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on Regulation |
| By: | Denise KONAN; Ari Van ASSCHE |
| URL: | http://d.repec.org/n?u=RePEc:ekd:003304:330400038&r=reg |
| By: | Mattia Nardotto (University of Cologne); Tommaso Valletti (Imperial College London, University of Rome “Tor Vergata” & CEPR); Frank Verboven (KU Leuven, Telecom ParisTech and CEPR) |
| Abstract: | We consider the impact of a regulatory process forcing an incumbent telecom operator to make its local broadband network available to other companies (local loop unbundling, or LLU). Entrants are then able to upgrade their individual lines and offer Internet services directly to customers. Employing a very detailed dataset covering the whole of the UK, we find that, over the course of time, many entrants have begun to take advantage of unbundling. LLU entry only had a positive effect on broadband penetration in the early years, and no longer in the recent years as the market reached maturity. In contrast, LLU entry continues to have a positive impact on the quality of the service provided, as entrants differentiate their products upwards compared to the incumbent. We also assess the impact of competition from an alternative form of technology (cable) which is not subject to regulation, and what we discover is that inter-platform competition has a positive impact on both penetration and quality. |
| Keywords: | regulation, competition, entry, telecommunications, broadband, local loop unbundling |
| JEL: | D22 K23 L43 L51 L96 |
| Date: | 2014–10–03 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:331&r=reg |
| By: | Margaret Armstrong (CERNA - Centre d'économie industrielle - MINES ParisTech - École nationale supérieure des mines de Paris); Asana Sasaki (ENPC - Ecole des Ponts ParisTech - École des Ponts ParisTech (ENPC)); Frederic Novel-Cattin (RENAULT SAS - RENAULT); Alain Galli (CERNA - Centre d'économie industrielle - MINES ParisTech - École nationale supérieure des mines de Paris) |
| Abstract: | This paper analyses the evolution of the bidding strategies of nuclear power plants on the Spanish day-ahead auction market, over the 11-year period from 2002 until December 2012. During that time the proportion of renewable energy especially wind and solar power increased dramatically. At the outset the nuclear plants offered almost all their production at zero cost; by the end, several were offering about 5% of their production at about 91 euro per MWh compared to the market ceiling price of 180.3 euro per MWh. This change in bidding strategy effectively increased the average wholesale price of electricity, leading to an overall increase in the revenues to power sellers of about $200 million euros per year in 2010 -2012, compared to what it would have been had they offered all their production at zero -cost. These results have important policy implications for regulatory authorities. |
| Keywords: | Strategic bidding ; Market power ; Day-ahead market ; Wholesale electricity market |
| Date: | 2014–09–23 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01068076&r=reg |
| By: | Ignacio Pérez; Karin Holm-Müller; Wolfgang Britz |
| URL: | http://d.repec.org/n?u=RePEc:ekd:000240:24000049&r=reg |
| By: | Patrick Sun (Columbia University, Department of Economics, 1022 International Affairs Building, 420 West 118th Street, New York City, NY 10027) |
| Abstract: | Signal quality is a significant contributor to the overall quality of wireless telephone service, which competitive analyses often overlooks. To understand the competitive impact of signal quality investment on further consolidation in this industry, I use a market research survey of choice of wireless service provider and a government database on transmission base stations in Connecticut. Dropped call rates and local coverage improve as base station density increases, so I treat base station density as an endogenous product characteristic and relate it to the local value of wireless services. I find a marginal base station contributes a median 0.15% increase in own market share and a median 0.03% decrease in rival market share. Marginal base station costs are implied to be substantial, so if these costs can be effectively reduced through network integration after a merger, the merging firms and consumers can both benefit through increased base station provision. If such integration is not possible, consumers lose due to either a loss in variety of products or reduced incentives of merged firms to produce quality. These results suggest that merger review must pay careful attention to the potential for network integration in wireless and related industries. |
| Keywords: | quality competition, merger analysis, telecommunications. |
| JEL: | L15 L40 L96 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1405&r=reg |
| By: | Pollrich, Martin; Schmidt, Robert C. |
| Abstract: | A unilateral policy intervention by a country (such as the introduction of an emission price) can induce firms to relocate to other countries. We analyze a dynamic game where a regulator offers contracts to avert relocation of a firm in each of two periods. The firm can undertake a location-specific investment (e.g., in abatement capital). Contracts can be written on some contractible productive activity (e.g., emissions), but the firm's investment is not contractible. A moral hazard problem arises under short-term contracting that makes it impossible to implement outcomes with positive transfers in the second period. The regulator resorts to high-powered incentives in the first period. The firm then overinvests and a lock-in effect prevents relocation in both periods. Paradoxically, the distortion in the firstperiod contract can be so severe that higher transfers are needed to avert relocation compared to a (hypothetical) situation without the investment opportunity. |
| Keywords: | moral hazard; contract theory; limited commitment; firm mobility; abatement capital |
| JEL: | D82 D86 L51 Q58 |
| Date: | 2014–09–16 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:480&r=reg |
| By: | Francesco Gulli; Liliya Chernyav´ska |
| URL: | http://d.repec.org/n?u=RePEc:ekd:000240:24000016&r=reg |
| By: | Ethan Cohen-Cole (Econ One Research); Eleonora Patacchini (Cornell University and EIEF); Yves Zenou (Stockholm University and IFN) |
| Abstract: | This paper proposes a model of network interactions in the interbank market. Our innovation is to model systemic risk in the interbank network as the propagation of incentives or strategic behavior rather than the propagation of losses after default. Transmission in our model is not based on default. Instead, we explain bank profitability based on competition incentives and the outcome of a strategic game. As competitors’ lending decisions change, banks adjust their own decisions as a result: generating a ‘transmission’ of shocks through the system. We provide a unique equilibrium characterization of a static model, and embed this model into a full dynamic model of network formation. We also determine the key bank, which is the bank that is crucial for the stability of the financial network. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:eie:wpaper:1408&r=reg |