|
on Regulation |
| By: | Thomas Gehring |
| Keywords: | industrial relations; institutionalism; lobbying; industrial policy; economics; law |
| Date: | 2007–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:erp:arenax:p0236&r=reg |
| By: | Prufer, J. (Tilburg University, Center for Economic Research) |
| Abstract: | Should mergers among nonprofit organizations be regulated differently than mergers among for-profit firms? The relevant empirical literature is highly controversial, the theoretical literature is scarce. I analyze the question by modeling duopoly competition with quality-differentiated goods. I compare welfare effects of mergers between firms with the effects of mergers between nonprofits dominated by consumers, workers, suppliers, and pure donors respectively. I find that mergers both among firms and among most types of nonprofits do not increase welfare. Mergers among consumerdominated nonprofits, however, can improve welfare. These results imply for competition law and regulation that ?nonprofit? might be too crude a label for organizations with varying goals. Consequently, mergers among certain nonprofit organizations should not necessarily be treated in the same way as mergers among for-profit firms ? a notion that is absent in current merger guidelines both in the US and the EU. |
| Keywords: | Nonprofits; Mergers; Antitrust; Governance; Owner Objectives; Notfor- profit Sector; Organizational Choice |
| JEL: | L44 L31 L22 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200782&r=reg |
| By: | Erin T. Mansur |
| Abstract: | In a market subject to environmental regulation, a firm's strategic behavior affects the production and emissions decisions of all firms. If firms are regulated by a Pigouvian tax, changing emissions will not affect the marginal cost of polluting. However, under a tradable permits system, the polluters' decisions affect the permit price. This paper shows that this feedback effect may increase a strategic firm's output. Relative to a tax, tradable permits improve welfare in a market with imperfect competition. As an application, I model strategic and competitive behavior of wholesalers in the Pennsylvania, New Jersey, and Maryland electricity market. Simulations suggest that exercising market power decreased local pollution by approximately nine percent, and therefore, substantially reduced the price of the region's pollution permits. Furthermore, I find that had regulators opted to use a tax instead of permits, the deadweight loss from imperfect competition would have been approximately seven percent greater. |
| JEL: | L13 L94 Q53 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13510&r=reg |
| By: | Motta, Alberto; Burlando, Alfredo |
| Abstract: | We consider a model of law enforcement where homogenous, risk neutral, and corruptible inspectors are responsible for monitoring citizens who may have committed criminal acts. A welfare maximizing, budget constrained government can implement appropriate wage policies to prevent collusion, but we find that governments characterized by high administrative costs in administrating fines, or by a low ability to spot and prosecute corruption, may prefer to let corruption happen. By allowing citizens to avoid all monitoring by reporting their own violations first, the government is able to increase welfare by hiring fewer inspector, and in some instances by shifting from a regime of corruption to a regime where there is none. Moreover, self reporting fully eliminates any deadweight losses that arise from the incentive schemes when inspectors are risk averse. In order for self-reporting to have these effects, it is necessary that the government maintains also an optimal incentive scheme for its inspectors. |
| Keywords: | self reporting; corruption; collusion; law enforcement; wage policy; leniency program; |
| JEL: | K00 O10 |
| Date: | 2007–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:5332&r=reg |
| By: | Nathaniel Keohane; Erin T. Mansur; Andrey Voynov |
| Abstract: | This paper explores firms' response to regulatory enforcement. New Source Review, a provision of the Clean Air Act, imposes stringent emissions limitations on significantly modified older power plants. In 1999, the EPA sued owners of 46 plants for NSR violations. We study how electricity companies respond to both the perceived threat of future action, and the action itself. A discrete choice model estimates plants likelihood of being named in lawsuits increases with large historic emissions and investments. On the eve of the lawsuits, emissions at plants with a one standard deviation greater probability of being sued fell approximately ten percent. |
| JEL: | L51 L94 Q52 Q58 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13512&r=reg |
| By: | Hussein Kassim (School of Political, Social and International Studies and Centre for Competition Policy, University of East Anglia); Kathryn Wright (Centre for Competition Policy, University of East Anglia) |
