Cross-subsidization in the Electric Power Industry: Current State and Problem-solving Vectors

As scientific community as businessmen discuss the problem of cross-subsidization in the electric power industry. This problem has long remained relevant. The main topic of economic discussions is fairness and validity of the rules for the tariff formation in the electric power industry. The different tariffs allow reducing the financial burden of some consumers and shifting it to others. The aim of the issue is to develop the main vectors of solving problems and government regulation measures. They are expected to level the negative economic effects of cross-subsidization. The purpose of the study is revealed through solving the following problems: a) to determine the socio-economic nature of cross-subsidization and regulatory problems at the current stage of development; b) to study the experience of foreign countries in cross-subsidization policies; review public policy mechanisms related to cross-subsidization. The subject of the issue is economic relations between different economic participants and their interests arising in the process of cross-subsidization policy. The results of the issue are the development of the main directions of the transformation of the state regulation of the energy complex in terms of reducing the negative effects of cross-subsidies. The scope of application of the obtained results is determined by the possibilities of developing and implementing a balanced state policy that takes into account the interests of all participants in economic processes, eliminating the creation of social tension in society that supports the growth of the well-being of the population. The following general scientific and special methods were chosen as scientific tools for conducting this study: content analysis method, system analysis method, retrospective analysis method, statistical survey methods. The information base of the study was the analytical development of the materials of the Federal Antimonopoly Service, the Federal State Statistics Service, regulatory acts of the Russian Federation governing the development of the electric power complex. The basis of the presented study was the basic definitions of cross-subsidies, methods of reducing the negative consequences of cross-subsidies, principles and approaches of state regulation of the electric power complex.

Russia's Arctic Facade: current state, challenges of uneven development and priority public policy measures

The relevance of the study is due to the special geostrategic significance for Russia of its Arctic facade - the coastal Arctic. The aim of the study is to strengthen Russia's sovereignty over its Arctic spaces through neutralizing the challenges of the over-uneven development of the municipalities included in the Arctic facade. The information base of the research was the data of municipal statistics, and the main methods were the systemic and structural approach, comparative, cartographic analysis, analysis of extreme cases and economic intermunicipal gaps. The results of the research: we determined the composition of the Russian Arctic facade; we made assessment of the location of the Arctic façade in the Russian Federation; we determined the degree of specialization of each of the eight regions in the provision of "services" of façade; we revealed major paradoxes of the internal development of the Arctic facade - between its gigantic size and the concentration of the main industrial and agricultural activity in the Arctic of one or two regions, the dichotomy of rotational areas - the poles of resource growth and areas of traditional activity of old-timers and indigenous minorities; thousandfold contrasts in the level of economic and investment development between leaders (Norilsk industrial area, Purovsky, Tazovsky, Nadym districts) and outsiders (Chukotka, Allaikhovsky, Mezensky districts); within the city districts, two extreme cases were revealed according to the key indicators of municipal statistics - the "corporate city" of Norilsk and the territory of defense significance - Novaya Zemlya; organizational, financial, institutional and informational measures were proposed to smooth out internal differences in the development of the territories of the Arctic façade: cross-subsidization from leading territories to outsider territories, improving the administrative-territorial division, turning Norilsk into a base for the development of the Russian eastern Arctic, creating a trans-Arctic charter flight Murmansk -Anadyr and sites for the exchange of best practices and practices between the municipalities of the Arctic facade.

INTERNET FINANCE, NET INTEREST MARGIN AND NONINTEREST ACTIVITIES IN CHINA’S BANKING SECTOR

Using data from 133 Chinese commercial banks from 2003 to 2015, we examine the links among Internet finance, net interest margin and noninterest activities. Four main findings emerge. First, the net interest margin exerts significantly negative impacts on the noninterest activities through incentive distortion, cross-subsidization and resource restriction effects. The incentive distortion effect plays a stronger role, while the cross-subsidization and resource restriction effects play weaker roles. Second, Internet finance significantly promotes the development of noninterest activities, meaning that the technology spillover effect of Internet finance is stronger than the customer loss effect in China. Third, Internet finance strengthens the negative effects of the net interest margin on fee and commission activities but weakens the negative effects of the net interest margin on other noninterest activities. Finally, we find that the effects of the net interest margin on noninterest activities are stronger in state-owned banks than in non-state-owned banks, while the effects of Internet finance on noninterest activities are weaker in state-owned banks.

Cross-Subsidization in Teacher Pension Benefits: Examining Rates of Return Among School Districts

When pension benefits are not directly tied to contributions, some individuals may earn disproportionate returns on their retirement contributions. For instance, individuals who receive relatively larger late-career raises will receive disproportionately greater returns. For teachers, whose salaries are determined by salary schedules set by districts, these differences may be nonrandom, with larger raises accruing to teachers in more advantaged school districts. Using salary schedules from 490 school districts, the authors estimate the rate of return on contributions for each district. They then analyze the relationship between district characteristics and the rate of return. They find that the rate of return varies markedly among school districts, with larger and generally more affluent school districts benefiting. These findings demonstrate how salary structures and current pension design lead to cross-subsidization of pension benefits among school districts.

Proposing a Paradigm Shift in Rural Electrification Investments in Sub-Saharan Africa through Agriculture

Almost one billion people in the world still do not have access to electricity. Most of them live in rural areas of the developing world. Access to electricity in the rural areas of Sub-Saharan Africa is only 28%, roughly 600 million people. The financing of rural electrification is challenging and, in order to accomplish higher private sector investments, new innovative business models have to be developed. In this paper, a new approach in the financing of microgrid electrification activities is proposed and investigated. In this approach, agriculture related businesses take the lead in the electrification activities of the surrounding communities. It is shown that the high cost of rural electrification can be met through the increased value of locally produced products, and cross-subsidization can take place in order to decrease the cost of household electrification. The approach is implemented in a case study in Rwanda, through which the possibility of local agricultural cooperatives leading electrification activities is demonstrated.