nep-reg New Economics Papers
on Regulation
Issue of 2020‒02‒10
sixteen papers chosen by
Natalia Fabra
Universidad Carlos III de Madrid

  1. Information Aggregation in Emissions Markets with Abatement By Estelle Cantillon; Aurelie Slechten
  2. Two-sided markets : the role of technological uncertainty By Hamed Ghoddusi; Alexander Rodivilov; Baran Siyahhan
  3. If you see (or smell) something, say something: Citizen complaints and regulation of oil and gas wells By Peter Maniloff; Daniel T. Kaffine
  4. Low and zero emissions in the steel and cement industries: Barriers, technologies and policies By Chris Bataille
  5. The impact of consumer protection in the digital age: Evidence from the European Union By Rösner, Anja; Haucap, Justus; Heimeshoff, Ulrich
  6. Developing an Energy Poverty Index for Queensland By Andreas Chai; Suzanne Bonner; Shane Tennet; Shyama Ratnasiri and Liam Wagner
  7. Economic modelling for the Single Market performance report 2019 By Martin Christensen; Javier Barbero; Paola Rocchi; Andrea Conte; Robert Marschinski; Simone Salotti
  8. How the auction design influences procurement prices: An experiment By Ehrhart, Karl-Martin; Ott, Marion
  9. Complementarities in Behavioral Interventions: Evidence from a Field Experiment on Energy Conservation By Ximeng Fang; Lorenz Goette; Bettina Rockenbach; Matthias Sutter; Verena Tiefenbeck; Samuel Schoeb; Thorsten Staake
  10. User Trusts: Broad-Based Ownership for Online Platforms By Schneider, Nathan
  11. European gasoline markets: price transmission asymmetries in mean and variance By Escribano, Álvaro; Torrado, María
  12. Economists’ Tunney Act Reply Comments on the DOJ’s Proposed Remedy in the Sprint/T-Mobile Merger Proceeding By Nicholas Economides; John Kwoka; Thomas Philippon; Robert Seamans; Hal Singer; Marshall Steinbaum; Lawrence J. White
  13. Public Perceptions of Biofuels - Case Study: Frames of Biofuel Discussion in the Finnish Context By Siivari, Elina; Safrutin, Ilia; Mozaffari, Khalil; Käyhkö, Esa; Jouttijärvi, Risto
  14. Rebating Antitrust Fines to Encourage Private Damages Actions By Winand Emons; Severin Lenhard
  15. Social Cost of Carbon: What Do the Numbers Really Mean? By Nikolay Khabarov; Alexey Smirnov; Michael Obersteiner
  16. Reimagining the Future of Transportation with Personal Flight: Preparing and Planning for Urban Air Mobility By Cohen, Adam; Guan, Justin; Beamer, Matthew; Dittoe, Ryan; Mokhtarimousavi, Seyedmirsajad

  1. By: Estelle Cantillon; Aurelie Slechten
    Abstract: A key policy argument in favor of emissions markets (relative to command-and-control types of regulation) is their ability to aggregate dispersed information and generate price signals to guide firms' trading and abatement decisions. We investigate this argument in a multi-period model where firms receive noisy private signals about their current period emissions and privately observe their previous period emissions before this information is made public to the rest of the market. Firms respond to information by trading and abating emissions. We show that there exists a rational expectations equilibrium that fully aggregates firms' private information, justifying the policy argument in favor of emissions markets, in the absence of other frictions. We also derive predictions about how prices should be reacting to new private or public information and show that the possibility of abatement dampens the impact of shocks on prices. Finally, we show that the information aggregation result breaks down if firms' abatement costs are also private information.
    Keywords: Information Aggregation, Efficient Market Hypothesis, Price Formation, Emissions Trading
    Date: 2018–12–15
  2. By: Hamed Ghoddusi (Stevens Institute of Technology [Hoboken]); Alexander Rodivilov (Stevens Institute of Technology [Hoboken]); Baran Siyahhan (LITEM - Laboratoire en Innovation, Technologies, Economie et Management (EA 7363) - UEVE - Université d'Évry-Val-d'Essonne - Université Paris-Saclay - IMT-BS - Institut Mines-Télécom Business School, DEFI - Département Droit, Economie et Finances - TEM - Télécom Ecole de Management - IMT - Institut Mines-Télécom [Paris] - IMT-BS - Institut Mines-Télécom Business School)
    Abstract: This paper examines the effect of technological uncertainty on the optimal pricing and investment decisions in a two-sided market. A platform offers a basic good and a developer offers a complementary good. The performance of the complementary good is stochastic and is endogenously determined by the pricing policy the platform adopts. Heterogeneous consumers join the platform either before uncertainty is resolved or after. In the former case, consumers obtain the basic good and an option to benefit from the complementary good in the future. The platform trades off building an earlier mass of consumer base and extracting profits from late adopters. Consumers are divided into three groups: early adopters, late adopters, and those who never join the platform. A platform's pricing policy depends on the value of the complementary good and the cost of its development. If the cost is small, a price skimming policy is optimal. When the cost is higher, price skimming remains optimal if the value of the complementary good is either small or relatively high. For intermediate values, the platform adopts a price penetration policy. We discuss some examples from the empirical literature in light of the model.
