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on Regulation |
| By: | Francesc Trillas (Universitat de Barcelona & IEB) |
| Abstract: | This article starts by surveying the literature on economic federalism and relating it to network industries. Some new developments (which focus on the role of inter-jurisdictional externalities and multiple objectives) are then added and used to analyze regulatory arrangements in telecommunications and energy in the EU and the US. Although central or federal policy making is more focused and specialized and makes it difficult for more interest groups to organize, it is not clear that under all conditions central powers will not be associated with underinvestment. When technology makes the introduction of competition in some segments possible, the possibilities for organizing the institutional architecture of regulation expand. |
| Keywords: | Regulation, federalism, network industries. |
| JEL: | L50 L94 L96 L97 K23 H77 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2009/2/doc2008-8&r=reg |
| By: | Francesca Stroffolini (University of Napoli “Federico II” and CSEF) |
| Abstract: | The paper analyses how information acquisition and transmission issues affect the determination of the optimal access pro.t-sharing plan in regulated network industries. It considers a regulated upstream monopoly with cost uncertainty and a downstream unregulated duopoly. It will be shown that, under an access price cap regulatory mechanism, the transfer of a sufficiently high share of access profits to consumers induces an integrated upstream monopolist to transmit to his downstream rival the information privately acquired on the upstream cost and this, in turn, may negatively affect welfare. On account of these effects the optimal access profit-sharing plan will depend on the variance and shape of cost distribution, on information acquisition costs as well as on the regulator’s redistributive concerns. |
| Keywords: | Access price cap regulation, profit-sharing, information transmission and acquisition |
| JEL: | D82 D83 L5 |
| Date: | 2009–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:214&r=reg |
| By: | Silvia Ardagna; Annamaria Lusardi |
| Abstract: | We use two micro data sets that collect harmonized data across countries to investigate the effects of regulation on new businesses. We are able to distinguish between two types of entrepreneurs: those who start a business to pursue a business opportunity and those who start a business because they could not find better work. Irrespective of the measure of regulation we use, we always find a detrimental effect of regulation on entrepreneurship. While women are overall less likely to start new businesses, in more regulated countries women are pulled into entrepreneurship not to pursue a business opportunity but because they could not find better work. Moreover, regulation dampens the effects of self-assessed business skills and social networks. In more regulated economies, those with better business skills and those who know other entrepreneurs are less likely to become entrepreneurs to pursue a business opportunity. Tighter regulation also exacerbates fear of failure, further discouraging business start-up. All our estimates point to a negative effect of regulation. |
| JEL: | E0 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14747&r=reg |
| By: | Yu-Wei Hu; Fiona Stewart |
| Abstract: | China currently has a highly diversified structure of pension regulation and supervision. In this paper we first review the legal framework of private pension fund regulation and supervision in other economies, including Australia, Chile, Hong Kong China, Poland, Turkey, the United Kingdom and the United States. Then, based on international practices and experiences identified, and taking into account China‘s unique situation, we examine potential ways to improve the current private pension regulatory and supervisory structure in the country.<P>Réglementation des agréments et structure de contrôle des pensions privées : Pratiques à l’échelle internationale et implications pour la Chine<BR>La structure actuelle de réglementation et de contrôle des pensions en Chine est très hétérogène. Le présent rapport examine, dans un premier temps, le cadre juridique de la réglementation et du contrôle des pensions privées dans d'autres pays, comme l'Australie, le Chili, Hong Kong-Chine, la Pologne, la Turquie, le Royaume-Uni et les États-Unis. Ensuite, en s'appuyant sur les pratiques recensées à l'échelle internationale et sur la situation particulière de la Chine, il étudie les possibilités d'amélioration de la structure de réglementation et de contrôle des pensions privées actuellement en vigueur dans le pays. |
| Keywords: | private pensions, pension privée, licensing, China, plans de pensions professionnelles, enterprise annuity, Chine, pension regulation, réglementation des pensions, supervisory structure, structure de contrôle, agrément |
| JEL: | G23 I32 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:oec:dafaab:33-en&r=reg |
| By: | Maximilian J. B. Hall (Dept of Economics, Loughborough University) |
| Abstract: | On 19 January 2009, the UK Government unveiled a second comprehensive bank bailout plan. This followed the failure of its October bailout package to stimulate domestic lending, as intended. The various components of the new "rescue package" are duly explained and analysed in this article, which also addresses the likely future course of policy should the Government fail in its latest ambitions to stimulate lending and thereby revive the flagging economy. |
| Keywords: | UK banks; banking regulation and supervision; central banking; failure resolution. |
| JEL: | E53 E58 G21 G28 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:lbo:lbowps:2009_01&r=reg |
| By: | Maximilian J. B. Hall (Dept of Economics, Loughborough University) |
