Thomas Michielsen

The Distribution of Energy-Intensive Sectors in the US

We study the in uence of energy endowments on the location of energy-intensive industries. We use data on manufacturing sectors in 50 US states from 2002 until 2008, with detailed information on state endowments of coal, natural gas, oil and hydropower and sectoral fuel and electricity intensities. The effect of energy on industry location is statistically and economically significant. A one standard deviation increase in energy en- dowments per capita increases the activity of energy-intensive industries by about 20%.

Merger Simulation in a Two-Sided Market: The Case of the Dutch Daily Newspapers

We develop a structural econometric framework that allows us to simulate the effects of mergers among two-sided platforms selling differentiated products. We apply the proposed methodology to the Dutch newspaper industry. Our structural model encompasses demands for differentiated products on both sides of the market and profit maximization by competing oligopolistic publishers who choose subscription and advertising prices, while taking the interactions between the two-sides of the market into account. We measure the sign and size of the indirect network effects between the two sides of the market and simulate the effects of a hypothetical merger on prices and welfare.

Fiscal Policy and CO2 Emissions of New Passenger Cars in the EU

To what extent have national fiscal policies contributed to the decarbonisation of newly sold passenger cars? We construct a simple model that generates predictions regarding the effect of fiscal policies on average CO2 emissions of new cars, and then test the model empirically. Our empirical strategy combines a diverse series of data. First, we use a large database of vehicle-specific taxes in 15 EU countries over 2001–2010 to construct a measure for the vehicle registration and annual road tax levels, and separately, for the CO2 sensitivity of these taxes. We find that for many countries the fiscal policies have become more sensitive to CO2 emissions of new cars. We then use these constructed measures to estimate the effect of fiscal policies on the CO2 emissions of the new car fleet. The increased CO2-sensitivity of registration taxes have reduced the CO2 emission intensity of the average new car by 1.3 %, partly through an induced increase of the share of diesel-fuelled cars by 6.5 percentage points. Higher fuel taxes lead to the purchase of more fuel efficient cars, but higher diesel fuel taxes also decrease the share of (more fuel efficient) diesel cars; higher annual road taxes have no or an adverse effect.

Environmental Catastrophes under Time-Inconsistent Preferences

I analyze optimal natural resource use in an intergenerational model with the risk of a catastrophe. Each generation maximizes a weighted sum of discounted utility (positive) and the probability that a catastrophe will occur at any point in the future (negative). The model generates time- inconsistency as generations disagree on the relative weights on utility and catastrophe prevention. As a consequence, future generations emit too much from the current generation’s perspective and a dynamic game ensues. I consider a sequence of models. When the environmental problem is related to a scarce exhaustible resource, early generations have an in-incentive to reduce emissions in Markov equilibrium in order to enhance the ecosystem’s resilience to future emissions. When the pollutant is expected to become obsolete in the near future, early generations may however in- crease their emissions if this reduces future emissions. When polluting inputs are abundant and expected to remain essential, the catastrophe becomes a self-fulfilling prophecy and the degree of concern for catastrophe prevention has limited or even no effect on equilibrium behaviour.

Assessing Unilateral Merger Effects in the Dutch Daily Newspaper Market

The newspaper market is a typical example of a so-called two-sided market: publishers sell content to readers and advertising slots to advertisers, while taking into account that the demand for advertisements in a newspaper depends positively on its circulation and the demand of readers might be affected by the number (or concentration) of ads in the newspaper (Anderson and Gabszewicz, 2006). When it comes to assessing a proposed merger, competition authorities are, as a rule, required to establish whether a horizontal merger is likely to raise concerns with respect to unilateral or non-coordinated effects (that is, whether the merger might increase the market power of the merging firms) and with respect to coordinated or collusive effects (that is, whether the merger might make collusion more likely). With regard to the assessment of unilateral merger effects, competition authorities have devised different methods to address the issue. For instance, initial screening has traditionally been based on the analysis of the market shares of the merging parties and of (the changes in) the HerfindahlHirschman Index (HHI). Hence mergers among firms with market shares below a given threshold and mergers characterized by a post-merger HHI and a change in the HHI below certain thresholds have been almost automatically approved. For mergers judged to be worthy of further investigation, full merger simulations have only seldom been conducted. More often, preference has been given to a small but significant nontransitory increase in price (SSNIP)-type test, where it is asked whether the merging firms would find it profitable to raise prices post merger by a given threshold, usually 5 or 10 per cent, assuming rivals would not react.2