nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2021‒10‒11
23 papers chosen by

  1. Decrypting New Age International Capital Flows By Clemens Graf von Luckner; Carmen M. Reinhart; Kenneth S. Rogoff
  2. Intensified Online Opinion Clashes with Salient Group Identity By Xintong Han; Mantian Mandy Hu
  3. The Value of Personal Data in Internet Commerce: A High-Stake Field Experiment on Data Regulation Policy By Tianshu Sun; Zhe Yuan; Chunxiao Li; Kaifu Zhang; Jun Xu
  4. Growing Platforms by Adding Complementors without Consent: Evidence from On-Demand Food Delivery Platforms By Raveesh Mayya; Zhuoxin Li
  5. “For the public benefit”: who should control our data? By Sarit Markovich; Yaron Yehezkel
  6. Estimating Demand with Multi-Homing in Two-Sided Markets By Pauline Affeldt; Elena Argentesi; Lapo Filistrucchi
  7. There and Back Again: The Making of Uganda’s Mobile Money Tax By Lees, Adrienne; Akol, Doris
  8. Efficient copyright filters for online hosting platforms By Alessandro De Chiara; Ester Manna; Antoni Rubí-Puig; Adrian Segura-Moreiras
  9. Platform Competition and Interoperability: The Net Fee Model By Mehmet Ekmekci; Alexander White; Lingxuan Wu
  10. Reward Crowdfunding Campaigns: Time-To-Success Analysis By Israel Santos Felipe; Wesley Mendes-da-Silva; Cristiana Cerqueira Leal; Danilo Braun Santos
  11. Consumer naivete and competitive add-on pricing on platforms By Ghosh, Meenakshi
  12. Credit Rating Agencies: Evolution or Extinction? By Dimitriadou, Athanasia; Agrapetidou, Anna; Gogas, Periklis; Papadimitriou, Theophilos
  13. Central bank communication with non-experts: a road to nowhere? By Ehrmann, Michael; Wabitsch, Alena
  14. Digital Transformation for a Sustainable Agriculture: Opportunities and Challenges By Khanna, Madhu
  15. When anxious mothers meet social media: WeChat, motherhood and the imaginary of the good life By Meng, Bingchun
  16. Mathematical foundations for balancing the payment system in the trade credit market By Fleischman, Tomaž; Dini, Paolo
  17. Streaming Stimulates the Live Concert Industry: Evidence from YouTube By Finn Christensen
  18. Circles of Trust: Rival Information in Social Networks By Petra Persson ⓡ; Nikita Roketskiy ⓡ; Samuel Lee
  19. Business Continuity Planning for Government Cash and Debt Management By Mr. Emre Balibek; Ian Storkey
  20. Economic Growth and Bank Innovation By Gary B. Gorton; Ping He
  21. Why do firms compete on price comparison websites? The impact on productivity, profits, and wages By Lindgren, Charlie; Li, Yujiao; Rudholm, Niklas
  22. Uber versus Trains? Worldwide Evidence from Transit Expansions By Marco Gonzalez-Navarro; Jonathan D. Hall; Harrison Wheeler; Rik Williams
  23. The Taxation of the Digitalised Economy: An African Study By Ndajiwo, Mustapha

  1. By: Clemens Graf von Luckner; Carmen M. Reinhart; Kenneth S. Rogoff
    Abstract: This paper employs high frequency transactions data on the world’s oldest and most extensive centralized peer-to-peer Bitcoin market, which enables trade in the currencies of more than 135 countries. We develop an algorithm that allows, with high probability, the detection of “crypto vehicle transactions” in which crypto currency is used to move capital across borders or facilitate domestic transactions. In contrast to previous work which has used “on-chain” data, our approach enables one to investigate parts of the vastly larger pool of “off-chain” transactions. We find that, as a conservative lower bound, over 7 percent of the 45 million trades on the exchange we explore represent crypto vehicle transactions in which Bitcoin is used to make payment in fiat currency. Roughly 20 percent of these represent international capital flight/flows/remittances. Although our work cannot be used to put a price on cryptocurrencies, it provides the first systematic quantitative evidence that the transactional use of cryptocurrencies constitutes a fundamental component of their value, at least under the current regulatory regime.
