier, edition 2, number 9780123745071.
    12. Nils-Henrik M. von der Fehr & Petter Vegard Hansen, 2010. "Electricity Retailing in Norway," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 25-46.
    13. Antonio Estache & Atsushi Iimi, 2010. "Bidder Asymmetry in Infrastructure Procurement: Are There any Fringe Bidders?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 36(2), pages 163-187, March.
    14. Michael Lokshin & Zurab Sajaia, 2004. "Maximum likelihood estimation of endogenous switching regression models," Stata Journal, StataCorp LP, vol. 4(3), pages 282-289, September.
    15. repec:rje:randje:v:37:y:2006:i:4:p:799-815 is not listed on IDEAS
    16. Paul Klemperer, 2004. "Auctions: Theory and Practice," Online economics textbooks, SUNY-Oswego, Department of Economics, number auction1.
    17. Anna Creti & Jerome Pouyet & María-Eugenia Sanin, 2013. "The NOME law: implications for the French electricity market," Journal of Regulatory Economics, Springer, vol. 43(2), pages 196-213, April.
    18. Anthony Heyes, 2009. "Is environmental regulation bad for competition? A survey," Journal of Regulatory Economics, Springer, vol. 36(1), pages 1-28, August.
    19. Paul Klemperer, 2004. "Auctions: Theory and Practice," Online economics textbooks, SUNY-Oswego, Department of Economics, number auction1.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Environmental regulation; Electricity market; Endogenous switching model; Porter hypothesis;

    JEL classification:

    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    Statistics

    Access and download statistics

    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:kap:regeco:v:49:y:2016:i:2:d:10.1007_s11149-016-9294-6. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.