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on Regulation |
| By: | Patrick Rey (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Jean Tirole (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | The paper analyzes the impact of price caps agreed upon by industry participants. Price caps, like mergers, allow firms to solve Cournot's multiple marginalization problem; but unlike mergers, they do not stifle price competition in case of substitutes or facilitate foreclosure in case of complements. The paper first demonstrates this for non-repeated interaction and general demand and cost functions. It then shows that allowing price caps has no impact on investment and entry in case of substitutes. Under more restrictive assumptions, the paper finally generalizes the insights to repeated price interaction, analyzing coordinated effects when goods are not necessarily substitutes. |
| Keywords: | Coopetition,Joint marketing agreements,Foreclosure,Mergers,Complements and substitutes,Tacit collusion,Information-light regulation,Price caps |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03270038&r= |
| By: | Cordoba, Juan Carlos; He, Sicheng |
| Abstract: | We study endogenous growth in the presence of domestic and international network externalities. In our model, network externalities provide natural protection to first movers and incentivize disruptive innovations without the need for patent protection. Domestic and global growth depends on the extent of network externalities, international compatibility costs, and anti-trust policies. We find that traditional anti-trust policies may lead to unintended outcomes. Policies such as banning price discrimination or collusion may reduce economic growth. In particular, price discrimination and collusion could increase economic growth when network externalities are large in relation to compatibility costs. |
| Date: | 2021–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genstf:202107160700001130&r= |
| By: | Luis Aguiar; Joel Waldfogel; Sarah B. Waldfogel |
| Abstract: | Platforms are growing increasingly powerful, raising questions about whether their power might be exercised with bias. While bias is inherently difficult to measure, we identify a context within the music industry that is amenable to bias testing. Our approach requires ex ante platform assessments of commercial promise - such as the rank order in which products are presented - along with information on eventual product success. A platform is biased against a product type if the type attains greater success, conditional on ex ante assessment. Theoretical considerations and voiced industry concerns suggest the possibility of platform biases in favor of major record labels, and industry participants also point to bias against women. Using data on Spotify curators' rank of songs on New Music Friday playlists in 2017, we find that Spotify's New Music Friday rankings favor independent-label music, along with some evidence of bias in favor of music by women. Despite challenges that independent-label artists and women face in the music industry, Spotify's New Music curation appears to favor them. |
| JEL: | K21 L12 L82 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29017&r= |
| By: | Sauter, Verena; Speth, Daniel; Plötz, Patrick; Signer, Tim |
| Abstract: | Facing climate change, The European Union has set ambitious greenhouse gas (GHG) reduction targets. Within Europe, heavy-duty vehicles (HDV) account for a quarter of greenhouse gas emissions in the transport sector and therefore plays a central role in achieving the climate targets. A potential solution to reduce GHG emissions is the use of battery electric vehicles (BEV). However, the limited range of BEV requires a European public fast-charging network to ensure widespread deployment of BEV. Here, European road freight transport flows are modelled based on the publicly available European Transport policy Information System (ETISplus) dataset. The resulting truck flows serve as input for a charging infrastructure network model. Potential charging stations are located using a coverage-oriented approach and sized according to a queuing model such that an average waiting time of five minutes is guaranteed at each location. Our results show that for a share of 15% BEV in HDV stock and a dense network with charging locations every 50 km, a total of 4,067 charging points at 1,640 locations are required by 2030. In contrast, with a share of 5% BEV and charging locations every 100 km, 1,715 charging points are needed at 812 locations. Our findings provide insights for the design of a public fastcharging network in Europe and thus supports the planning of future infrastructure projects. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fisisi:s022021&r= |
| By: | Obst, Thomas; Schläger, Dan |
| Abstract: | A cross-country comparison shows similar behavioural adaptations of individuals despite different degrees of stringency of the respective lockdown in place. In Germany, during the first lockdown in spring 2020 mobility fell by 45 percent, while in Sweden it also decreased by 27 percent during the same period. A comprehensive cost-benefit analysis is crucial to better evaluate the efficacy of lockdowns and implied trade-offs. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwkkur:332021e&r= |
| By: | Dirk Bergemann; Alessandro Bonatti; Andreas Haupt; Alex Smolin |
