nep-reg New Economics Papers
on Regulation
Issue of 2021‒08‒30
twenty-two papers chosen by
Christopher Decker
Oxford University

  1. The contribution of taxes, subsidies and regulations to British electricity decarbonisation By Richard Green; Iain Staffell
  2. Impact of Roaming Regulation on Revenues and Prices of Mobile Operators in the EU By Lukasz Grzybowski; Ángela Munoz-Acevedo
  3. Generalized linear competition: From pass-through to policy By Christos Genakos; Felix Grey; Robert Ritz
  4. Measuring the Impact of Electricity Market Reform in a Chinese Context By Michael Pollitt
  5. Hayek and the Texas blackout By Stephen Littlechild; Lynne Kiesling
  6. Two-sided Markets, Pricing, and Network Effects By Jullien, Bruno; Pavan, Alessandro; Rysman, Marc
  7. Digital payments in China: adoption and interactions among applications By Dominique Torre; Qing Xu
  8. Consumer Search and Choice Overload By Rey, Patrick; Nocke, Volker
  9. The Affordable Care Act After a Decade: Industrial Organization of the Insurance Exchanges By Benjamin R. Handel; Jonathan T. Kolstad
  10. North-South Displacement Effects of Environmental Regulation: The Case of Battery Recycling By Shinsuke Tanaka; Kensuke Teshima; Eric Verhoogen
  11. Online reviews and customer satisfaction: The use of Trustpilot by UK retail energy suppliers and three other sectors By Stephen Littlechild
  12. Asymmetric Effects of Rate Structure Change on ResidentialWater Conservation in California By Lee, Juhee; Nemati, Mehdi; Allaire, Maura; Dinar, Ariel
  13. Collusion, Mergers, and Related Antitrust Issues By John Asker; Volker Nocke
  14. Storing Power: Market Structure Matters By David Andrés-Cerezo; Natalia Fabra
  15. Corrective Regulation with Imperfect Instruments By Eduardo Dávila; Ansgar Walther
  16. Regulatory Costs of Being Public: Evidence from Bunching Estimation By Michael Ewens; Kairong Xiao; Ting Xu
  17. The Productivity Puzzle in Network Industries: Evidence from the Energy Sector By Victor Ajayi; Geoffroy Dolphin; Karim Anaya; Michael Pollitt
  18. Global lending conditions and international coordination of financial regulation policies By Enisse Kharroubi
  19. Dynamic Monopoly Pricing With Multiple Varieties: Trading Up By Stefan Buehler; Nicolas Eschenbaum
  20. Regulation and Informal Market for Schools in Delhi. By Bose, Sukanya; Ghosh, Priyanta; Sardana, Arvind; Boda, Manohar
  21. Is Meat Too Cheap? Towards Optimal Meat Taxation By Funke, Franziska; Mattauch, Linus; van den Bijgaart, Inge; Godfray, Charles; Hepburn, Cameron; Klenert, David; Springmann, Marco; Treich, Nicholas
  22. Vulnerable households and fuel poverty: policy targeting efficiency in Australia’s National Electricity Market By Paul Simshauser

  1. By: Richard Green (Imperial College Business School); Iain Staffell (Imperial College London)
    Keywords: Electricity Decarbonisation, Shapley Value, Carbon Pricing, Renewables
    JEL: L94 Q48 Q58
    Date: 2021–03
  2. By: Lukasz Grzybowski; Ángela Munoz-Acevedo
    Abstract: We empirically assess the impact of the EU roaming regulation on mobile operators’ average revenues per user (ARPU) and retail prices. Using a differences-in-difference approach, hedonic price regressions and detailed operator and plan-level data we find that the regulation decreased mobile operator’s revenues per user, while it had no impact on tariffs during the latest phase of the regulation.