    Keywords: Dynamic pricing,Two-sided markets,Real options
    Date: 2019–11
  3. By: Peter Maniloff (Division of Economics and Business, Colorado School of Mines); Daniel T. Kaffine (Department of Economics, University of Colorado Boulder)
    Abstract: The traditional theory of firm regulation and enforcement examines the interplay of firms and regulator, with citizens as passive consumers of goods or providers of votes. However, in industries such as oil and gas, citizens can play an important role in inspections and enforcement, which we analyze with a novel dataset of Colorado regulatory activities. We find regulators frequently conduct follow-up inspections of citizen complaints, and these citizen-driven inspections are just as likely to lead to regulatory action as ``normal'' scheduled inspections. However, the evidence is consistent with regulators treating these complaints as ``one-offs'' --- regulators do not increase inspection activity of other wells owned by a firm that was complained about. An inspector conducting a complaint inspection crowds out two regular inspections at the daily level, but we find no evidence of crowd-out at time scales of one month or greater. Finally, heterogeneity across complaint types suggests citizens are particularly adept at identifying nuisance-related violations (e.g. noise, smell), but are less adept at identifying more technical violations.
    Keywords: enforcement, oil and gas, citizen participation
    JEL: Q58 Q48 K42
    Date: 2020–01
  4. By: Chris Bataille (Institut du Développement Durable et des Relations Internationales)
    Abstract: This paper discusses the main barriers and possible solutions to the decarbonisation of steel and cement industries. First, the paper details the economic, regulatory, technological and political economy barriers that impede a low carbon transition. Then, it addresses the role of material efficiency and enhanced recycling in greening these industries, and reviews the emerging and near commercial low- and zero- emissions production technologies. Finally, the policy packages that could contribute to trigger demand and supply decarbonisation of steel and cement are discussed.
    Date: 2020–01–31
  5. By: Rösner, Anja; Haucap, Justus; Heimeshoff, Ulrich
    Abstract: We investigate the effect of an EU-wide consumer protection regulation on consumer trust as well as consumer behavior. The Unfair Commercial Practice Directive (UCPD) was implemented by EU member states between 2007 and 2010. We utilize data from the Special and Flash Eurobarometer for the years between 2006 and 2014 and experts' evaluation on consumer protection levels before the introduction of the regulation. This rich data set allows us to apply a difference-in-difference estimator with multiple time periods. We find a significant relationship between the introduction of the UCPD and consumer trust and cross-border purchases for countries with a low consumer protection level before the introduction of the UCPD. The relationship increases over time and stays then relatively constant.
    Keywords: Consumer Protection,UCPD,B2C,E-Commerce,Consumer Trust,Cross-border Purchase
    JEL: D18 K20 L50 L51
    Date: 2020
  6. By: Andreas Chai; Suzanne Bonner; Shane Tennet; Shyama Ratnasiri and Liam Wagner
    Keywords: Energy Poverty, Electricity Prices,
    JEL: D18 D12 Q47 Q41
    Date: 2019–05
  7. By: Martin Christensen (European Commission - JRC); Javier Barbero (European Commission - JRC); Paola Rocchi (European Commission - JRC); Andrea Conte (European Commission - JRC); Robert Marschinski (European Commission - JRC); Simone Salotti (European Commission - JRC)
    Abstract: The European Single Market permits free movement of goods and services within the European Union (EU). By stimulating competition and trade, it improves efficiency, it raises quality and helps cutting prices. The European Commission has a strategy in place to unlock the full potential of the Single Market by improving mobility for service providers, facilitating innovation, enabling across-borders retailing, and enhancing EU-wide access to goods and services. This Policy Insight presents the results of the modelling exercises on the macroeconomic effects of a barriers reduction in regulated business services sectors and construction. Simulations made with the RHOMOLO and FIDELIO models suggest that price reductions in relatively small sectors may have sizeable GDP effects in the EU with sizeable sectoral and country spillovers. For instance, tackling the regulatory restrictiveness in legal, accounting, architectural and engineering services may increase EU value added by up to €41 billion, generating jobs for 500,000 persons, after ten years.