    JEL: E42 E51 E58 F21 F24 F32 F38
    Date: 2021–10
  2. By: Xintong Han (Concordia University and CIREQ, Department of Economics, 1455 Boulevard de Maisonneuve Ouest, Concordia University, Montreal, H3G 1M8, Canada); Mantian Mandy Hu (Chinese University of Hong Kong, School of Business, Shatin, NT, Hong Kong, SAR)
    Abstract: We collect data from Hong Kong’s foremost news media outlets’ Facebook pages from 2019 to 2020 to examine clashes of opinion on the social media platform. We find that specific writing habits signify users’ backgrounds and elicit group segregation cues from readers. An increase in pro-police comments written in Simplified Chinese induces a more polarized reaction from the opposite side compared with comments written in Traditional Chinese. The opposite side produces more anti-police comments and demands for regional independence in response. However, content generated by suspected internet water armies alleviates the clashes. The results reveal the factors that affect opinion polarization on social media platforms. They demonstrate the need for debiasing intervention and regulation.
    Keywords: social media, ideological clashes, protest, writing habits
    JEL: D71 L82 P48 P51
    Date: 2021–04
  3. By: Tianshu Sun (Marshall School of Business, University of Southern California, Los Angeles, CA 90089 United States); Zhe Yuan (School of Economics, Zhejiang University, Hangzhou 310000 China); Chunxiao Li (Alibaba Group); Kaifu Zhang (Alibaba Group); Jun Xu (Alibaba Group)
    Abstract: Personal data has become a key input in Internet Commerce, facilitating the matching between millions of customers and merchants. Recent data regulations in China, Europe and US restricts Internet platforms' ability to collect and use personal data for personalized recommendation and may fundamentally impact Internet Commerce. In collaboration with the world's largest E-commerce platform, we conduct a large-scale field experiment to measure the potential impact of data regulation policy, and to understand the value of personal data in Internet Commerce. For a random subset of 555,800 customers on Alibaba platform, we simulate the regulation by banning the use of personal data in the homepage recommendation algorithm and record the matching process and outcomes between these customers and merchants. Compared to the control group with personal data, we observe a significant higher concentration in the algorithmic recommendation of products in the treatment group and a very sharp decrease in the matching outcomes as measured by both customer engagement (clickthrough rate and product browsing) and market transaction (GMV). The negative effect is disproportionate and more pronounced for niche merchants and customers who would benefit most from E-commerce. We discuss the economic impact of data regulation on Internet Commerce, as well as the role of personal data in generating value and fostering innovations.
    Keywords: Personal Data, Privacy Regulation, E-commerce, Field experiments, Personalization, Market Structure
    Date: 2021–10
  4. By: Raveesh Mayya (Leonard N. Stern School of Business, New York University, New York, New York, United States 10012); Zhuoxin Li (Carroll School of Management, Boston College, Chestnut Hill, Massachusetts, United States 02467)
    Abstract: This empirical research investigates the impact of an aggressive growth strategy used by delivery platforms to add restaurants to their platforms without restaurants' consent. Although these platforms provide a valuable option to consumers to access restaurant services, they experience strong resistance from the other side (restaurants), due to unclear benefits from the partnership and the potential risks of cannibalization. To grow the multi-sided networks, platforms have experimented with a new seeding strategy that enlists restaurants on platforms without restaurants' consent. Such a seeding strategy is controversial and is under regulation scrutiny. For example, California enacted a policy in 2020 that made it illegal for delivery platforms to list restaurants without a formal partnership with them. Using a rich panel dataset compiled from public and proprietary sources, this research exploits two shocks to identify the impact of the aggressive platform growth strategy and the retrospective regulation on restaurants. The first shock is non-partnered restaurants being listed on the platform without the restaurants' consent. The second shock is the de-listing of non-partnered restaurants from the platform after California deemed such a platform strategy illegal. Our results suggest that being listed on a platform reduces a restaurant's $DineIn$ visits but increases $TakeOut$ visits. Furthermore, independent restaurants lose more $DineIn$ visits than the gain in $TakeOut$ visits, resulting in a net loss of total demand. Furthermore, retrospective regulation to delist non-partnered restaurants actually hurt these restaurants. After the regulation, independent restaurants not only lose $TakeOut$ visits but also fail to recover their pre-listing $DineIn$ visits. The findings provides practical insights that can help restaurants, delivery platforms, and policymakers make informed decisions around policies and regulations.
