Incentive Regulation Research Articles

Added benefit and revenues of oncology drugs approved by the European Medicines Agency between 1995 and 2020: retrospective cohort study

ObjectivesTo evaluate the added benefit and revenues of oncology drugs, explore their association, and investigate potential discrepancies between added benefit and revenues across different approval pathways of the European Medicines...

Linking foreign direct investment to financial deepening: Evidence from sub‐Saharan Africa

AbstractIn this study, the nexus between Foreign Direct Investment (FDI) and financial deepening is critically examined. The study employed a robust dynamic panel cross‐sectionally augmented distributed lag method for 31 countries in sub‐Saharan Africa (SSA). The results reveal that: (1) a strong significantly positive long run impact of FDI on financial deepening exists; (2) real gross domestic product (GDP), trade openness and government effectiveness stimulate the positive FDI–financial deepening nexus; (3) the strength of the FDI–financial deepening nexus also depends on the percentile position in the income distribution of SSA countries (countries in the upper strata of the income distribution evidently had stronger FDI–financial deepening relations than those in the lower strata and (4) real GDP, trade openness and government effectiveness also enhance financial deepening in SSA. The study recommends that governments in SSA should foster fiscal, financial and regulatory incentives for attracting FDI for improved financial depth in SSA by: strengthening the regulatory frameworks and institutions of governance through the removal of unwarranted governmental interferences in the administration of justice and electoral processes; removing multiple tax regimes; and stabilizing prices and exchange rate volatility via stimulating local productivity and guaranteeing the rule of law, political stability and security of life and property in the region.

Optimizing the Benefits of Invasive Alien Plants Biomass in South Africa

The current political situation in South Africa is seeking opportunities to promote sustainable development and use of renewable resources for energy, poverty alleviation, economic development, and environmental protection (e.g., mitigation of greenhouse gas emissions). The present study is based on a critical literature review and synthesis of policy advice in South Africa. The study comprehensively examined the knowledge base and gathered relevant empirical findings and perspectives so as to identify the gaps, trends, and patterns in the optimal management and utilization of invasive alien plants (IAPs) biomass, thereby supporting evidence-based practice. Additionally, the literature review was supported by the first-hand experience of invasive alien plants management and its biomass utilization. This research proposes long-term options for optimizing the costs and benefits of invasive alien plants biomass and meeting rising energy demand. Biomass from the country’s approximately 300 “Working for Water (WfW) Projects” might be used for bioenergy, firewood, charcoal, and other value-added forest products, both for internal and international use. The extraction and use of biomass from invasive alien plants for green energy and other valuable products would aid in the elimination of hazardous invasive species and reduce the amount of fuel in the fields, as well as fire and flood threats. Biomass from invasive alien plants clearings can be distributed to rural regions and informal settlements as a supply of firewood with the aim of reducing reliance on nearby forests, conserving the environment and biodiversity, minimizing forest degradation, supporting climate change, and enhancing energy efficiency and wood waste management (e.g., recycling and prevention) for green economic development and industrial transformation. The findings of this study imply that for competitive biomass-to-energy conversion and bio-economic applications for the use of invasive alien plant biomass, cost management, particularly for transportation, and significant regulatory incentives are essential. In addition, effective policy instruments that aid in the promotion of innovative systems and knowledge generation are required so that biomass can be optimally used for bioenergy and other competitive bio-economic applications.

Can Integrate a Sustainable Business Model and Global Value Chains Revive the Value Chain’s Sustainable Growth?

