Paolo Polinori

Italian Consumers' Willingness to Pay for Renewable Energy Sources

EU Directive 2009/72/CE imposes to the European Countries environmental and energy targets. The Italian goal is to attain a 17% share in electricity production from renewable energy sources (RES) by 2020. To make investment in renewables attractive, market prices must be profitable and the gap between the private and social costs of renewables must be filled using “persuasive” tools. The acceptance of such a burden may be controversial because it results in an increase in prices. It is interesting to estimate the consumer’s willingness to pay (WTP) for green electricity. We based our research on a national survey conducted in November 2007 in Italy. We used a stochastic payment card (SPC) including a “certainty correction” and proposing five degrees of acceptance. An empirical analysis shows that there is a substantial willingness among Italian consumers to partially cover the cost of achieving the RES goal.

Market Power and Transmission Congestion in the Italian Electricity Market

Analysis of market power in electricity markets is relevant for understanding the competitive development of the industrys restructuring and liberalization process, but in the existing literature, there is not an adequate consideration of line transmission congestion. The aim of this paper is to propose a new approach to measuring market power in the Italian Power Exchange (IPEX), explicitly considering transmission line congestion. We construct a new measure of the residual demand curve to disentangle unilateral market power from congestion rent for the main Italian generators during the period April 2004 to December 2007. In Italy, this period was one of stable transmission network structure. Following the approach of Wolak (2003, 2009), we measure the unilateral market power with the Lerner index (LI), computed as the inverse of the residual demand elasticity. In conclusion, the correct modeling of the residual demand curve including transmission congestions enables us to compute the zonal LI and therefore more accurately measure the market power when congestion occurs. Our results show that various generators exercise market power only in specific zones. These findings provide deeper understanding of market outcomes in the presence of congestion, suggesting appropriate policy directions for market surveillance and competition regulation.

Networks and Organisational Learning: Evidence from Broiler Production

Purpose – The aim of this study is to the test the hypothesis that a network involved in the division of labour can contribute to individual skills creation.Design/methodology/approach – This paper is divided into two parts. First, it proposes and examines the fundamental of the hypothesis. In the second part, it reports the results of the investigation designed to test the hypothesis.Findings – The hypothesis that task specification in organisational learning influences skills creation cannot be rejected. The evidence indicates that information on network integration of task specifications engages agents in problem solving and promotes skills creation according to opportunities of interaction in a structured context.Originality/value – This study tests the hypothesis that a network involved in the division of labour can contribute to individual skills creation.

Integration and Convergence in European Electricity Markets

In this paper we investigate wholesale electricity prices integration process in the main European markets. After reforms introduced in the last decades in Europe, wholesale electricity prices are now determined in regulated markets. However, while market institutional frameworks show several similarities, there are still differences in fuel mix, generation units technologies, market structure. Using multivariate cointegration techniques we test integration dynamics within four European markets (Austria, Germany, France and Italy) for which we have collected a novel dataset of spot prices from 2004 to 2010. We provide evidence that German market constitutes a common stochastic trend driving the long-run behavior of other markets. Our results are robust to causality test, to Granger causality test, to oil price relevance test and provide additional evidence to assess the efficient market hypothesis in European electricity markets.

Measuring Market Power in Wholesale Electricity Italian Market

In the new deregulated competitive Italian electricity many interesting issues arise as the market complexity, the firm strategic behavior, the market power size, and so on. Effective competition in the electricity market is a necessary features of a successful supply industry restructuring. In this paper we examine the degree of competition in the Italian market during the period April 2004 to December 2004 in two principal ways. In the first one we estimate a very intuitive relation among the differences between the hourly equilibrium price (ph) and the individual hourly bids that the competitors offer around ph, and a large set of structural and behavioral variables. In the second one the aim is twofold. The first one is to build the residual demand for each Italian Generation Company. The construction of the residual demand curve system is the necessary condition to get the second aim which is to measure the unilateral market power for the Italian Generation Companies. Following Wolak (2003) approach the appropriate measure of the unilateral market power is the Lerner index based on the residual demand curve elasticity which is computed as arc elasticity. The expected results is a deeper understanding of the Wholesale Italian Electricity Markets and of its mechanism in order to enhance competition and to design appropriate market surveillance.

Ambiente operativo ed efficienza nel settore del trasporto pubblico locale in Italia

This paper assesses the impact of environmental factors on the efficiency of public transit system within a DEAbased mixed framework. Using a sample of 100 Italian companies, we implement a two-stage method in order to investigate the impact of environmental effects into DEA inefficiency measures. The results point out the relevance of environmental effects and consequently the bias of deterministic DEA approach.