    Keywords: Multi-sided platforms; on-demand delivery; network effects; regulation; seeding; platform policy
    JEL: L14 L43 L88
    Date: 2021–09
  5. By: Sarit Markovich (Kellogg School of Management, Northwestern University, Evanston, IL, USA); Yaron Yehezkel (Coller School of Management, Tel-Aviv University, Ramat-Aviv, Israel)
    Abstract: We consider a platform that collects data from users. Data has commercial benefit to the platform, personal benefit to the user, and public benefit to other users. We ask whether the platform, or users, should have the right to decide which data the platform commercializes. We find that when users differ in their disutility from the commercialization of their data and the public benefit of data is high (low), it is welfare enhancing to let the platform (users) control the data. In contrast, when heterogeneity is in the disutility from the commercialization of different data items, it is welfare enhancing to let users (the platform) control the data when the public benefit of data is high (low). Furthermore, we find that allowing the platform to compensate users for their data is not always welfare enhancing and competition does not necessarily result in the efficient outcome.
    Keywords: data regulation, network externalities, platform competition
    JEL: L1
    Date: 2021–09
  6. By: Pauline Affeldt; Elena Argentesi; Lapo Filistrucchi
    Abstract: We empirically investigate the relevance of multi-homing in two-sided markets. First, we build a micro-founded structural econometric model that encompasses demand for differentiated products and allows for multi-homing on both sides of themarket. We then use an original dataset on the Italian daily newspaper market that includes information on double-homing by readers to estimate readers’ and advertisers’ demand. The results show that an econometric model that does not allow for multi-homing is likely to produce biased estimates of demand on both sides of the market. In particular, on the reader side, accounting for multi-homing helps to recognize complementarity between products; on the advertising side, it allows to measure to what extent advertising demand depends on the shares of exclusive and overlapping readers.
    JEL: C51 D43 L13 L82 M37
    Date: 2021–09
  7. By: Lees, Adrienne; Akol, Doris
    Abstract: This paper evaluates the appropriateness of the tax policymaking process that led to the introduction, and the later adaptation, of a tax on mobile money transactions in Uganda in 2018. We examine the unusual source of the proposal, how this particular tax diverged from the usual tax policymaking process, and whether certain key stakeholders were excluded. We argue that weaknesses in the tax policymaking process undermined the quality of policy design, and resulted in a period of costly, and avoidable, policy adjustment. This case study is relevant for Uganda as well as for other low-income countries which could be exposed to similar challenges in designing effective taxes for the mobile money industry.
    Keywords: Finance,
    Date: 2021
  8. By: Alessandro De Chiara (Department of Economics, Universitat de Barcelona and Barcelona Economic Analysis Team (BEAT), Avinguda Diagonal 696, 08034, Barcelona, Spain.); Ester Manna (Professora Lectora Serra Húnter, Department of Economics, Universitat de Barcelona and Barcelona Economic Analysis Team (BEAT), Avinguda Diagonal 696, 08034, Barcelona, Spain.); Antoni Rubí-Puig (Department of Law, Universitat Pompeu Fabra, Ramon Trias Fargas, 25-27, 08005 Barcelona, Spain.); Adrian Segura-Moreiras (Department of Law, Universitat Pompeu Fabra, Ramon Trias Fargas, 25-27, 08005 Barcelona, Spain.)