AbstractTraditional value chains link factors of production and production to final consumption, adding economic value. To reduce the negative effects of the value chain on the environment and societies, the sustainable business model must be integrated into all parts of the global value chain. This necessitates responsible production and procurement, but all participants must recognise the importance of reusing resources, increasing the product life cycle, and minimising waste. However, this does not imply that all value chain participants in the value chain have equal responsibilities, as they have varying degrees of dominance, interests, and environmental and societal impact in their value chain-related activities. We claim that regional trade agreements are the key to balancing each other’s interests in an international value chain, assisting participants in reaching a consensus. On the other hand, existing regional trade agreements have flaws in how they distribute value. Furthermore, their standard-setting does not contribute to developing a sustainable global value chain because it ignores the impact of the sustainable business models of value chain participants on the global value chain. So, the article will focus on reconstructing global value chains by introducing a sustainable business model and using regulatory incentive systems to guide value chain participants in fulfilling corporate social and environmental responsibilities. As a result, this article discusses how a sustainable business model can aid in developing the global value chain in a sustainable direction, as well as how regulation can help.

Optimal revenue adjustment in the presence of exogenous demand variation

This article examines optimal adjustments to a regulated firm’s revenue when realized revenue diverges from expected revenue due to exogenous variation in demand. The adjustments that are considered include those that arise under two popular forms of incentive regulation — price cap regulation (PCR) and revenue cap regulation (RCR). It is shown that the optimal revenue adjustment reflects the firm’s Lerner Index. The optimal policy differs from both PCR and RCR, but more closely resembles PCR (RCR) when the prevailing fixed charge for the firm’s service is large (small).

The Economic Consequences of Deforestation in the Amazon Basin on Brazil’s Agricultural Sector and Biodiversity: A Comparative Analysis of Pre and Post-2000 Policy Interventions

Deforestation in the Amazon Basin presents significant economic and environmental challenges, particularly impacting Brazil’s agricultural sector and the region’s rich biodiversity. This paper conducts a comprehensive analysis of the long-term economic impacts of deforestation, with a dual focus on agricultural productivity and biodiversity conservation. Utilizing a comparative approach, the study evaluates the efficacy of various policy interventions implemented before and after the year 2000, aiming to discern their roles in addressing the multifaceted consequences of deforestation. The methodology combines quantitative analysis of deforestation rates, agricultural output data, and biodiversity indices with qualitative assessments of policy frameworks and their enforcement mechanisms. This multidisciplinary approach enables a nuanced understanding of the complex interplay between environmental policies, agricultural practices, and ecological outcomes in the Amazon Basin. Initial findings indicate that policies enacted after 2000, including the Action Plan for the Prevention and Control of Deforestation in the Legal Amazon (PPCDAm), have made noticeable strides in curbing deforestation rates. These policy measures, characterized by enhanced regulatory frameworks, stricter enforcement, and incentives for sustainable land use, have shown potential in mitigating the adverse effects of deforestation. The analysis reveals that reduced deforestation has positive implications for agricultural sustainability, enhancing land use efficiency and supporting the transition towards more sustainable farming practices. Furthermore, the conservation of biodiversity, essential for maintaining ecosystem services crucial to agriculture and human well-being, has seen marked improvement. Despite these positive trends, the paper identifies ongoing challenges in fully realizing the economic benefits of reduced deforestation, including the need for continued investment in sustainable agriculture and the strengthening of policy frameworks to support biodiversity conservation. The study underscores the critical importance of integrated policy approaches that address the economic drivers of deforestation while promoting ecological sustainability. The findings of this paper contribute to the broader discourse on environmental economics and policy-making, offering insights into the effective management of natural resources. By highlighting the significant role of post-2000 policies in enhancing the economic and environmental resilience of the Amazon Basin, the study provides a foundation for future research and policy development aimed at achieving balanced and sustainable development in the region.