    Keywords: region, growth, rhomolo, indirect jobs, coal, input-output analysis
    JEL: C63 C68
    Date: 2019–12
  8. By: Ehrhart, Karl-Martin; Ott, Marion
    Abstract: The targeted design of auctions has to take behavioral regularities into account. This paper explores whether procurement auction formats can take advantage of bidders' willingness-to-pay-willingness-to-accept disparity. In a laboratory experiment, we compare four different second-price auction formats for procuring a good. The four formats are a sealed-bid auction and three di erent descending-clock auctions. We assume that a bidder's willingness-to-accept exceeds his willingness-to-pay and that, depending on the auction format, a bidder's reference-state shifts such that the bidder's perspective moves from a willingness-to-accept perspective towards a willingness-to-pay perspective, thus inducing aggressive bids. In line with the prediction, auction prices decline across the four formats. In particular, we observe the lowest prices in those two clock auction formats that, at every auction stage, select a bidder as the current leading bidder. We conclude that mechanisms influence the reference state and that auctions that foster reference-state shifts lead to lower payments for the buyer. These results support and generalize findings on sales auctions. However, not all of our findings on procurement auctions mirror findings on sales auctions. Bidders overbid in sealed-bid procurement auctions, which does not mirror the commonly observed overbidding in sealed-bid sales auctions.
    Keywords: procurement auction,experiment,WTP-WTA disparity,reference-dependence
    JEL: D44 H57 D91 C92
    Date: 2019
  9. By: Ximeng Fang; Lorenz Goette; Bettina Rockenbach; Matthias Sutter; Verena Tiefenbeck; Samuel Schoeb; Thorsten Staake
    Abstract: Behavioral policy often aims at overcoming barriers like imperfect information and limited attention that contribute to suboptimal consumer decisions. When multiple barriers are present, a single intervention that does not overcome all barriers simultaneously may fail to unfold its full potential. We conduct a three-month randomized field experiment on energy conservation in a resource-intensive everyday activity, using two different interventions. Home energy reports fail to reduce energy use despite achieving significant knowledge gains; real-time feedback induces considerable conservation effects. Strikingly, combining both interventions boosts these effects by over 50%. This showcases how barrier multiplicity can generate complementarities in behavioral interventions.
    Keywords: behavioral interventions, energy conservation, inattention, real-time feedback, home energy reports, policy interactions, randomized controlled trials
    JEL: D12 D83 Q41
    Date: 2020–01
  10. By: Schneider, Nathan (University of Colorado Boulder)
    Abstract: This essay introduces what promise a novel broad-based capital strategy—trusts serving platform users—might hold for the online economy, especially as an enabler of more widespread, organized, and democratic user accountability. It draws on lessons from the experience of employee ownership alongside emerging opportunities for other kinds of broad-based ownership structures. User-oriented trusts could enable meaningful co-governance and profit sharing among essential stakeholders, a prospect that merits research and experimentation.
    Date: 2020–02–06
  11. By: Escribano, Álvaro; Torrado, María
    Abstract: The main objective of this paper is to analyse the different sources of asymmetric price transmissions in the fuel market for France, Germany and Spain. During the last decades,the EU has carried out several common energy policies to achieve more efficient and competitive markets. However, given the specific characteristics of each country, the question we want to address is if fuel prices across EU members behave differently in response to different market structures. Oil operators have been targeted by competition authorities for conducting non-competitive practices. To figure out whether the common complaint that gasoline prices adjust differently to positive or negative input price changes, dynamic asymmetric models for the mean and variance are developed for each country. Several asymmetric specifications for the mean and variance are considered and the best specification combines double threshold error correction models (DT-ECM) for the mean with asymmetric EGARCH plus dummy variables for the conditional variance. We show that French gasoline prices behave more competitively, adjusting quicker to the long-run equilibrium and with higher price volatility. This outcome is consistent with the strong presence of hypermarkets following low-cost pricing strategies in France.