| Abstract: | The modernisation of EC antitrust rules timed to coincide with the 2004 enlargement of the European Union is widely recognised as an historic and revolutionary reform. According to the dominant view that has emerged in both law and political science, the change is to be explained in terms of the interest and ability of the European Commission to engineer a reform that, behind the guise of decentralisation to national authorities, has in practice extended its power and influence over the control of anti-competitive agreements. Drawing on original research, this paper contests the conventional wisdom and the image of the Commission as an imperialistic actor that underlines it. It argues that such a view dramatically overstates the Commission’s power and that a more sophisticated explanation is required. First, the Commission was motivated more by changes in the thinking within an epistemic community of competition practitioners and lawyers than by an impulse to expand its authority. Second, contrary to the monolithic conception of the Commission on which the dominant view depends, the Commission was internally differentiated and the development of its reform proposals the product of internal negotiation and conflict, rather than the expression of an inner drive to expansionism. Third, scrutiny reveals the Commission to be a constrained organisation, rather than a body able to re-write competition law autonomously. |
| Keywords: | Modernisation, reform, European Commission, competition policy |
| JEL: | P48 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:ccp:wpaper:wp07-19&r=reg |
| By: | Nicholas Economides (Stern School of Business, New York University); Joacim Tåg (Swedish School of Economics and Business Administration, FDPE, and HECER); |
| Abstract: | We discuss the benefits of net neutrality regulation in the context of a two-sided market model in which platforms sell Internet access services to consumers and may set fees to content and applications providers “on the other side” of the Internet. When access is monopolized, we find that generally net neutrality regulation (that imposes zero fees “on the other side” of the market) increases total industry surplus compared to the fully private optimum at which the monopoly platform imposes positive fees on content and applications providers. Similarly, we find that imposing net neutrality in duopoly increases total surplus compared to duopoly competition between platforms that charge positive fees on content providers. We also discuss the incentives of duopolists to collude in setting the fees “on the other side” of the Internet while competing for Internet access customers. Additionally, we discuss how price and non-price discrimination strategies may be used once net neutrality is abolished. Finally, we discuss how the results generalize to other two-sided markets. |
| Keywords: | net neutrality, two-sided markets, Internet, monopoly, duopoly, regulation, discrimination |
| JEL: | L1 D4 L12 L13 C63 D42 D43 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0714&r=reg |
| By: | Erin T. Mansur |
| Abstract: | Electricity restructuring has created the opportunity for producers to exercise market power. Oligopolists increase price by distorting output decisions, causing cross-firm production inefficiencies. This study estimates the environmental implications of production inefficiencies attributed to market power in the Pennsylvania, New Jersey, and Maryland electricity market. Air pollution fell substantially during 1999, the year in which both electricity restructuring and new environmental regulation took effect. I find that strategic firms reduced their emissions by approximately 20% relative to other firms and their own historic emissions. Next, I compare observed behavior with estimates of production, and therefore emissions, in a competitive market. According to a model of competitive behavior, changing costs explain approximately two-thirds of the observed pollution reductions. The remaining third can be attributed to firms exercising market power. |
| JEL: | H23 L13 L33 L94 Q53 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13511&r=reg |
| By: | Nadine Levratto (IDHE - Institutions et Dynamiques Historiques de l'Economie - [CNRS : UMR8533] - [Université Panthéon-Sorbonne - Paris I][Université Paris VIII Vincennes-Saint Denis][Université de Paris X - Nanterre] - [Ecole Normale Supérieure de Cachan], EUROMED MARSEILLE - Ecole de Management) |
| Abstract: | The evolutions of the bankruptcy law seek to reach many aims: economic safety, firms’ creation and expansion in a capitalist economy, protection of the interests of the agents involved in transactions that goes far beyond creditors and debtors, and prolongation of the activity of viable firms. This contribution examines the French insolvency law and its transformations since the 19th century from a historical and concrete point of view which makes it possible to put in perspective the modifications and the uses of the legal rules in an economic and institutional context. The underlying assumptions and the main results contradict the conclusions of the Law and Economics theory which insist on the weak economic efficiency and the low ability to protect creditors’ interest of the bankruptcy law. We show that far from being only one means of selection thanks to which the market could be cleared of its failing agents, the bankruptcy law opens a non commercial space of resolution of the failures of market which, by releasing the actors of their former constraints, authorizes them to reinstate the business world. |
| Keywords: | Bankruptcy, Law and economics, insolvency, Doing Business |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00178004_v1&r=reg |
| By: | Erin T. Mansur; Sheila M. Olmstead |
