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on Regulation |
| By: | Baranes, Edmond; Cortade, Thomas; Cosnita-Langlais, Andreea |
| Abstract: | We study the impact of cost savings on the outcome of horizontal mergers between two-sided platforms. We consider four symmetrically differentiated platforms located equidistantly on the unit circle and competing in membership fees. Users on both sides single-home, and we allow for both positive and negative cross-group externalities. We find that the impact of merger cost savings on prices is generally not monotonic, and that synergies are necessary for horizontal platform mergers to be Pareto-improving. Furthermore, the merger may benefit users on one side while harming users on the opposite side, which raises some interesting questions for the enforcement of merger control on two-sided markets. |
| Keywords: | horizontal merger, two-sided markets, cost savings, indirect network effects, merger control |
| JEL: | D43 K21 L41 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:97459&r=all |
| By: | Siciliani, Paolo (Bank of England and UCL Laws); Giovannetti, Emanuele (Anglia Ruskin University & Hughes Hall, University of Cambridge) |
| Abstract: | The paper develops a static model to explore how, under platform competition, heterogeneous levels of switching costs can give rise to an incumbency advantage. The key condition required for the coexistence of both platforms on the market, to have effective competition, relies on the relative strength of switching costs over the network effects. Only when switching costs are stronger than cross-group network benefits is market tipping avoided. The same condition also underpins the presence of a material incumbency advantage vis-à-vis the entrant platform. Therefore, regulatory intervention aimed at facilitating switching, for example by imposing data portability, might worsen entry condition as the incumbent platform is less accommodative. Besides the standard configuration with exogenous singlehoming, we also fully characterise the model with endogenous multihoming on both sides. Partial multihoming occurs only on one side, the one with comparatively lower switching costs. However, in contrast to the seminal ‘competition bottleneck’ model, on the opposite side, where singlehoming arises endogenously, agents face higher prices than under exogenous singlehoming. Therefore, the incumbent platform would normally opt for this regime, whereas we show that the entrant is basically indifferent between the two. |
| Keywords: | two-sided markets; platform competition; switching costs; multihoming |
| JEL: | L11 L13 |
| Date: | 2019–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0839&r=all |
| By: | Francesco Lamperti; Mariana Mazzucato; Andrea Roventini; Gregor Semieniuk |
| Abstract: | While investments into renewable energy technologies are growing almost everywhere, the chances to meet ambitious emission and climate targets, as those envisaged in the Paris Agreement, are scant. To speed up the transition, policy makers need to design and implement a policy mix that could affect not just the quantity of green finance, but its quality as well. In this paper, we argue that a mission-oriented approach to the transition from an economy with high, to one with low greenhouse gas emissions, coupled with the state taking on the role of an entrepreneurial state, could provide an effective win-win strategy to address climate change concerns (embodied in emissions reduction and adaptation boosting) and build the basis for the next phase of growth and technological progress. In practice, this amounts to (i) abandoning the view that cost-internalization of environmental externalities would suffice to induce an effective transition (ii) developing a multi-level and cross-sectoral governance of the transition, with a clear direction in terms of the technological trajectory to favour, and (iii) designing a policy mix encompassing: fiscal instruments, targets and standards; public-private co-funding schemes; financial regulation; and disclosure practices. Social scientists should support such ambitious policy-design processes through adequate model development, where a combination of policies, and a directive role of the state, can be accommodated and examined in detail. |
| Keywords: | market-shaping; mission-oriented; green finance; renewable energies; transition; entrepreneurial state. |
| Date: | 2019–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2019/41&r=all |
| By: | Costa, Francisco J M (FGV EPGE Brazilian School of Economics and Finance); Gerard, François |
| Abstract: | This paper provides stark evidence of hysteresis -- the failure of an effect to reverse itself as its underlying cause is reversed -- in energy demand. We estimate that half of the 23%-reduction in residential electricity use caused by a 9-month-long policy that was imposed on millions of Brazilians has persisted for at least 12 years. We examine the implications of our finding by extending the traditional welfare analysis of corrective policies to allow for hysteresis. Our estimate highlights that failing to take hysteresis into account could severely bias the welfare evaluation of policies aimed at reducing (long-run) energy demand. |