Navigating global energy markets: A review of economic and policy impacts

The global energy landscape is undergoing a profound transformation, marked by shifts in supply and demand dynamics, technological advancements, and evolving policy frameworks. This paper provides a comprehensive review of the economic and policy impacts shaping contemporary global energy markets. Economic forces play a pivotal role in shaping the trajectory of global energy markets. The exploration of unconventional energy sources, such as shale gas and renewable technologies, has disrupted traditional supply chains, influencing market prices and altering the geopolitical dynamics of energy-producing nations. The rise of energy-efficient technologies and the growing demand for cleaner energy sources are redefining the investment landscape, creating new opportunities and challenges for businesses, governments, and consumers alike. Policy decisions at national and international levels exert a profound influence on energy markets. The transition towards a low-carbon economy is a central theme, with governments worldwide implementing a variety of regulatory frameworks, incentives, and penalties to encourage sustainable energy practices. This paper explores the effectiveness and implications of these policies, examining their impact on market competitiveness, innovation, and global cooperation in addressing climate change. The interplay between economic and policy factors is evident in the ongoing energy transition. As countries strive to meet their climate goals, the paper delves into the intricacies of energy market dynamics, analyzing the role of government interventions in fostering innovation, promoting energy security, and addressing socio-economic disparities. Furthermore, the paper highlights the interconnectedness of global energy markets, emphasizing the importance of international collaboration in achieving a sustainable and resilient energy future. By providing a nuanced understanding of the economic and policy influences on global energy markets, this review aims to guide stakeholders in navigating the complexities of an evolving energy landscape.

Changing times: incentive regulation, corporate reorganizations, and productivity growth in the Great Britain’s gas networks

ABSTRACT The gas industry in Great Britain has witnessed periodic regulatory reviews and large corporate reorganization over the last few decades. We assess how these changes have impacted total factor productivity growth using a data envelopment analysis (DEA) approach by setting out different models, each for gas transmission and distribution network. We also construct a combined single series for distribution and transmission using financial data to show whether productivity growth can be attributed to corporate reorganizations. Our results show a negative productivity growth of −1.6% p.a. for gas transmission over the sample period, but reversed to a positive TFP growth once quality is included. For gas distribution, we find productivity regress at −6.2% p.a. over the sample period, with a negative productivity trend observed across all the models, despite the inclusion of quality variables. However, the findings reveal a slightly higher productivity growth of 1% p.a. using corporate data, with pre-restructuring period having a positive productivity growth compared with the post-restructuring era with a negative productivity growth.

Economic Viability of Business models for Photovoltaic solar generation in Brazil: Studies of cases

In the last years, worldwide, more capacity of solar energy has been added than any other type of electric power generation technology. The current expansion market is largely due to the increase in market competitiveness of photovoltaic solar energy and demand for electricity. However, the markets continue to be driven largely by government or regulatory incentives and not by innovative business. Therefore, this paper presents: (i) overview of photovoltaic systems regarding the most adopted business models in Brazil; ii) business model economic viability case study. The results presented shows that the acquisition model has the best investment indicators. For the Acquisition and Rental models, all case studies were economically viable, but in the Shared Solar Generation model the Consumer Units C1 and C2 were considered unfeasible by Levelized Cost of Energy - LCOE criterion.

Do conformity and bailouts affect misreporting? The case of public health-care organisations

Most literature on the antecedents of misreporting in the public sector focuses on the propensity to report financial breakeven, with limited attention to the regulatory and normative incentives that may alter such propensity. This study provides novel explanations for public sector organisations' deviation from breakeven. Its underlying assumption is that misreporting may be shaped by mimetic pressures encouraging conformity as well as regulatory pressures conveyed through soft budget constraints. The empirical analysis includes all Italian public healthcare organisations over 17 years. The findings suggest that public healthcare organisations may manipulate accruals not only to achieve financial breakeven, but also to conform with peers’ financial performance or to worsen reported financial performance in anticipation of a bailout.