Contagion in Electricity Markets: Does it Exist?

This paper investigates the existence of contagion effects in electricity markets. The concept of contagion has been developed for high frequency financial markets, see the World Bank definition(Word Bank, 2000). Following Pick (2005) and Pesaran - Pick (2007) the paper presents a canonical, econometric model of contagion and investigates the conditions under which contagion can be distinguished from mere interdependence. The theoretical and empirical distinction between contagion and interdependence is based upon precise identification conditions, discussed in the paper. The empirical analysis is based on different regional markets in the Italian Power Exchange (IPX) and we focus only on pure contagion relationship in the IPX at the Italian regional level. This is a novel result in economic literature. The analysis and identification of contagion requires that each individual market equations contains market specific regressors, consequently we have to involve market specific variables in structural equations in order to correctly specify the model. Pesaran - Pick (2007, p. 1266) show that ignoring endogeneity and interdependence can introduce a substantial upward bias in estimation of contagion coefficient. In general, problems of endogeneity requires usage of instrumental variables (IV)estimation and, in agreement with Pick (2005), we obtain consistency by including regional market specific fundamentals. The most important conclusions of this paper are that contagion can be identified separately from interdependence and that effects are asymmetric.

Quality of Life in Major Italian Cities: Do Local Governments Cost Efficiency Contribute to Improve Urban Life Style? An Introductory Analysis

In this paper we set forth a novel analysis of urban quality of life (QoL) using Data Envelopment Analysis (DEA) approach. We use a newly constructed municipality database, which includes all 103 provincial capitals. In our approach we follow a two-stage method. In the first stage, we estimate efficiency scores through a nonparametric DEA with desirable and undesirable outputs. Estimated rankings are compared to Legambiente index. In the second stage, we regress efficiency scores on economic, social and political variables. Our main objective is to estimate non discretionary variables effects on efficiency. According to Simar and Wilson (2007) results show that local government efficiency is highly heterogeneous and that there exists high correlation among our rankings and Legambiente index. Considering exogenous effects, geographical conditions and political aspects constitute the main determinants of municipalities’ efficiency.

Sustainability: Will There Be the Will and the Means?

In this chapter we argue that a strong effort toward new technologies and investments can allow us to sustain economic growth without endangering the environment. We define this effort toward a new sustainable paradigm as consisting of a mix of renewable sources, energy efficiency, and energy savings issues discussed by others in the present volume. The crucial question, of course, is how much investment is required to achieve a sustainable paradigm and whether it is a plausible sacrifice compared with similar past investments. We argue that the difficulty in finding feasible solutions to address climate change is a political, not an economic problem. The lack of political will and willingness to cooperate, however, is not an exclusive characteristic of the climate change, as exemplified by the recent failure of Copenhagen meeting in December 2009. The lack of cooperation is typical of many vexing global questions related to human rights issues, trade agreements, financial capital taxation, offshore tax havens, property rights, and the safeguarding of biodiversity. Each of these issues requires time before a solution can be found. For example, negotiations to admit China to the World Trade Organization rather trivial matter compared to climate change took over 15 years. Finally the chapter argues that the size, intensity, and scope of policies required to achieve future sustainability are similar to those employed in the past to sustain economic growth, and hence there is no need for radical measures or a major departure from our current socio-economic system.

Marketing Renewable Energy in Italy

Following the abandonment of nuclear power with a post-Chernobyl referendum, Italian energy policy has created a culture in favor of renewables developed by entrepreneurs and paid for by end users in the form of subsidies. This has led to the success in Italy of incentives for the use of renewables, which in 2015 already met targets set for 2020. Focusing on the Italian case, this chapter initially describes the legal framework and, in particular, the incentive mechanisms and then analyzes the impact of renewables in the vertically integrated Italian electricity market with policy implications. The main results highlight that the massive spread of renewable energy sources (RES) has changed the attitude of policymakers from a command-and-control system to a more simplified and market-oriented approach. In particular, given the past intensive financial efforts, new legislation started to curb new RES investment by setting clear caps on the total financing allotments to the incentive policy. Furthermore, the massive injection of RESs has highlighted the inadequacy of the current electric market design. Finally, the large-scale penetration of RES into everyday life in Italy has increased consumer awareness of green electricity, stimulating a new quest for green electricity and better climate conditions.