    Abstract: In this paper, we build a theoretical model in which an online hosting platform can develop a copyright filter to screen content that contributors wish to upload. The technology is imprecise, since non-infringing material may be incorrectly filtered out. Once the content is hosted on the platform, a right-holder may send a take-down notice if its own automated notice system, also imprecise, finds it to be copyright infringing. We investigate the efficient design of regulation and liability and we find that (i) the right-holder should be given incentives to evaluate fair use when submitting a notice and (ii) the platform should be fined if the take-down to notice ratio is above some predetermined threshold. Such dual system would achieve efficient copyright enforcement without excluding fair-use material.
    Keywords: Article 17; Copyright filters; Infringing material; Fair use; Liability rules; Online hosting platforms; Notice and take-down system.
    JEL: K2 L51
    Date: 2021–10
  9. By: Mehmet Ekmekci (Department of Economics, Boston College); Alexander White (School of Economics and Management, Tsinghua University); Lingxuan Wu (Department of Economics, Harvard University)
    Abstract: We study the effects of competition and interoperabilty in platform markets. To do so, we adopt an approach of competition in net fees, which is well-suited to situations where users pay additional charges, after joining, for on-platform interactions. Compared to other approaches, net fees expand the tractable scope to allow platform asymmetry and variable total demand. Regarding competition, our findings raise concerns, including possible dominance-inducing entry, which symmetric models overlook. Our results are more optimistic towards the helpfulness of policies that promote interoperability among platforms, but they urge caution when total demand variability is a significant factor.
    Keywords: Platform Competition, Big Tech, Net Fees, Interoperability
    JEL: D21 D43 D85 L13
    Date: 2021–09
  10. By: Israel Santos Felipe (Federal University of Ouro Preto/Brazil and NIPE/Portugal); Wesley Mendes-da-Silva (Sao Paulo School of Business Administration of The Fundação Getulio Vargas); Cristiana Cerqueira Leal (School of Economics and Management & NIPE - Center for Research in Economics and Finance, University of Minho); Danilo Braun Santos (Federal University of Sao Paulo/Brazil)
    Abstract: The time-to-success of reward crowdfunding campaigns constitutes a relevant topic that has been neglected in business literature. In this study, we employ parametric and semi-parametric models of survival analysis to identify the determining factors of the duration of success of these campaigns. Based on more than 4,200 reward crowdfunding campaigns, our results are robust for controls and reveal that the campaigns that attain success most rapidly are located predominantly in cities with greater income inequality. These are cities that are characterized by lower fundraising targets and receive a larger number of pledges. In addition, our covariates indicate a non-constant influence on time-to-success during the fundraising period.
    Keywords: crowdfunding; entrepreneurial finance; fintech; survival analysis; financial innovation
    JEL: L26 G32 G41 O31 C41 I31
    Date: 2021
  11. By: Ghosh, Meenakshi
    Abstract: We model a situation where two sellers trade vertically and horizontally differentiated goods on a platform for which they are charged a commission fee. Sellers' costs are asymmetric due to differences in the fees charged by the platform and in their costs of production. Consumers purchase either a base good, or a bundle comprising of the base good and an add-on, from one of the sellers on the platform. Consumers differ in their brand preferences, valuations of quality and in their levels of sophistication. More specifically, we assume that there is a fraction of consumers who are naive, and do not observe or consider add-on prices - possibly because they do not foresee their demand for an add-on - until after they have committed to buying the base good from a seller. We examine how the interplay of these forces shapes consumer behavior, sellers' pricing strategies and cost pass-through, and platform fees and revenues.