    Keywords: roaming, mobile telecommunications, regulation
    JEL: L13 L50 L96
    Date: 2021
  3. By: Christos Genakos (CJBS, University of Cambridge); Felix Grey (Faculty of Economics and Energy Policy Research Group, University of Cambridge); Robert Ritz (EPRG, CJBS, University of Cambridge)
    Keywords: Pass-through, imperfect competition, regulation, carbon pricing, airlines, political economy
    JEL: D43 H23 L51 L93
    Date: 2020–07
  4. By: Michael Pollitt (EPRG, CJBS, University of Cambridge)
    Keywords: power sector reform, social cost benefit analysis, state of the market
    JEL: L94
    Date: 2021–04
  5. By: Stephen Littlechild (EPRG, CJBS, University of Cambridge); Lynne Kiesling (University of Colorado-Denver)
    Keywords: Hayek, Texas blackout, scarcity pricing, retail electricity competition
    JEL: L94 L51 K23 D47 D82
    Date: 2021–06
  6. By: Jullien, Bruno; Pavan, Alessandro; Rysman, Marc
    Abstract: The chapter has 9 sections, covering the theory of two-sided markets and related empirical work. Section 1 introduces the reader to the literature. Section 2 covers the case of markets dominated by a single monopolistic rm. Section 3 discusses the theoretical literature on competition for the market, focusing on pricing strategies that rms may follow to prevent entry. Section 4 discusses pricing in markets in which multiple platforms are active and serve both sides. Section 5 presents alternative models of platform competition. Section 6 discusses richer matching protocols whereby platforms pricediscriminate by granting access only to a subset of the participating agents from the other side and discusses the related literature on matching design. Section 7 discusses identication in empirical work. Section 8 discusses estimation in empirical work. Finally, Section 9 concludes.
    Keywords: Two-sided market; platform; pricing; network effects; matching
    Date: 2021–08–21
  7. By: Dominique Torre (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (... - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015 - 2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur); Qing Xu (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (... - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015 - 2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur)
    Abstract: Alipay and WeChat Pay, the mobile payment services of Alibaba and Tencent, rapidly spread out in China from the early 2010s. Their successes motivate three open questions: (i) why the two companies did not really compete to gain the exclusivity of their clients? (ii) why the installed basis of the incumbent did not prevent the success of the entrant? (iii) why the new entry accelerated the dffusion of the incumbent's solutions? This paper elaborates an adoption model which encapsulates the distinctive features of the two service providers. It points out that complementaries between the two solutions (dfferentiated services offered to clients, decreasing adoption costs and contrasting business models) can explain the interest of both service providers to avoid any strong competition. During the adoption phase, Alipay and WeChat had interest to a mutual development as soon as they did not offered the same product, with the same business model. In this situation, every improvement of the technology of each operator increased the profit of the other. This strategic complementarity effect between the two competitors could however decrease during time their incentive to innovate.
    Keywords: strategic complementarities,online payment,electronic wallets,payments in China,mobile-payment,paiement mobile,complémentarités stratégiques,paiement en ligne,porte-monnaie électronique,paiements en Chine
    Date: 2020
  8. By: Rey, Patrick; Nocke, Volker
    Abstract: We consider a multiproduct seller facing consumers who must search to learn prices and valuations. The equilibrium features choice overload: the larger the product line, the fewer consumers start searching. We provide conditions under which the seller o¤ers too much or too little variety. We then allow the seller to position products or make recommendations, thereby introducing the possibility of directed search, and show that the seller may .nd it pro.table to maintain some noise. Finally, we study the seller.s incentive to disclose product identity and extend our analysis to that of a platform choosing which sellers to host.
    Keywords: Sequential consumer search; product variety; choice overload; multi-product firm; platform
    JEL: L12 L15 D42
    Date: 2021–08–24
  9. By: Benjamin R. Handel; Jonathan T. Kolstad
    Abstract: The regulated insurance exchanges set up in the Affordable Care Act (ACA) were designed to deliver affordable, efficient health coverage through private insurers. It is crucial to study the complex industrial organization (IO) of these exchanges in order to assess their impacts to date, during the first decade of the ACA, and in order to project their impacts going forward. We revisit the inherent market failures in health care markets that necessitate key ACA exchange regulations and investigate whether they have succeeded in their goals of expanding coverage, creating robust marketplaces, providing product variety, and generating innovation in health care delivery. We discuss empirical IO research to date and also highlight shortcomings in the existing research that can be addressed moving forward. We conclude with a discussion of IO research-based policy lessons for the ACA exchanges and, more generally, for managed competition of private insurance in health care.
    JEL: G22 H2 I11 I13
    Date: 2021–08
  10. By: Shinsuke Tanaka; Kensuke Teshima; Eric Verhoogen
    Abstract: This study examines the effect of a tightening of the U.S. air-quality standard for lead in 2009 on the relocation of battery recycling to Mexico and on infant health in Mexico. In the U.S., airborne lead dropped sharply near affected plants, most of which were battery-recycling plants. Exports of used batteries to Mexico rose markedly. In Mexico, production increased at battery-recycling plants, relative to comparable industries, and birth outcomes deteriorated within two miles of those plants, relative to areas slightly farther away. The case provides a salient example of a pollution-haven effect between a developed and a developing country.