| Date: | 2019–08–23 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:r4wep&r=all |
| By: | Jens-Peter Loy; Dieter Pennerstorfer; Daniela Rroshi; Christoph Weiss; Biliana Yontcheva |
| Abstract: | We investigate how consumer information affects price adjustment in the Austrian retail gasoline market. Our measure of consumer information is obtained from detailed census data on commuting behavior, as commuters can freely sample prices on their commuting route and are thus better informed about prices. A threshold error-correction model suggests that prices adjust more quickly if cost shocks exceed certain thresholds. Parametric and semiparametric regressions show that a larger share of informed consumers increases both transmission speed and pass-through elasticity. Better informed consumers reduce the asymmetry in thresholds, but have no effect on the asymmetry in the speed of adjustment. |
| Keywords: | Price Transmission, Consumer Information, Commuters, Gasoline Market, Threshold Error-Correction Model |
| JEL: | D43 D83 L13 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2019_20&r=all |
| By: | Shapiro, Joseph S. |
| Keywords: | Social and Behavioral Sciences |
| Date: | 2020–01–08 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:agrebk:qt8ph2590d&r=all |
| By: | Michelangelo Rossi |
| Abstract: | I show how changes in competition affect the power of reputation to induce sellers to exert effort. The impact of competition on sellers’ incentives is theoretically ambiguous. More com-petition disciplines sellers, but, at the same time, it erodes reputational premia. This paper identifies empirically whether one effect dominates the other using data from Airbnb. To guide the empirical analysis, I develop a model of reputation where the relative number of hosts and guests affects the value of building a reputation through effort. In this framework, more competition depresses hosts’ profits and leads hosts to reduce effort. I test the model’s predic-tion exploiting a change in regulation for Airbnb listings effective in San Francisco in 2017. I identify a negative causal effect of competition on effort. As the number of competitors sur-rounding each listing increases by 10 percent, ratings about hosts’ effort decrease by more than one standard deviation. These findings suggest that more competition may erode incentives for high-quality services in markets where sellers’ performances depend on reputation. |
| Keywords: | reputation, competition, digitization |
| JEL: | D82 D83 L50 L81 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7972&r=all |
| By: | S. Nageeb Ali; Greg Lewis; Shoshana Vasserman |
| Abstract: | A concern central to the economics of privacy is that firms may use consumer data to price discriminate. A common response is that consumers should have control over their data and the ability to choose how firms access it. Since firms draw inferences based on both the data seen as well as the consumer's disclosure choices, the strategic implications of this proposal are unclear. We investigate whether such measures improve consumer welfare in monopolistic and competitive environments. We find that consumer control can guarantee gains for every consumer type relative to both perfect price discrimination and no personalized pricing. This result is driven by two ideas. First, consumers can use disclosure to amplify competition between firms. Second, consumers can share information that induces a seller---even a monopolist---to make price concessions. Furthermore, whether consumer control improves consumer surplus depends on both the technology of disclosure and the competitiveness of the marketplace. In a competitive market, simple disclosure technologies such as "track / do-not-track" suffice for guaranteeing gains in consumer welfare. However, in a monopolistic market, welfare gains require richer forms of disclosure technology whereby consumers can decide how much information they would like to convey. |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1912.04774&r=all |
| By: | Carl Gaigné (SMART - Structures et Marché Agricoles, Ressources et Territoires - INRA - Institut National de la Recherche Agronomique - AGROCAMPUS OUEST); Vincent Hovelaque (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Y. Mechouar (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Recent studies on facility location highlight that increasing the carbon price can ensure meaningful reductions in transport-related greenhouse gas emissions (GHGs). In this paper, we propose to revisit the Production-Location Problem considering transport-related carbon emission mitigation due to carbon taxation and production technologies that allow complementarity or substitution among input quantities. We first show that cost-minimizing location may differ from carbon emission minimizing location, regardless of the production technology type. We also find that gradual changes in carbon tax affect the relative delivered prices of inputs such that the firm has an incentive to relocate its facility and substitute among input quantities, leading to new shipping patterns that do not necessarily cause a lower pollution. |
| Keywords: | Sustainability,Production technology,Location,Transport-related carbon emissions,Carbon tax |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-02385726&r=all |