nep-reg New Economics Papers
on Regulation
Issue of 2008‒01‒19
four papers chosen by
Christian Calmes
University of Quebec in Ottawa

  1. Basel II and the Value of Bank Differentiation By Hege, Ulrich; Feess, Eberhard
  2. Price Discrimination Bans on Dominant Firms By Bouckaert, J.M.C.; Degryse, H.A.; Dijk, T. van
  3. The Paradox of the Exclusion of Exploitative Abuse By Bruce Lyons
  4. Principles for benchmarking potentially alternative systems of private copy compensation By FRANCISCO MARCOS; JUAN SANTALO

  1. By: Hege, Ulrich; Feess, Eberhard
    Abstract: This paper analyzes optimal bank capital requirements when regulation can be differentiated according to banks’ heterogeneous risk-assessment capabilities. The new Basel II Accord provides the opportunity to do by introducing distinct regulatory systems for banks authorized to apply internal ratings and externally rated banks.
    Keywords: bank capital regulation; capital adequacy; bank competition; risk-taking; Basel Accord; internal ratings
    JEL: H41 K13
    Date: 2007–10–01
  2. By: Bouckaert, J.M.C.; Degryse, H.A.; Dijk, T. van (Tilburg University, Center for Economic Research)
    Abstract: Competition authorities and regulatory agencies sometimes impose pricing restrictions on firms with substantial market power ? the ?dominant? firms. We analyze the welfare effects of a ban on behaviour-based price discrimination in a two-period setting where the market displays a competitive and a sheltered segment. A ban on ?higher-prices-to-shelteredconsumers? decreases prices in the sheltered segment, relaxes competition in the competitive segment, increases the rival?s profits, and may harm the dominant firm?s profits. We show that a ban on ?higher-prices-to-sheltered-consumers? increases the dominant firm?s share of the first-period market. A ban on ?lower-prices-to-rival?s-customers? decreases prices in the competitive segment, lowers the rival?s profits, and augments the consumer surplus. In particular, while second-period competition is relaxed by a ban on ?lower-prices-to-rival?scustomers?, first-period competition is intensified substantially, which leads to lower prices ?on-average? over the two periods. Our findings indicate that a dynamic two-period analysis may lead to conclusions opposite to those drawn from a static one-period analysis.
    Keywords: dominant firms;price discrimination;competition policy;regulation.
    JEL: D11
    Date: 2008
  3. By: Bruce Lyons (School of Economics and Centre for Competition Policy, University of East Anglia)
    Abstract: Monopoly pricing is a textbook market failure that is taught in the first year of any economics course. The implied welfare loss (or ‘exploitative abuse’) justifies a whole range of competition policy towards cartels, mergers and regulated industries. Yet there is widespread hostility to prosecuting the same exploitative abuse in the textbook monopoly case (i.e. under Article 82EC)! This paper seeks to understand this paradox. I conclude that, while there are important problems with prosecuting Article 82 exploitation cases (because of problems relating to measurement, market dynamics, multi-sided markets and remedy issues), it is important to keep open the possibility of prosecution; for example, in the forthcoming Article 82 Guidelines.
    Keywords: exclusionary abuse, exploitative abuse, monopoly pricing, welfare loss
    JEL: D42 I38 L41
    Date: 2007–12
  4. By: FRANCISCO MARCOS (Instituto de Empresa); JUAN SANTALO (Instituto de Empresa)
    Abstract: Current theory provides no clear framework for the analysis of the current system of private copy compensation and its potential modifications and/or alternatives. Building upon more general incentive economics theory and on general legal considerations, this paper attempts to build such analytical framework by proposing a set of principles for benchmarking potentially alternative systems of private copy compensation. The paper also offers a brief analysis of the main modifications and alternatives to the current system in light of the abovementioned principles. The main finding is that, according to the proposed principles, the current system "as is" gets the best appraisal.
    Keywords: Copyright, Economic principles, Intellectual property, Remuneration
    Date: 2007–11

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