    Keywords: add-on pricing, consumer naivete, cost asymmetry, horizontal differentiation, platform fees, cost pass-through
    JEL: D43 L11 L14 L15
    Date: 2021–10–01
  12. By: Dimitriadou, Athanasia (University of Derby); Agrapetidou, Anna (Democritus University of Thrace, Department of Economics); Gogas, Periklis (Democritus University of Thrace, Department of Economics); Papadimitriou, Theophilos (Democritus University of Thrace, Department of Economics)
    Abstract: Credit Rating Agencies (CRAs) have been around for more than 150 years. Their role evolved from mere information collectors and providers to quasi-official arbitrators of credit risk throughout the global financial system. They compiled information that -at the time- was too difficult and costly for their clients to gather on their own. After the 1929 big market crash, they started to play a more formal role. Since then, we see a growing reliance of investors on the CRAs ratings. After the global financial crisis of 2007, the CRAs became the focal point of criticism by economists, politicians, the media, market participants and official regulatory agencies. The reason was obvious: the CRAs failed to perform the job they were supposed to do financial markets, i.e. efficient, effective and prompt measuring and signaling of financial (default) risk. The main criticism was focusing on the “issuer-pays system”, the relatively loose regulatory oversight from the relevant government agencies, the fact that often ratings change ex-post and the limited liability of CRAs. Many changes were implemented to the operational framework of the CRAs, including public disclosure of CRA information. This is designed to facilitate "unsolicited" ratings of structured securities by rating agencies that are not paid by the issuers. This combined with the abundance of data and the availability of powerful new methodologies and inexpensive computing power can bring us to the new era of independent ratings: The not-for-profit Independent Credit Rating Agencies (ICRAs). These can either compete or be used as an auxiliary risk gauging mechanism free from the problems inherent in the traditional CRAs. This role can be assumed by either public or governmental authorities, national or international specialized entities or universities, research institutions, etc. Several factors facilitate today the transition to the ICRAs: the abundance data, cheaper and faster computer processing the progress in traditional forecasting techniques and the wide use of new forecasting techniques i.e. Machine Learning methodologies and Artificial Intelligence systems.
    Keywords: Credit rating agencies; banking; forecasting; support vector machines; artificial intelligence
    JEL: C02 C15 C40 C45 C54 E02 E17 E27 E44 E58 E61 G20 G23 G28
    Date: 2021–10–04
  13. By: Ehrmann, Michael; Wabitsch, Alena
    Abstract: Central banks have intensified their communication with non-experts – an endeavour which some have argued is bound to fail. This paper studies English and German Twitter traffic about the ECB to understand whether its communication is received by non-experts and how it affects their views. It shows that Twitter traffic is responsive to ECB communication, also for non-experts. For several ECB communication events, Twitter constitutes primarily a channel to relay information: tweets become more factual and the views expressed more moderate and homogeneous. Other communication events, such as former President Draghi’s “Whatever it takes” statement, trigger persistent traffic and a divergence in views. Also, ECB-related tweets are more likely to get retweeted or liked if they express stronger or more subjective views. Thus, Twitter also serves as a platform for controversial discussions. The findings suggest that central banks manage to reach non-experts, i.e. their communication is not a road to nowhere. JEL Classification: E52, E58
    Keywords: central bank communication, monetary policy, non-experts, social media
    Date: 2021–10
  14. By: Khanna, Madhu
    Keywords: Farm Management, Research and Development/Tech Change/Emerging Technologies
    Date: 2021–08
  15. By: Meng, Bingchun
    Abstract: In this article I have tried to unpack the anxiety of Chinese middle-class mothers through examining the dialectics of structural changes and discursive shifts. The theoretical premises are that, on the one hand, China’s highly compressed modernisation process has had a major impact on parenting arrangements and parenting ethos; on the other hand, the practice of mothering and the imaginary of motherhood have significant implications for social reproduction. Combining empirical materials collected through a social media platform, in-depth interviews and focus groups, I have teased out the classed imaginaries of good mothering and how these are subsequently linked to imaginaries of the good life.