| Abstract: | On 14 September 2007, after failing to find a 'White Knight' to take over its business, Northern Rock bank turned to the Bank of England ('the Bank') for a liquidity lifeline. This was duly provided but failed to quell the financial panic, which manifested itself in the first fully-blown nationwide deposit run on a UK bank for 140 years. Subsequent provision of a blanket deposit guarantee duly led to the (eventual) disappearance of the depositor queues from outside the bank's branches but only served to heighten the sense of panic in policymaking circles. Following the Government's failed attempt to find an appropriate private sector buyer, the bank was then nationalised in February 2008. Inevitably, post mortems ensued, the most transparent of which was that conducted by the all-party House of Commons' Treasury Select Committee. And a variety of reform proposals are currently being deliberated at fora around the globe with a view to patching up the global financial system to prevent a recurrence of the events which precipitated the bank's illiquidity and the wider financial instability which set in towards the end of 2008. This article briefly explains the background to these extraordinary events before setting out, in some detail, the tensions and flaws in UK arrangements which allowed the Northern Rock spectacle to occur. None of the interested parties – the Bank, the Financial Services Authority (FSA) and the Treasury – emerges with their reputation intact, and the policy areas requiring immediate attention, at both the domestic and international level, are highlighted. A review and assessment of both the House of Commons Treasury Committee's Report on Northern Rock and the Tripartite Authorities' proposals for reform are also provided before analysis of the subsequent measures taken to stabilise the UK financial sector – involving further nationalisation of banks, the brokering of takeover rescues of banks and building societies, a £400 billion bailout of the deposit-taking sector and a subsequent bank bailout scheme – is undertaken. Accordingly, this paper represents an update, covering developments until end-January 2009, of my earlier paper on the Northern Rock affair (Working Paper No. WP 2008-09), which was published in September 2008. Specifically, it covers the latest domestic (i.e. UK) developments on a number of fronts. The text, for example, provides updates on the reform proposals of the Tripartite Authorities, amendments to deposit protection arrangements, and the emergency funding initiatives adopted by the Bank of England. Table 2 (where, along with Table 1, most of the new material is located), meanwhile, provides updates and analysis of the following: the latest developments in the UK housing market; the latest developments in the real economy; the latest financial statements of the major banks; the latest nationalisation moves;* the latest inflation figures and interest rate decisions of the MPC; the latest government bailout plans for deposit-takers; the latest official support packages introduced for the housing market, mortgage borrowers and small businesses; the latest fiscal stimulus plans (e.g. as contained in the Pre-Budget Report of November 2008); and the latest domestic financial and regulatory developments. Meanwhile, Table 1 provides up-to-date information on: emergency funding initiatives undertaken by the Fed, the ECB and other major central banks; financial institution takeovers/bailouts in the US and Europe; interest rate developments in the major economies; financial and regulatory developments in the US and Europe; developments in the real economies of the US and Europe; the financial statements of banks in the USA and Europe; the evolution of official bailout plans in the US ('TARP') and Europe; deposit protection developments in the US and Europe; fiscal stimulus packages adopted in the US, Europe and the wider international community; G7/EU plans to tackle the worsening financial crisis; IMF 'bailouts' of beleaguered countries; and the Basel Committee's proposals for revamping Basel II in the light of the crisis. *A more detailed discussion of these developments is provided in Hall (2008). |
| Keywords: | Sub-prime crisis; credit crunch; banking regulation and supervision; failure resolution; central banking; deposit protection. |
| JEL: | E53 E58 G21 G28 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:lbo:lbowps:2009_03&r=reg |
| By: | Adrien de Hauteclocque; Jean-Michel Glachant |
| Abstract: | Long-term supply contracts often have ambiguous effects on the competitive structure, investment and consumer welfare in the long term. In a context of market building, these effects are likely to be worsened and thus even harder to assess. Since liberalization and especially since the release of the Energy Sector Enquiry in early 2007, the portfolio of long-term supply contracts of the former incumbents have become a priority for review by the European Commission and the national competition authorities. It is widely believed that European Competition authorities take a dogmatic view on these contracts and systemically emphasize the risk of foreclosure over their positive effects on investment and operation. This paper depicts the methodology that has emerged in the recent line of cases and argues that this interpretation is largely misguided. It shows that a multiple-step approach is used to reduce regulation costs and balance anti-competitive effects with potential efficiency gains. However, if an economic approach is now clearly implemented, competition policy is constrained by the procedural aspect of the legal process and the remedies imposed remain open for discussion. |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:mee:wpaper:0816&r=reg |
| By: | Andrés Fuentes |