| Abstract: | We consider a multiproduct monopoly pricing model. We provide sufficient conditions under which the optimal mechanism can be implemented via upgrade pricing -- a menu of product bundles that are nested in the strong set order. Our approach exploits duality methods to identify conditions on the distribution of consumer types under which (a) each product is purchased by the same set of buyers as under separate monopoly pricing (though the transfers can be different), and (b) these sets are nested. We exhibit two distinct sets of sufficient conditions. The first set of conditions is given by a weak version of monotonicity of types and virtual values, while maintaining a regularity assumption, i.e., that the product-by-product revenue curves are single-peaked. The second set of conditions establishes the optimality of upgrade pricing for type spaces with monotone marginal rates of substitution (MRS) -- the relative preference ratios for any two products are monotone across types. The monotone MRS condition allows us to relax the earlier regularity assumption. Under both sets of conditions, we fully characterize the product bundles and prices that form the optimal upgrade pricing menu. Finally, we show that, if the consumer's types are monotone, the seller can equivalently post a vector of single-item prices: upgrade pricing and separate pricing are equivalent. |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2107.10323&r= |
| By: | Khaled Abedrabboh; Luluwah Al-Fagih |
| Abstract: | The intermittent nature of renewable energy resources creates extra challenges in the operation and control of the electricity grid. Demand flexibility markets can help in dealing with these challenges by introducing incentives for customers to modify their demand. Market-based demand-side management (DSM) have garnered serious attention lately due to its promising capability of maintaining the balance between supply and demand, while also keeping customer satisfaction at its highest levels. Many researchers have proposed using concepts from mechanism design theory in their approaches to market-based DSM. In this work, we provide a review of the advances in market-based DSM using mechanism design. We provide a categorisation of the reviewed literature and evaluate the strengths and weaknesses of each design criteria. We also study the utility function formulations used in the reviewed literature and provide a critique of the proposed indirect mechanisms. We show that despite the extensiveness of the literature on this subject, there remains concerns and challenges that should be addressed for the realistic implementation of such DSM approaches. We draw conclusions from our review and discuss possible future research directions. |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2106.14659&r= |
| By: | OECD |
| Abstract: | As countries weather the COVID-19 health emergency, high-quality connectivity, more than ever, is essential to ensure that economic activities can continue in a remote manner. However, important disparities in terms of connectivity persist, aggravating the consequences of the health emergency. Therefore, policies aiming to reduce connectivity divides are of paramount importance. This report explores policies and regulations in OECD countries that have proven successful to work towards closing connectivity divides. It offers a roadmap to policy makers on the overarching policies and regulatory measures to expand connectivity, as well as the tailored approaches to extend broadband networks in rural and remote areas. |
| Date: | 2021–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaab:315-en&r= |
| By: | Kevin R. Williams |
| Abstract: | Airfares fluctuate due to demand shocks and intertemporal variation in willingness to pay. I estimate a model of dynamic airline pricing accounting for both sources of price adjustments using novel flight-level data. I use the model estimates to evaluate the welfare effects of dynamic airline pricing. Relative to uniform pricing, dynamic pricing benefits early-arriving, leisure consumers at the expense of late-arriving, business travelers. Although dynamic pricing ensures seat availability for business travelers, these consumers are then charged higher prices. When aggregated over markets, welfare is higher under dynamic pricing than under uniform pricing. The directionality of the welfare effect at the market level depends on whether dynamic price adjustments are mainly driven by demand shocks or by changes in the overall demand elasticity. |
| JEL: | L11 L12 L93 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28989&r= |
| By: | Rodríguez-Álvarez, Ana (Oviedo Efficiency Group, Department of Economics, University of Oviedo, Spain); Llorca, Manuel (Department of Economics, Copenhagen Business School); Jamasb, Tooraj (Department of Economics, Copenhagen Business School) |
| Abstract: | In recent years, awareness of energy poverty has gained increasing attention in European countries. Comparative country studies can enhance our understanding of the causes and effects of this growing problem. This paper proposes a new model for the analysis of energy poverty. We define a theoretical framework and model to estimate an energy poverty frontier. The estimated frontier indicates the minimum level of energy poverty that a country can achieve given its income level, energy prices, and other country-specific features. We apply the approach to a sample of 30 European countries during the period 2005-2018. This allows us to contrast whether policy measures aimed at reducing the poverty among vulnerable individuals and households have been effective. The estimates indicate that financial aid aimed at especially vulnerable groups, reductions in energy prices, and improvements in energy efficiency seem to be beneficial to face energy poverty. The impact of these factors may partly explain why, despite the negative impact of the financial crisis, we have found a steady and general energy poverty reduction during the period in almost all the countries analysed. |
