ECOBAS Research Seminar: Sebastián Cea Echenique (University of Los Andes)


In a cap and trade model with an investment in a 2-stage electricity generation capacity with uncertainty, we include limited attention by the social planner. The inclusion of this type of configurations is justified by the fact that setting a precise cap is costly. In our model we define two types of planner rationalities: one oriented to the profits from the sale of rights and the other focused on social welfare. We compute the model for the Chilean case contrasting with the results of Amigo et alii (2021) and carbon neutrality compliance based on the Paris agreement. On the one hand, the results of the Profit oriented model show a significant impact of cap accuracy on the optimal placement of auctioned rights. Simultaneously, this configuration delivers the lowest electricity prices among all models. On the other hand, the Welfare oriented configuration issues the least amount of permits for high carbon budgets.

ECOBAS Research Seminar: Mar Reguant - Northwestern University & Barcelona School of Economics


We study the distributional impacts of real-time pricing (RTP) in the Spanish electricity market, which rolled out RTP as the default tariff for a large share of residential customers. We complement aggregate patterns of distributional effects with a method to infer individual households’ income using zip-code income distributions. We identify three channels for the distributional impacts of RTP: consumption patterns, appliance ownership, and location. The first channel makes the switch from monthly to hourly prices progressive since high-income households consume disproportionately more at peak times when real-time prices are higher. However, the other two channels make the switch from annual to monthly prices regressive: low-income households, who tend to have more electric heating, benefit from the price insurance provided by time-invariant prices during winter, when prices tend to be higher and more volatile. Given that prices differences are greater across months than within months, the regressive effect dominated. Using counterfactual experiments, we find that RTP makes low-income households particularly vulnerable to adverse weather shocks during winter. In the future, the wider adoption of enabling technologies (including storage and demand response devices) by the high-income groups might worsen the distributional impacts of RTP.

ECOBAS Research Seminar: Francisco Gómez-Martínez - Norwegian Business School


Existing evidence demonstrates that the degree of social homogeneity in a society correlates with various economic indicators. Using experimental techniques, we establish the causal impact of social proximity on socially responsible behavior in markets and its implications for economic welfare.

We develop an experimental market where low-cost production generates a negative externality to a third party, while high-cost production eliminates the externality. We compare behavior in groups
varying whether the third party shares a common identity with buyers and sellers (in-group condition) or not (out-group condition). Our findings indicate that socially responsible behavior is generally robust
across our treatments. However, reducing social heterogeneities improves economic welfare indicators: market prices are significantly higher and the number of offers rejected by the buyers becomes significantly lower. This leads to a striking reduction of economic inequality and improvement of market efficiency. Overall, our experiment shows that the social structure of market environments matters a great deal and has significant implications for the design of institutions.

ECOBAS Research Seminar: Brais Álvarez Pereira - UNova (Lisbon)

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Does lack of information reduce the ability of producers to find the right time to sell their products? To answer this question, we ran a two-level cluster randomized control trial among 1988 cashew producers in 290 villages in Guinea-Bissau. Treated producers received weekly messages to their mobiles during the trading season in 2020. The messages provided up-to-date market news, farmgate prices, and gave marketing advice. We found that treated producers sold their cashews more frequently relative to the producers in other experimental groups, who tend to sell their cashews in a single transaction. Treated producers failed to earn higher prices, but earned more from all sales and barters, relative to the control group mean. We explore several mechanisms to understand our results. We found no evidence suggesting that treated producers changed their buyers, the location of their sales, had more bargaining power, better record keeping, or different attitudes towards risk. Given the low cost of our intervention, market information can be a cost-effective tool to increase producers’ revenues.

ECOBAS Research Seminar: Javier López Prol - Yonsei University (South Korea)


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ABSTRACT: Opposite to traditional dispatchable technologies, wind and solar have a variable generation pattern. Due to the particular characteristics of electricity markets, this variability poses challenges to their integration, such as the cannibalization effect (decline of their market value as penetration increases), and curtailment. I will review these problems by presenting their quantification for California, and discuss some of the potential solutions, focusing on the potential benefits of spatial integration and deployment coordination of renewable resources across countries.

ECOBAS Research Seminar: Joana Rita Pinho Resende - Universidade do Porto (Portugal)

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We consider a non-durable good monopolist that collects data on its customers in order to profile them and subsequently practice price discrimination on returning customers. The monopolist's price discrimination scheme is leaky, in the sense that an endogenous fraction of consumers may choose to incur a privacy cost to conceal their identity in future purchases. We characterize the Markov Perfect Equilibrium of the dynamic game under two alternative customer profiling regimes: full information acquisition (FIA) and Purchase History Information (PHI). In both cases, we find that, contrary to what could have been expected, the aggregate profit is not monotonically increasing in the level of the privacy cost but a U-shaped function of it, leading to ambiguous profit effects: A reduction in privacy costs increase the fraction of customers who choose to be anonymous (detrimental profit effect) but it also softens the firm's introductory price, reducing the pace at which prices targeted to new customers fall over time (positive profit effect). When comparing results under FIA and PHI, we find that market expansion is faster and more customers conceal their identity under FIA than under PHI. Equilibrium profits are also higher in the FIA case. Although equilibrium profits are U-shaped functions of the privacy cost in both profiling regimes, they tend to be globally decreasing under PHI, while being globally increasing with the privacy cost under FIA.

ECOBAS Research Seminar: Javier Ojea - Joint Research Centre of the European Commission (JRC-EC)

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ABSTRACT: Transitioning to a low-carbon economy involves risks for the value of financial assets, with potential ramifications for financial stability. We quantify the systemic impact on financial firms arising from changes in the value of financial assets under three climate transition scenarios that reflect different levels of vulnerability to the transition to a low-carbon economy, namely, orderly transition, disorderly transition, and no transition (hot house world). We describe three systemic risk metrics computed from a copula-based model of dependence between financial firm returns and financial asset market returns: climate transition expected returns, climate transition value-at-risk, and climate transition expected shortfall. Empirical evidence for European financial firms over the period 2013-2020 indicates that the climate transition risk varies across sectors and countries, with banks and real estate firms experiencing the highest and lowest systemic impacts from a disorderly transition, respectively. We find that default premium, yield slope and inflation are the main drivers of climate transition risk, and that, in terms of capital shortfall, the cost of rescuing more risk-exposed financial firms from climate transition losses is relatively manageable. Simulation of climate risks over a five-year period shows that disorderly transition can be expected to imply significant costs for banks, while financial services and real estate firms remain more sheltered.