    Keywords: WeChat; motherhood; good life; neoliberalism; class inequality
    JEL: N0
    Date: 2020–04–02
  16. By: Fleischman, Tomaž; Dini, Paolo
    Abstract: The increasingly complex economic and financial environment in which we live makes the management of liquidity in payment systems and the economy in general a persistent challenge. New technologies make it possible to address this challenge through alternative solutions that complement and strengthen existing payment systems. For example, interbank balancing and clearing methods (such as real-time gross settlement) can also be applied to private payments, complementary currencies, and trade credit clearing to provide better liquidity and risk management. The paper defines the concept of a balanced payment system mathematically and demonstrates the effects of balancing on a few small examples. It then derives the construction of a balanced payment subsystem that can be settled in full and therefore that can be removed in toto to achieve debt reduction and payment gridlock resolution. Using well-known results from graph theory, the main output of the paper is the proof—for the general formulation of a payment system with an arbitrary number of liquidity sources—that the amount of liquidity saved is maximum, along with a detailed discussion of the practical steps that a lending institution can take to provide different levels of service subject to the constraints of available liquidity and its own cap on total overdraft exposure. From an applied mathematics point of view, the original contribution of the paper is two-fold: (1) the introduction of a liquidity node with a store of value function in obligation-clearing; and (2) the demonstration that the case with one or more liquidity sources can be solved with the same mathematical machinery that is used for obligation-clearing without liquidity. The clearing and balancing methods presented are based on the experience of a specific application (Tetris Core Technologies), whose wider adoption in the trade credit market could contribute to the financial stability of the whole economy and a better management of liquidity and risk overall.
    Keywords: obligation-clearing; invoice-netting; liquidity-saving; graph theory
    JEL: F3 G3
    Date: 2021–09–21
  17. By: Finn Christensen (Department of Economics, Towson University)
    Abstract: I exploit the removal of Warner Music content from YouTube in the first three quarters of 2009 as a plausible natural experiment to investigate the impact of streaming on live concert sales. I find that this Warner-YouTube blackout had statistically and economically negative effects on Warner artists relative to non-Warner artists. Specifically, relative revenues and prices were lower and relative attendance was not higher. These effects were stronger among artists who recently had a song in the Billboard Hot 100 and among those who were more frequently searched on YouTube. These findings suggest that the diffusion of streaming has stimulated the demand for live concerts. The evidence is also consistent with a differentiated Bertrand model of ticket pricing in which prices are strategic complements and prices and streaming penetration gives rise to increasing differences in the artist profit function. More broadly, the paper is an example of how the results from the monotone comparative statics literature can be adapted for use with difference-in-differences estimation.
    Keywords: Live music, streaming, digitization, monotone comparative statics, refutability.
    JEL: D2 L2 L8 Z11
    Date: 2021–01
  18. By: Petra Persson ⓡ; Nikita Roketskiy ⓡ; Samuel Lee
    Abstract: We analyze the diffusion of rival information in a social network. In our model, rational agents can share information sequentially, unconstrained by an exogenous protocol or timing. We show how to compute the set of eventually informed agents for any network, and show that it is essentially unique under altruistic preferences. The relationship between network structure and information diffusion is complex because the former shapes both the charity and confidentiality of potential senders and receivers.
    JEL: D83 D85
    Date: 2021–10
  19. By: Mr. Emre Balibek; Ian Storkey
    Abstract: Cash and debt management operations are part of the “transactional” functions of public financial management. It is critical that these functions are resilient to external disruptions, ranging from information and communication technology (ICT) system outages to natural disasters. This technical manual aims to provide guidance on the steps that government cash and debt management units can follow to develop and implement a practical business continuity plan that economizes the resources used. It also discusses the evolving nature of business disruption risks faced by cash and debt management over the last decade, including the COVID-19 pandemic, as well as risk mitigation solutions that have emerged.
    Keywords: Business continuity planning; business impact analysis; operational risk management; business disruption risks; cash and debt management; COVID-19; pandemic
    Date: 2021–09–21
  20. By: Gary B. Gorton; Ping He
    Abstract: Based on archival and survey data we show that the maturity of U.S. business loans has been continuously increasing since the mid-1930s when banks invented the term loan. Concurrently, bank innovation first involved the invention of credit analysis and covenant design. Later, bank innovation included the advent of loan sales, increased loan syndications, the opening of the leveraged loan market, and the securitization of loans in collateralized loan obligations. We estimate and calibrate a model of bank innovation to determine the quantitative contribution of bank innovation to economic growth.
