|
on Regulation |
| By: | Andrea Gavosto; Guido Ponte; Carla Scaglioni |
| Abstract: | The current regulatory debate in the telecommunications industry in Europe and elsewhere is dominated by the issue of if and how to regulate next generation networks (NGN) which operators plan to roll out in the near future. The crucial issue is whether an extension of current regulatory obligations onto future networks would hamper the investment by large European operators. The paper applies a real option model to explain the investment decision in next generation networks. One important result of the model is that regulation affects the investment decision only in the initial period when uncertainty is still very high. The real option model has been calibrated with parameters drawn from real data for a new entrant and from educated estimates for an established operator. Four different regulatory regimes and their impact on the timing of the investments have been simulated: a temporary regulatory holiday is shown to be an effective regulatory tool in order to induce immediate investments. |
| Keywords: | real options; telecommunication; regulated industries; Next Generation Networks. |
| JEL: | L51 D81 G11 G35 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:ise:isegwp:wp312007&r=reg |
| By: | Jo Seldeslachts (Wissenschaftszentrum Berlin (WZB), Reichpietschufer 50, 10785 Berlin, Germany Seldeslachts@wz-berlin.de); Joseph A. Clougherty (Wissenschaftszentrum Berlin (WZB), Reichpietschufer 50, 10785 Berlin, Germany Clougherty@wz-berlin.de); Pedro Pita Barros (Universade Nova de Lisboa and CEPR FEUNL, Campus de Campolide, 1099-032 Lisboa, Portugal PPBarros@fe.unl.pt) |
| Abstract: | Antitrust policy involves not just the regulation of anti-competitive behavior, but also an important deterrence effect. Neither scholars nor policymakers have fully researched the deterrence effects of merger policy tools, as they have been unable to empirically measure these effects. We consider the ability of different antitrust actions – Prohibitions, Remedies, and Monitorings – to deter firms from engaging in mergers. We employ cross-jurisdiction/pan-time data on merger policy to empirically estimate the impact of antitrust actions on future merger frequencies. We find merger prohibitions to lead to decreased merger notifications in subsequent periods, and remedies to weakly increase future merger notifications: in other words, prohibitions involve a deterrence effect but remedies do not. |
| JEL: | L40 L49 K21 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:218&r=reg |
| By: | Kurt R. Brekke (Department of Economics, Norwegian School of Economics and Business Administration, and Health Economics Bergen); Tor Helge Holmås (Institute for Research in Economics and Business Administration, and Health Economics Bergen); Odd Rune Straume (Universidade do Minho - NIPE) |
| Abstract: | We study the impact of regulatory regimes on generic competition and pharmaceutical pricing using a unique policy experiment in Norway, where reference pricing (RP) replaced price cap regulation in 2003 for a sub-sample of off-patent products. We exploit a detailed panel dataset at product level covering a wide set of off-patent drugs before and after the policy reform. Off-patent drugs not subject to reference pricing serve as our control group. We find that RP leads to lower relative prices, with the effect being driven by strong brand-name price reductions, and not increases in generic prices. We also find that RP increases generic competition, resulting in lower brand-name market shares. Finally, we show that RP has a strong negative effect on average prices at molecule level, suggesting significant cost-savings. |
| Keywords: | Pharmaceuticals, Regulation, Generic Competition. |
| JEL: | I11 I18 L13 L65 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:01/2008&r=reg |
| By: | Ojo, Marianne |
| Abstract: | This comparative analysis discusses the differences between the structure and systems of bank regulation operating in the UK, Germany, Italy and the US. The importance of harmonisation in achieving stated supervisory objectives is also emphasised. The main objective of this chapter is to illustrate how the external auditor's role could be harnessed more efficiently in the UK banking regulatory and supervisory process. This is of particular importance given the reduced supervisory role which the Bank of England has assumed since banking regulatory and supervisory powers and functions were transferred to the Financial Services Authority. External audits and in particular external auditors, have a greater role to play in bank regulation and supervision than was the case over 20 years ago. This is so mainly as a result of globalisation. The need for a single regulator which regulates not just the banking sector, but also the insurance and securities sectors, has arisen principally because of the rise of conglomerate firms. Single regulators are able to manage more effectively cross sector services' risks. Correspondingly, the functional overlaps between banking, insurance and securities business and their universal scope make it more difficult for a regulator to observe and comprehend such businesses. The difficulty of measuring and assessing risk within such institutions along with the speed with which assets can be adjusted in derivatives markets has led to more emphasis being placed on internal managerial control. Consideration is also being given to the structures that can be put in place to re inforce the incentives of all parties involved – not just to management but all parties including auditors and regulators. Because banking has evolved to a stage where conglomerates now have a significant presence and provide a range of services (and not just banking services), and because of the growing presence of international firms, the role of the external auditor has become so important. |
| JEL: | K29 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:6829&r=reg |
| By: | Dirk Engelmann; Dorothea Kübler |
| Abstract: | In order to address the impact of regulation on ethical concerns of consumers, we study the effect of a minimum wage. In our experimental market, consumers have monopsony power, firms engage in Bertrand competition, and workers are passive recipients of a wage payment. Two treatments are employed, one with no minimum wage in the first part but with a minimum wage in the second part, and one treatment with a minimum wage at the outset that is abolished in the second part. In both treatments, wages decrease over time in the first part even though some consumers show an interest in fair wages. If a minimum wage is in place, wages decline even faster. Introducing a minimum wage in a mature market raises average wages, while abolishing it lowers them. We discuss the implications of our results, such as the crowding out of ethical behavior through legal regulation. |