| Keywords: | Energy poverty in Europe; Energy poverty determinants; Social protection; Stochastic frontier analysis |
| JEL: | C23 H53 I32 Q43 Q48 |
| Date: | 2021–07–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cbsnow:2021_012&r= |
| By: | Antoine Dubus (Télécom ParisTech) |
| Abstract: | This article analyzes behavior-based price discrimination in a two-period competition framework where firms endogenously collect consumer data and strategically target past customers. When firms strategically target customers: (i) they price-discriminate high valuation customers; (ii) they charge a homogeneous price to low valuation customers, even when they have precise information on them. Strategic targeting questions the main classical results of the literature: in a symmetric equilibrium firms do not compete for customer information acquisition and there is no consumer poaching. Sufficiently asymmetric data collection costs can restore previous results of the literature, and we discuss their implications for firms' data strategies and competition in digital markets. |
| Keywords: | Behavior-based price discrimination,Strategic Targeting,Data collection |
| Date: | 2021–06–24 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03269586&r= |
| By: | Felix Holzmeister; Jürgen Huber; Michael Kirchler; Rene Schwaiger |
| Abstract: | We conducted two large-scale, highly powered randomized controlled trials intended to encourage consumer debt repayments. In Study 1, we implemented five treatments varying the design of envelopes sent to debtors. We did not find any treatment effects on response and repayment rates compared to the control condition. In Study 2, we varied the letters' contents in nine treatments, implementing factorial combinations of social norm and (non-)deterrence nudges, which were either framed emotively or non-emotively. We find that all nudges are ineffective compared to the control condition and even tend to induce backfiring effects compared to the agency's original letter. Since comparable nudges have been shown to be highly effective in other studies, our study supports the literature, emphasizing that the success of nudging interventions crucially depends on the domain of application. |
| Keywords: | Nudging, randomized controlled trial, debt repayment |
| JEL: | C93 D91 G51 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2021-21&r= |
| By: | Gorecki, Paul |
| Abstract: | Since 2017 Ireland’s competition agency, the Competition and Consumer Protection Commission (CCPC), has cleared two merger to monopoly transactions, albeit both subject to the divestment of selected assets to an entrant. One of these transactions was Kantar Media’s 2017 acquisition of Newsaccess. Prior to 2017 the CCPC had prohibited mergers to monopoly. Does this apparent relaxation mark a sea change in CCPC merger policy? Taking the Kantar Media/Newsaccess merger as a case study, the paper explores this question. The paper finds that there has been a relaxation of merger enforcement by the CCPC. On an ex ante basis the Kantar Media/Newsaccess merger should have been prohibited or the remedy substantially strengthened. However, ex post, due to business difficulties of the merger entity consequent upon a major pre-merger restructuring, the market has self-corrected through successful entry facilitated in large part by these business difficulties. Such rapid self-correction in restoring competition is very much the exception rather than the rule. If it were otherwise there would be no need for merger control. |
| Keywords: | Ireland; merger control; structural remedies; substantial lessening of competition; ex post evaluation; Competition Act 2002. |
| JEL: | D22 K21 L41 |
| Date: | 2021–07–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:108743&r= |
| By: | Dickson, Alex (University of Strathclyde); Gehrsitz, Markus (University of Strathclyde); Kemp, Jonathan (AG Barr) |
| Abstract: | This study evaluates the effects of the 2018 UK Soft Drinks Industry Levy on soft drinks prices, sales, reformulation activities, and consequently calories consumed. We combine novel electronic point of sale data that cover most of the UK soft drinks market with longitudinal nutritional information and a variety of event-study specifications. We document that all but a few global soft drinks brands reduced sugar content and hence avoided the tiered levy. For brands that maintained their original sugar content, the levy was on average over-shifted resulting in substantial retail price increases. Consumers responded by reducing their consumption of levied drinks by around 18% which is indicative of an inelastic demand response, especially in the drink-now and energy drink segments of the market. We also document substitution into diet drinks in response to the tax. In total, the levy is responsible for a reduction in intake of just under 6,500 calories from soft drinks per annum per UK resident. More than 80% of reductions were due to manufacturers' reformulation activities and occurred in the two years between the announcement of the levy and its implementation. |
| Keywords: | sugar tax, soda tax, reformulation, tax pass-through, sin taxes |