    JEL: O0 O11 O30 O43
    Date: 2021–10
  21. By: Lindgren, Charlie (Dalarna University, 791 88 Falun, Sweden); Li, Yujiao (Dalarna University, 791 88 Falun, Sweden); Rudholm, Niklas (Institute of Retail Economics (Handelns Forskningsinstitut))
    Abstract: This paper investigates how firm entry into a price comparison website marketplace affects firm productivity, profits, and wages. We want to answer the key research question: Why do firms compete on price comparison websites? A substantial literature indicates that competition in such marketplaces is fierce, leading to lower prices for products sold. We suggest that participation in these marketplaces also leads to increased productivity, i.e., output increases when holding constant the level of inputs used. This leads to increased profits, motivating firms to enter price comparison websites despite fierce competition. Our results indicate that for the full sample of firms, PriceSpy participation increases output by almost 12% when holding the level of inputs constant. Also, investigation of who gains from the increased productivity shows that, for entering firms, operating profits increase by 9% and gross wages by 14% when studying the full sample of firms. That labor gains more from PriceSpy participation is even clearer when studying the impact on wholesale and retail firms separately. For those firms, gross wages increased by 16–17% after entry, while no statistically significant impact was found regarding operating profits.
    Keywords: Online retailing; e-commerce; price comparison websites; productivity; value added.
    JEL: D22 D24 D33 L81
    Date: 2020–09–01
  22. By: Marco Gonzalez-Navarro (Department of Agricultural & Resource Economics, University of California Berkeley, 216 Giannini Hall, Berkeley, California, 94720, USA); Jonathan D. Hall (Department of Economics and Munk School of Global Affairs and Public Policy, University of Toronto, 150 St. George Street, Toronto, Ontario M5S 3G7, Canada); Harrison Wheeler (Department of Economics, University of California Berkeley, 530 Evans Hall #3880, Berkeley, California, 94720, USA); Rik Williams (Uber Technologies, Inc., 1515 3rd St., San Francisco, California 94158, USA)
    Abstract: There is a contentious debate on whether ride-hailing complements or substitutes public transportation. We address this question using novel data and an innovative identification strategy. Our identification strategy relies on exogenous variation in local transit availability caused by rail expansions. Using proprietary trip data from Uber for 35 countries, we use a dynamic difference-in-differences strategy to estimate how transit expansions affect local Uber ridership in 100 m distance bands centered on the new train station. Our estimates compare Uber ridership within a distance band before and after a train station opens relative to the next further out distance band. Total effects are obtained by aggregating relative effects at all further distance bands. We find that a new rail station opening increases Uber ridership within 100 m of the station by 60\%, and that this effect decays to zero for distances beyond 300 m. This sharp test implies Uber and rail transit are complements.
    Keywords: Public transit, ride-hailing
    JEL: R40 O33 L91
    Date: 2021–10
  23. By: Ndajiwo, Mustapha
    Abstract: The advent of digitalised business models has considerable potential to improve trade in Africa, however, it has greatly exacerbated the two central challenges of international tax. The first challenge is the definition of taxable presence, and the second is the allocation of business profits of multinational enterprises (MNEs) among the different jurisdictions where they operate. This has generated much debate and has seen the rise in unilateral measures in different jurisdictions. This paper is a case study of six African countries, namely Nigeria, Ghana, Senegal, Kenya, Rwanda, and Uganda. The paper examines the issue of nexus and profit allocation and the presence of digitalised businesses in Africa and recommends immediate and long-term options that are available to African countries. The paper reveals that the main problem of taxing highly digitalised businesses is not due to their lack of taxable presence in African countries but to the attribution of profits. The study further revealed that while generally, the six jurisdictions studied are considering the taxation of profits arising from the digitalised economy, efforts so far have focused on indirect taxation. The paper argues that African countries have the immediate advantage of collecting taxes from digitalised transactions through VAT due to its relative administrative ease and the existence of a legal framework, in comparison to corporate taxes. The paper also cautions African countries on transaction taxes, recommending that if African countries decide to impose taxes on transactions, they should be progressive to reduce the regressive impact. In the long term, the paper recommends that the best way forward for African countries would be to build on the G24 proposal under the Inclusive Framework on BEPS, and press for simple formulaic methods which would allocate profits fairly between countries based on real activities in each.
    Keywords: Economic Development, Technology,
    Date: 2020

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