“Hospitals respond to demand. Public health needs to respond to risk”: health system lessons from a case study of northern Queensland’s COVID-19 surveillance and response

BackgroundThe vast region of northern Queensland (NQ) in Australia experiences poorer health outcomes and a disproportionate burden of communicable diseases compared with urban populations in Australia. This study examined the governance of COVID-19 surveillance and response in NQ to identify strengths and opportunities for improvement.MethodsThe manuscript presents an analysis of one case-unit within a broader case study project examining systems for surveillance and response for COVID-19 in NQ. Data were collected between October 2020–December 2021 comprising 47 interviews with clinical and public health staff, document review, and observation in organisational settings. Thematic analysis produced five key themes.ResultsStudy findings highlight key strengths of the COVID-19 response, including rapid implementation of response measures, and the relative autonomy of NQ’s Public Health Units to lead logistical decision-making. However, findings also highlight limitations and fragility of the public health system more generally, including unclear accountabilities, constraints on local community engagement, and workforce and other resourcing shortfalls. These were framed by state-wide regulatory and organisational incentives that prioritise clinical health care rather than disease prevention, health protection, and health promotion. Although NQ mobilised an effective COVID-19 response, findings suggest that NQ public health systems are marked by fragility, calling into question the region’s preparedness for future pandemic events and other public health crises.ConclusionsStudy findings highlight an urgent need to improve governance, resourcing, and political priority of public health in NQ to address unmet needs and ongoing threats.

Regulatory incentives for transmission system operators under flow-based market coupling

Flow-based market coupling is a critical element of the electricity market in Europe. Transmission System Operators determine the commercial transmission capacity that can be implicitly traded in a zonal day-ahead market. However, this entails a trade-off: higher commercial transmission capacities increase market efficiency, affecting the electricity market prices, but also increase redispatch costs, affecting the network tariff. The decision on the commercial transmission capacity should optimally balance day-ahead welfare and redispatch costs, but depends on the rules and regulated incentives enforced on the TSOs. A MinRAM criterion, i.e., imposing minima for the commercial transmission capacity, is a one-size-fits-all policy without variation in time and space that unlikely leads to optimal transmission capacity allocation and is hard to tune because regulators have incomplete information. Incentive regulation is an alternative policy instrument promoting welfare-maximizing commercial transmission capacities, robust against information asymmetry. We provide a set of mathematical conditions to properly design an incentive scheme that rewards price convergence and penalizes excessive redispatch costs. Therefore, this paper serves as a stepping stone towards tapping the full potential of cross-border trade in zonal markets for policymakers, regulators, TSOs and market participants.

Potential of pension funds and insurance companies for investment in resources: Policies for sustainable transition

This study extensively explores the complex relationship between environmental investments made by pension funds and insurance companies and their influence on expenses associated with fossil fuels. Analyzing data from 2015 to 2020 across ten OECD economies, the research employs the Fully Modified OLS technique to extract meaningful insights. The results reveal that a 1% increase in environmental investments propels practices focused on energy conservation and increased efficiency by 0.49%, underscoring a dedicated commitment to sustainability. Additionally, a 1% increase in IT expenditures is associated with a 0.10% improvement in energy efficiency. Conversely, heightened green tax payments exhibit a negative correlation with energy usage, emphasizing the impact of regulatory incentives. To bolster sustainable investments, the paper advocates for robust ESG reporting, support for SMEs, the adoption of green corporate management practices, and improved access to green financial markets.

Under the Background of Economic Structure Optimization, Environmental Governance Promotes Macroeconomic Structural Adjustment Measures