| Abstract: | Rather than allowing water prices to reflect scarcity rents during periods of drought-induced excess demand, policy makers have mandated command-and-control approaches, like the curtailment of certain uses, primarily outdoor watering. Using unique panel data on residential end-uses of water, we examine the welfare implications of typical drought policies. Using price variation across and within markets, we identify end-use specific price elasticities. Our results suggest that current policies target water uses that households, themselves, are most willing to forgo. Nevertheless, we find that use restrictions have costly welfare implications, primarily due to household heterogeneity in willingness-to-pay for scarce water. |
| JEL: | L51 L95 Q25 Q28 Q58 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13513&r=reg |
| By: | Markus Leibrecht (Institute for Public Sector Economics, Vienna University of Economics and Business Administration, Austria); Johann Scharler (Department of Economics, Johannes Kepler University Linz, Austria) |
| Abstract: | The purpose of this paper is to investigate empirically the importance of labor market conditions and in particular of employment protection legislation as a determinant of bilateral Foreign Direct Investment flows to seven Central and Eastern European countries. Although our results indicate that countries characterized by low unit labor costs tend to attract more Foreign Direct Investment, we find no evidence suggesting that employment protection legislation matters in this context. This result also holds if we control for the riskiness of the host countries. |
| Keywords: | Foreign Direct Investment; Central and Eastern Europe; Labor Market; Employment Protection |
| JEL: | F21 F23 J50 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2007_16&r=reg |
| By: | Xenia Matschke (University of Connecticut); Anja Schottner (University of Bonn) |
| Abstract: | In the last two decades, trade liberalization under GATT/WTO has been partly offset by an increase in antidumping protection due to the inclusion of sales below cost in the definition of dumping. The cost-based definition gives regulating authorities an opportunity to choose protection according to their liking. This paper investigates the domestic government's antidumping duty choice in an asymmetric information framework where the foreign firm's cost is observed by the domestic firm, but not by the government. To induce truthful revelation, the government can design a tariff schedule, contingent on firms' cost reports, accompanied by a threat to collect additional information for report verification (i.e., auditing) and, in case misreporting is detected, to set penalty duties. We devise a mechanism where the domestic and foreign firm may be asked to provide cost reports under which the full-information, i.e., efficient, tariffs are implementable. We also discuss the conditions under which this policy is optimal and when it may be better to instead adopt a "facts available" policy, i.e., a policy where no information from the foreign firm is solicited. |
| Keywords: | antidumping duties, asymmetric information, trade protection |
| JEL: | F13 F16 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2007-39&r=reg |
| By: | Viral V. Acharya (London Business School & CEPR); Jean Imbs (University of Lausanne - HEC, CEPR & Swiss Finance Institute); Jason Sturgess (London Business School) |
| Abstract: | We use portfolio theory to quantify the efficiency of state-level sectoral patterns of production in the United States. On the basis of observed growth in sectoral value added output, we calculate for each state the efficient frontier for investments in the real economy, the efficient Sharpe ratio, and the corresponding weights on investments in different industries. We study how rapidly different states converge to an efficient allocation, depending on access to finance. We find that convergence is faster - in terms of distance to the efficient frontier and improving Sharpe ratios - following intra- and (particularly) interstate liberalization of bank branching restrictions. This effect arises primarily from convergence in the volatility of state output growth, rather than in its average. The realized industry shares of output also converge faster to their efficient counterparts following liberalization, particularly for industries that are characterized by young, small and external finance dependent firms. Convergence is also faster for states that have a larger share of constrained industries, greater distance from the efficient frontier before liberalization and larger geographical area. These effects are robust to industries integrating across states and the endogeneity of liberalization dates. Overall, our results suggest that financial development has important consequences for the efficiency and specialization (or diversification) of investments, in a manner that depends crucially on the variancecovariance properties of investment returns, rather than on their average only. |
| Keywords: | Financial development, Growth, Sharpe ratio, Volatility, Diversification |
| JEL: | E44 F02 F36 O16 G11 G21 G28 |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp0636&r=reg |
| By: | Beard, Rodney |
| Abstract: | In this paper an interest group model of rent seeking behaviour between sugarcane farmers and environmental protectionists is developed. The motivation for this scenario comes from the debate over fertilizer run-off and its possible impact on Queensland’s Great Barrier Reef. The paper takes Gordon Tullock’s rent-seeking model and applies it to the bargaining process over controls on fertilizer application in an effort to learn something about the likely political outcomes of this debate. |
| Keywords: | Public choice; Environmental economics; Agricultural policy |
| JEL: | Q18 Q58 Q53 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:5351&r=reg |