| Keywords: | Fairness, Crowding Out, Consumer Behavior, Minimum Wage, Experimental Economics |
| JEL: | C91 J88 K31 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2008-008&r=reg |
| By: | Michael Dietrich (Université de Sheffield - University of Sheffield); Jackie Krafft (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia-Antipolis); Jacques Laurent Ravix (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia-Antipolis) |
| Abstract: | Uniformity in modes of regulation and governance is now widely debated. The predominant thesis is that there should be a superior model promoting optimality by disclosure of information and transparency. But today, this thesis is greatly contested, since the adoption of a unique and universal set of rules and arrangements neglects the diversity of national experiences and the heterogeneity of firms, institutions and social norms. Moreover, evidence shows that this unique model of regulation and governance tends to generate major failures and turbulences. What emerges as a result is that different types of rules and norms govern entrepreneurial as well as public firms in different industries and stages of their development. The special issue following this introduction aims at discussing this timely debate on uniformity versus variety of modes of regulation and governance, and especially privileges analytical and empirical contributions covering the following dimensions of the debate: new approaches on regulation and governance in the domain of economics of the firm, business strategy, law and economics; new evidence on the evolution of regulation and governance at the firm, industry, and national levels. |
| Date: | 2008–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:hal-00203479_v1&r=reg |
| By: | Van Laere, Elisabeth; Baesens, Bart; Thibeault, André (Vlerick Leuven Gent Management School) |
| Abstract: | In order to promote financial stability, regulatory authorities pay a lot of attention in setting minimum capital levels. In addition to these requirements, financial institutions calculate their own economic capital reflecting the unexpected losses and true risk according to the specific characteristics of their portfolio. The current Basel I framework pays little or no attention to the creditworthiness of a borrower in deciding on the regulatory capital requirements. As a result, a lot of banks remove low-risk assets from their balance sheets and only retain relatively high risk assets on balance. The recently introduced Basel II framework should result in a further convergence between regulatory and economic capital. However, recent papers (Elizalde et al., 2006; Jackson et al., 2002 and Jacobson et al. 2006) argue that also under Basel II, regulatory and economic capital will have different determinants. This paper first gives an overview of capital adequacy and then further describes the differences and similarities between economic and regulatory capital based on a literature review. |
| Date: | 2008–01–08 |
| URL: | http://d.repec.org/n?u=RePEc:vlg:vlgwps:2007-35&r=reg |
| By: | Ojo, Marianne |
| Abstract: | ABSTRACT The role of the external auditor in the supervisory process requires standards such as independence, objectivity and integrity to be achieved. Even though the regulator and external auditor perform similar functions, namely the verification of financial statements, they serve particular interests. The regulator works towards safeguarding financial stability and investor interests. On the other hand, the external auditor serves the private interests of the shareholders of a company. The financial audit remains an important aspect of corporate governance that makes management accountable to shareholders for its stewardship of a company. The debate surrounding the role of external auditors focusses in particular on auditor independence. A survey by the magazine “Financial Director” shows that the fees derived from audit clients in terms of non-audit services are significant in comparison with fees generated through auditing. Accounting firms sometimes engage in a practice called “low balling” whereby they set audit fees at less than the market rate and make up for the deficit by providing non audit services. As a result, some audit firms have commercial interests to protect too. There is concern that the auditor's interests to protect shareholders of a company and his commercial interests do not conflict with each other. Sufficient measures need to be in place to ensure that the external auditor's independence is not affected. As well as considering threats to auditor independence and safeguards to protect against such threats, this paper focuses on how the external auditor can assist the FSA through two of its principal regulatory tools in the FSA's response to risk, namely supervision and enforcement. A lot of work and improvements on audit independence have been carried out over the years and there should be an ongoing process of review and further efforts aimed at improvement. Key words: Supervision, Enforcement, Independence |
| JEL: | K29 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:6828&r=reg |
| By: | Richard Green |
| Abstract: | The energy utilities – gas and electricity companies – were traditionally regulated monopolies, but once the EU decided to liberalise them, competition policy became applicable. The EU has used a series of Directives to set out the framework for a market-led energy sector, with third party access to the transmission and distribution networks, and a choice of retailer for all customers, although these depend upon the agreement of Member States. The Commission has been able to take action directly when ruling on mergers in the sector, and in several cases has obtained concessions that should increase the level of competition as a condition for allowing a merger. This is a reactive approach, however, and problems remain in the sector, as shown by the 2005-7 sector enquiry. The proposed third energy package may remove some of the barriers to effective liberalisation. |
| Keywords: | Competition Policy, mergers, electricity, gas, liberalisation |
| JEL: | L43 L94 L95 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:bir:birmec:08-01&r=reg |