| JEL: | H21 H23 H51 I12 I18 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14528&r= |
| By: | Don Fullerton; Shan He |
| Abstract: | Circular Economy literature recommends longer lasting products, in order to reduce pollution from extraction, production, and disposal. Our economic analysis finds conditions where consumers choose lives that are too short – a “durability gap”. Then policies targeting durability raise welfare. While externalities are corrected by Pigovian taxes that ignore durability, raising the output tax nonetheless induces consumers to pay more for goods that last longer. Second, if the tax is suboptimal, a durability mandate raises welfare. Third, internalities have ambiguous effects. Fourth, a social discount rate less than private discount rate is the strongest case for policy to favor durability. |
| Keywords: | Pigovian taxes, first-best policy, externalities, internalities |
| JEL: | H21 H23 Q58 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9171&r= |
| By: | Louis-Gaëtan Giraudet (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique); Matthieu Glachant (CERNA i3 - Centre d'économie industrielle i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Jean-Philippe Nicolaï (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, ETH Zürich - Eidgenössische Technische Hochschule - Swiss Federal Institute of Technology [Zürich]) |
| Abstract: | In Europe, energy efficiency obligations are imposed on energy retailers competing in liberalized energy markets. They comply by subsidizing energy efficiency investments made by energy end-users within or outside their customer base. We develop a model describing how competition in the energy market affects compliance strategies. We find that, instead of selecting the most cost-effective investments options, firms may either target their most elastic customers, which enables them to increase their retail price, or their competitor's customers, which protects their sales. Allowing firms to trade obligations can restore cost-effectiveness, but reduces consumer surplus. Overall, the degree of flexibility that should be incorporated into such programs crucially depends on the degree of heterogeneity across investment costs and the relative weights governments assign to cost-effectiveness and consumer surplus. |
| Keywords: | Energy efficiency,Imperfect competition,Information asymmetry,Internal and external compliance. |
| Date: | 2020–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03109922&r= |
| By: | Paul L. E. Grieco; Charles Murry; Ali Yurukoglu |
| Abstract: | We construct measures of industry performance and welfare in the U.S. car and light truck market from 1980-2018. We estimate a differentiated products demand model for this market using product level data on market shares, prices, and product characteristics, and consumer level data on demographics, purchases, and stated second choices. We estimate marginal costs under the conduct assumption of Nash-Bertrand pricing. We relate trends in consumer welfare and markups to industry trends in market structure and the composition of products, like the rise of import competition, the proliferation of SUV's, and changes in vehicle characteristics. We find that although prices rose over time, concentration and market power decreased substantially. Consumer welfare increased over time due to improving product quality and falling marginal costs. The fraction of total surplus accruing to consumers also increased. |
| JEL: | L1 L40 L62 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29013&r= |
| By: | Albanese, Andrea (LISER); Fallucchi, Francesco (LISER); Verheyden, Bertrand (LISER (CEPS/INSTEAD)) |
| Abstract: | Over the first half of March 2021, the majority of European governments suspended Astrazeneca's Vaxzevria vaccine as a precaution following media reports of rare blood clots. We analyse the impact of the European Medicines Agency's (EMA) March 18th statement assuring the public of the safety of Vaxzevria and the immediate reinstatement of the vaccine by most countries on respondents' intention to get vaccinated. By relying on survey data collected in Luxembourg and neighbouring areas between early March and mid-April, we observe that the willingness to be vaccinated was severely declining in the days preceding the EMA statement. We implement a regression discontinuity design exploiting the time at which respondents completed the survey and find that the vaccine reinstatement substantially restored vaccination intentions. |
| Keywords: | COVID-19, vaccine hesitancy, supranational regulation, public health, regression discontinuity design |
| JEL: | I12 I18 C21 H12 H40 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14553&r= |
| By: | Haselmann, Rainer; Tröger, Tobias |
| Abstract: | This in-depth analysis provides evidence on differences in the practice of supervising large banks in the UK and in the euro area. It identifies the diverging institutional architecture (partially supranationalised vs. national oversight) as a pivotal determinant for a higher effectiveness of supervisory decision making in the UK. The ECB is likely to take a more stringent stance in prudential supervision than UK authorities. The setting of risk weights and the design of macroprudential stress test scenarios document this hypothesis. This document was provided by the Economic Governance Support Unit at the request of the ECON Committee. |
| Keywords: | Bank Supervision,Economic Governance,Banking Union,Brexit |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewh:86&r= |