Along with the implementation of reform and opening up in the 1970s, China’s economy entered a period of rapid development. During this period, the economic structure of our country has gradually changed from the primary industry to the secondary industry. Even today, the industrial industry still plays a very important role in the economic structure of our country. The industrial chain such as the real estate industry, chemical industry, and manufacturing industry is still the main industrial structure that promotes our economic growth for a long time. However, as the energy of industrial development is obtained by massive consumption of fossil fuels, the economic development brought by industrial development is behind the serious environmental pollution problem. We gradually realize that economic development cannot be based on environmental damage, but although our country has been committed to reversing the situation of environmental sacrifice for economic development at the beginning of the discovery of problems, the effect is very little. Therefore, how to maximize environmental protection under the current economic structure is the issue to be discussed in this paper. This paper mainly summarizes relevant experience through domestic and foreign literature, and clarifies the macro relationship between environmental governance and economic structure, and then discusses it from three dimensions: technological innovation, consumer demand, and international trade. The final results show that different types of environmental regulations have different effects on industrial structure, and the effectiveness of policy incentive regulation is about 23% higher than that of command control regulation. At the same time, according to the analysis results of economic structure upgrading in the Pearl River Delta region, the effect of environmental regulation on the regional industrial structure is also different, and the average effect can improve the overall industrial structure optimization rate by about 36%.

Short Review of Solar Energy Markets and Policies for Smart Cities Development

This paper presents a meticulous review of the solar energy markets and their instrumental role in driving the growth of smart cities. Drawing from extensive research, the review delves into urban metamorphoses spurred by the burgeoning growth of megacities, highlighting the significance of sociotechnical systems, evolved institutional practices, and energy material flows. The study identifies seven pivotal models for smart city energy governance, encompassing distributed energy resources, energy storage, microgrids, demand response, smart measuring systems, energy harvesting, and green technological innovations. A comparative analysis of urban developments in cities such as Singapore, Shanghai, and the greater Jakarta area reveals diverse trajectories in energy system evolution and business model shifts. The surging growth of solar energy, underpinned by technological breakthroughs, cost efficiencies, and robust governmental policies, is also explored. Although solar energy has been bolstered by a myriad of fiscal and regulatory incentives, it faces persistent challenges like technical impediments, financial barriers, and regulatory obstacles. The paper also introduces an innovative compound Real Options Approach (ROA) for appraising solar energy projects within smart cities, arguing its efficacy over the traditional Expected Net Present Value methods by recognizing managerial adaptability. In summation, this review accentuates the imperative of enduring policy support to amplify solar energy adoption worldwide, setting the stage for a sustainable smart city future.

Study on the impact of digital transformation on green competitive advantage: The role of green innovation and government regulation.

Digital transformation enables small and medium enterprises (SMEs) to reduce or overcome their reliance on resources and energy, thereby minimizing their environmental impact and providing them with sustainable green competitive advantages. However, the reasons for this phenomenon are not yet clear. To further investigate this issue, we selected 391 Chinese SMEs to examine the relationships among green transformation, green innovation, government regulation, and green competitive advantages. Green innovation includes green product innovation and green process innovation, while government regulation includes incentive regulation, constraint regulation, and guidance regulation. The empirical results show that digital transformation can enhance SMEs' green competitive advantages. Additionally, the hypothesized mediating effect of green product innovation and green process innovation between digital transformation and green competitive advantages is supported, while the moderating effect of incentive regulation, constraint regulation, and guidance regulation on the relationship between digital transformation and green product innovation and green process innovation is also confirmed. The findings of this study may contribute to more effective management of digital transformation and green innovation in SMEs, thereby promoting their development.

EVENT STUDY ON DRUG APPROVALS - IMPACT OF ORPHAN DRUG APPROVALS ON THE SHAREHOLDER VALUE OF PHARMACEUTICAL COMPANIES

The pharmaceutical industry is controversially discussed. Nevertheless, there is a con-sensus that the need for new medicines is undeniable. In particular, the treatment of rare diseases with orphan drugs is characterized by a high unmet medical need. Regulatory incentive schemes seek to stimulate orphan drug research and development (R&D). This is also reflected in the increasing approvals during the last two decades. Orphan drugs have gained relevance and become a more attractive business for pharmaceutical compa-nies (Blonda et al., 2021, p. 2)

Conceptual Analysis on the Potential Regulation of Income Tax Incentives for Floating Hospital’s Financing by State-Owned Enterprises

Conceptual Analysis on the Potential Regulation of Income Tax Incentives for Floating Hospital’s Financing by State-Owned Enterprises