    Keywords: Log-GARCH; GJR-GARCH; EGARCH; GARCH; Nonlinear error correction; Rockets and feathers; Gasoline price asymmetries; Competition
    JEL: L71 L13 D43 C52 C24 B23
    Date: 2020–01–30
  12. By: Nicholas Economides (Professor of Economics, NYU Stern School of Business, New York, New York 10012); John Kwoka (Neal F. Finnegan Distinguished Professor of Economics, College of Social Sciences and Humanities, Northeastern University); Thomas Philippon (Max L. Heine Professor of Finance, NYU Stern School of Business, New York, New York 10012); Robert Seamans (Associate Professor of Management and Organizations, NYU Stern School of Business, New York, New York 10012); Hal Singer (Managing Director at Econ One, Adjunct Professor at Georgetown McDonough School of Business); Marshall Steinbaum (Assistant Professor, Economics Department, University of Utah); Lawrence J. White (Robert Kavesh Professor of Economics, NYU Stern School of Business, New York, New York 10012)
    Abstract: Following up on our initial comments at the Tunney Act proceeding of the proposed merger between Sprint and T-Mobile, we discuss DOJ’s criticisms of these comments, explaining why these criticisms are baseless. Moreover, using evidence from the NY v. Deutsche Telecom trial, we provide new arguments showing that the DOJ proposed remedy will fail to restore the ex ante competitive conditions in the affected antitrust product markets to the detriment of users of mobile phones in the United States.
    Keywords: Telecommunications; Merger; Tunney Act; Sprint; T-Mobile; Dish; DOJ
    JEL: L1 L4 L5 L9
    Date: 2020–01
  13. By: Siivari, Elina; Safrutin, Ilia; Mozaffari, Khalil; Käyhkö, Esa; Jouttijärvi, Risto
    Abstract: Biofuels are fuels made of biological materials and they can be used in cars, trucks and other engines. The EU's policy and regulatory framework for bioeconomy and biofuels is seen as a multi-layered and complex issue. Policies around biofuels have developed recently in the EU. Renewable Energy Directive II established a binding target for the use of renewable energy across the European Union by 2030 to be 32% of the total energy production. Finland is a country where the utilization of forest biomass has traditions ranging back centuries and continues in the present day with bioenergy holding a central role in the Finnish energy matrix. Our case study is focused on examining the public perceptions of biofuels in Finland and is linked to the discussion about climate change, global warming, and sustainable development. We used a stakeholder approach and mapped key stakeholders in the biofuel sector in Finland from six stakeholder categories: corporations, governmental actors, non-governmental organisations (NGOs), municipalities, universities, and the media. We selected 59 online publications for our analysis from a time period between 2010-2019. Frame analysis was conducted using three pairs of polarised frames: environmental positive and negative, economic positive and negative, and technological positive and negative. The results show that for the most part the framing of biofuel discussion in Finland is positive and emphasizes the environmentally and economically positive aspects. The negative aspects that came to front are especially in the notions of economic costs and in arguments for environmental calculations. The EU legislation itself is seen as a background to all this discussion and is itself not scrutinized extensively by the various stakeholders.
    Date: 2019–11–28
  14. By: Winand Emons; Severin Lenhard
    Abstract: To encourage private actions for damages in antitrust cases some jurisdictions subtract a fraction of the redress from the fine. We analyze the effectiveness of this policy. Such a rebate does not encourage settlement negotiations that would otherwise not occur. If, however, the parties settle without the rebate, the introduction of the reduction increases the settlement amount, yet at the price of reduced deterrence for those wrongdoers who are actually fined. Under a leniency program the rebate has no effect on the leniency applicant: she doesn’t pay a fine that can be reduced. The overall effect of a fine reduction on deterrence is, therefore, negative.
    Keywords: antitrust, damages, deterrence, leniency
    JEL: D43 K21 K42 L40
    Date: 2020–01
  15. By: Nikolay Khabarov; Alexey Smirnov; Michael Obersteiner
    Abstract: The Social Cost of Carbon (SCC) is estimated by integrated assessment models and is widely used by government agencies to value the climate impacts of rulemakings, however, the core discussion around SCC so far was focused on validity of obtained numerical estimates and related uncertainties while largely neglecting a deeper discussion of the SCC applicability limits stemming from the calculation method. This work provides a conceptual mathematical background and the economic interpretation that is behind the SCC calculation in the three widely used integrated assessment models. Policy makers need to be aware of a subtle, but decisive difference between the actual and the commonly implied meanings of SCC that substantially limits its applicability as compared to the current practice.
    Date: 2020–01
  16. By: Cohen, Adam; Guan, Justin; Beamer, Matthew; Dittoe, Ryan; Mokhtarimousavi, Seyedmirsajad
    Keywords: Engineering
    Date: 2020–01–12

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