| Abstract: | Measures to make the regulation of product markets more conducive to competition play a prominent role in the governments “growth package” of measures to stimulate economic growth which are in the process of being implemented. This paper discusses these measures and suggests further improvements. Notwithstanding significant reforms in recent years, competition law and its enforcement are still weaker than in other OECD countries. Scope for making regulation of product markets more competition-friendly is large in the network industries. While sector-specific regulators have been introduced, their independence needs to be strengthened. The reform of the electricity supply law provides the main building block opening the industry to competition, but vertical separation requirements of the electricity grid from electricity generation and trading activities need to be strengthened. In telecommunications, restrictions in access of competitors to the local loop limit the scope for lowering prices and improving quality of service in broadband connections. Measures still need to be taken to prevent discrimination against market entrants in the railway passenger services market and much scope exists to widen competition in postal services. Progress in lowering the degree of protection in the proposed legislation on agricultural policy 2007-11 is modest. Trade barriers can also be lowered for manufactured goods through the adoption of the Cassis de Dijon principle.<P>Réformes pour ouvrir à la concurrence les secteurs abrités en Suisse<BR>Les mesures visant à rendre la réglementation des marchés de produits plus propice à la concurrence occupent une place de premier plan dans le « programme de croissance » destiné à stimuler l'expansion économique, dont la mise en oeuvre a commencé. Le présent chapitre examine les mesures figurant dans ce programme et propose de nouvelles améliorations. Malgré les importantes réformes opérées ces dernières années, la Suisse est encore à la traîne des autres pays de l'OCDE du point de vue du droit de la concurrence et de son application. Beaucoup reste à faire dans les industries de réseau pour rendre la réglementation des marchés de produits plus favorable à la concurrence. Des autorités de régulation sectorielles ont été mises en place mais elles ont besoin d'une plus grande indépendance. La réforme de la législation relative à la fourniture d'électricité jette les bases de l'ouverture de ce secteur à la concurrence, mais séparation verticale plus stricte est nécessaire entre le réseau de transport et les activités de production et de commercialisation. Dans le secteur des télécommunications, les restrictions d'accès des concurrents à la boucle locale limitent les possibilités de baisse des prix et d'amélioration de la qualité du service dans le haut débit. Il y a encore des mesures à prendre afin d'éviter la discrimination à l'encontre des entrants sur le marché des services de transport ferroviaire de passagers et beaucoup reste à faire pour élargir la concurrence dans les services postaux. La législation sur la politique agricole proposée pour la période 2007-11 ne marque qu'un léger progrès en matière de réduction de la protection. L'adoption du principe « Cassis de Dijon » pourrait aussi contribuer à abaisser les obstacles au commerce des produits manufacturés. |
| Keywords: | Suisse, network industries, industrie de réseau, competition, privatisation, concurrence, privatisation, competition law, productivity and growth, droit de la concurrence, productivité globale et croissance, agriculture, agriculture, regulatory policies, politique de régulation |
| JEL: | K21 K23 L16 L40 L43 L51 L53 O52 Q3 |
| Date: | 2009–02–17 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:667-en&r=reg |
| By: | Chongwoo, Choe; Shekhar, Chander |
| Abstract: | We compare the prevailing system of compulsory pre-merger notification with the Australian system of voluntary pre-merger notification. It is shown that, for a non-trivial set of parameter values, a perfect Bayesian equilibrium exists in mixed strategies in which the regulator investigates un-notified mergers with probability less than one and the parties choose notification with probability less than one. Thanks to the signaling opportunity that arises when notification is voluntary, voluntary notification leads to lower enforcement costs for the regulator and lower notification costs for the merging parties. Some of the theoretical predictions are supported by exploratory empirical tests using merger data from Australia. Overall, our results suggest that voluntary merger notification may achieve objectives similar to those achieved by compulsory systems at lower costs to the merging parties as well as to the regulator. |
| Keywords: | Merger regulation; pre-merger notification; abnormal returns |
| JEL: | D21 G34 K21 L40 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13450&r=reg |
| By: | Olli Castrén (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main.); Trevor Fitzpatrick (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main.); Matthias Sydow (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | In terms of regulatory and economic capital, credit risk is the most significant risk faced by banks. We implement a credit risk model - based on publicly available information - with the aim of developing a tool to monitor credit risk in a sample of large and complex banking groups (LCBGs) in the EU. The results indicate varying credit risk profiles across these LCBGs and over time. Furthermore, the results show that large negative shocks to real GDP have the largest impact on the credit risk profiles of banks in the sample. Notwithstanding some caveats, the results demonstrate the potential value of this approach for monitoring financial stability. JEL Classification: C02, C19, C52, C61, E32. |
| Keywords: | Portfolio credit risk measurement, stress testing, macroeconomic shock measurement. |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:200901002&r=reg |