Analysis of the quality indicators of electricity supply services on the example of the distribution system operator JSC "Kharkivoblenergo"

The resolution of the National Commission in 2021 for the operator of the distribution system JSC “Kharkivoblenergo”, which operates in the territory of the city of Kharkiv and the Kharkiv region, established a tariff for electricity distribution services with the application of incentive regulation, which provides for tariff formation on the basis of long-term regulation of tariffs and adjustment of the necessary income of the Company based on the performance of the task of achieving the target values of the quality indicators of electric energy and compliance with the guaranteed standards. In accordance with this Resolution, the indicators of the quality of services System Average Interruption Duration Index (SAIDI) and System Average Interruption Frequency Index (SAIFI) for the supply of electric energy were analysed using the example of the operator of the distribution system JSC “Kharkivoblenergo”. The SAIDI quality indicator is characterized by the duration of long interruptions in electricity supply in the distribution system of JSC “Kharkivoblenergo”. The SAIFI quality indicator provides information on the frequency of long interruptions in electricity supply in the distribution system of JSC “Kharkivoblenergo”. The analysis of SAIDI and SAIFI indicators was performed for the short-term period of operation of the operator of the distribution system JSC “Kharkivoblenergo”, namely for December 2021. Based on the results of the analysis of SAIDI and SAIFI indicators, it follows that the achievement of the target values of quality indicators allows adjusting the necessary rate of income for the operator of the distribution system JSC “Kharkivoblenergo”, and also creates a favourable investment climate, which ensures modernization, reconstruction and construction for the renewal of the energy infrastructure with the aim of improving the quality of providing services for the supply of electric energy to consumers. Also, the analysis of the indicated indicators made it possible to evaluate the work of JSC “Kharkivoblenergo” in terms of the implementation of established quality indicators, to identify problem areas in the Company's activities regarding the provision of guaranteed quality standards, to form and practically implement an investment program, to determine how quality indicators are reflected in tariff formation in the incentive regulation.

Analyzing how government spending, incentives, and supply chains affect financial performance in energy poverty alleviation.

Poor access to modern energy services, or energy poverty, continues to be a significant barrier to socioeconomic progress and well-being. The complicated connections between public investment, incentives, supplier chains, and the financial success of energy poverty alleviation efforts are explored in this paper. This research examines the history of eradicating energy poverty worldwide, particularly in China. It examines how these aspects affect the efficiency and long-term viability of reducing energy poverty initiatives. This research synthesizes the evidence on government expenditure patterns and their impact on initiatives to reduce energy poverty via an extensive literature examination. The development of infrastructure, capacity building, and the deployment of energy technology are all made possible in large part by government spending. Financial and regulatory incentives have also been shown to encourage the energy industry's private sector engagement and innovation. These incentives help expand underprivileged groups' access to electricity by creating an atmosphere conducive to investment. This research also examines supply chains' crucial role in combating energy poverty. For the effective installation and upkeep of energy projects, efficient and resilient supply chains are crucial because they guarantee the availability of vital materials and resources. An integrated supply chain strategy may improve project results, save costs, and eliminate risks related to logistical difficulties. Government funding, incentives, and supply chains all have a connection that affects how well energy poverty alleviation programs function financially. Maintaining projects after their first execution requires sustained financial performance. It explores how supply network interruptions may affect financial performance, highlighting the need for robust supply chain management techniques. As a result, this study adds to a comprehensive knowledge of the complex processes underpinning the reduction of energy poverty. It offers insights into developing efficient policies and strategies by examining how government actions, incentives, supply chains, and financial performance interact. These observations are relevant for practitioners, investors, and academics trying to increase access to sustainable energy sources and reduce poverty in addition to policymakers. This report provides helpful recommendations for boosting the effectiveness and endurance of energy poverty reduction activities as nations work to reach global sustainable development objectives.