    JEL: F18 I14 I15 O15 Q56
    Date: 2021–08
  11. By: Stephen Littlechild (University of Birmingham and CJBS)
    Keywords: online reviews, customer satisfaction, customer feedback, Trustpilot, retail energy market, supermarkets, banks, mobile phone providers
    JEL: L15 L84 L94
    Date: 2020–09
  12. By: Lee, Juhee; Nemati, Mehdi; Allaire, Maura; Dinar, Ariel
    Keywords: Resource/Energy Economics and Policy, Environmental Economics and Policy, Community/Rural/Urban Development
    Date: 2021–08
  13. By: John Asker; Volker Nocke
    Abstract: This survey examines recent developments in economic research relating to antitrust, paying specific attention to research in the areas of collusion and merger enforcement. Research relating to both collusion and mergers has made significant advances in the last twenty years. With respect to collusion, this includes important theoretical and empirical work on the sustainability, structure, and impact of collusive schemes. With respect to mergers, this includes important work on the impact of enforcement institutions, both theoretical and empirical work on unilateral effects, and theoretical work on the selection of which mergers get proposed to antitrust agencies and optimal policy in the face of that selection. A feature of recent research is the increasing complementarity between empirical work (ranging from observational studies to model-based measurement) and theoretical work in advancing our understanding of collusive and merger-related phenomena.
    JEL: K21 L4
    Date: 2021–08
  14. By: David Andrés-Cerezo (European University Institute); Natalia Fabra (Universidad Carlos III and CEPR)
    Keywords: Storage, electricity, market structure, investment, vertical relations
    JEL: L22 L94
    Date: 2020–12
  15. By: Eduardo Dávila; Ansgar Walther
    Abstract: This paper studies the optimal design of second-best corrective regulation, when some agents or activities cannot be perfectly regulated. We show that policy elasticities and Pigouvian wedges are sufficient statistics to characterize the marginal welfare impact of regulatory policies in a large class of environments. We show that the optimal second-best policy is determined by a subset of policy elasticities: leakage elasticities, and characterize the marginal value of relaxing regulatory constraints. We apply our results to scenarios with unregulated agents/activities and with uniform regulation across agents/activities. We illustrate our results in applications to shadow banking, scale-invariant regulation, asset substitution, and fire sales.
    JEL: D62 G18 G28 H21
    Date: 2021–08
  16. By: Michael Ewens; Kairong Xiao; Ting Xu
    Abstract: The increased burden of disclosure and governance regulations is often cited as a key reason for the significant decline in the number of publicly-listed companies in the U.S. We explore the connection between regulatory costs and the number of listed firms by exploiting a regulatory quirk: many rules trigger when a firm’s public float exceeds a threshold. Consistent with firms seeking to avoid costly regulation, we document significant bunching around multiple regulatory thresholds introduced from 1992 to 2012. We present a revealed preference estimation strategy that uses this behavior to quantify regulatory costs. Our estimates show that various disclosure and internal governance rules lead to a total compliance cost of 4.1% of the market capitalization for a median U.S. public firm. Regulatory costs have a greater impact on private firms’ IPO decisions than on public firms’ going private decisions. However, heightened regulatory costs only explain a small fraction of the decline in the number of public firms.
    JEL: G28 G32 K22
    Date: 2021–08
  17. By: Victor Ajayi (EPRG, CJBS, University of Cambridge); Geoffroy Dolphin (EPRG, CJBS, University of Cambridge); Karim Anaya (EPRG, CJBS, University of Cambridge); Michael Pollitt (EPRG, CJBS, University of Cambridge)
    Keywords: Total factor productivity, growth accounting, regulation, energy networks, climate policy
    JEL: D24 O47 H23
    Date: 2020–07
  18. By: Enisse Kharroubi
    Abstract: Using a model of strategic interactions between two countries, I investigate the gains to international coordination of financial regulation policies, and how these gains depend on global lending conditions. When global lending conditions are determined non-cooperatively, I show that coordinating regulatory policies leads to a Pareto improvement relative to the case of no cooperation. In the non-cooperative equilibrium, one region - the core - determines global lending conditions, leaving the other region - the periphery - in a sub-optimal situation. The periphery then tightens regulatory policy to reduce the cost of sub-optimal lending conditions. Yet, in doing so, it fails to internalise a cross-border externality: tightening regulatory policy in one region limits ex ante borrowing in the other region, which increases the cost of sub-optimal lending conditions for the periphery. The equilibrium with cooperative regulatory policies can then improve on this outcome as both regions take into account the cross-border externality and allow for larger ex ante borrowing, ending in a lower cost of suboptimal lending conditions for the periphery.
    Keywords: regulatory policy, global financial conditions, international coordination
    JEL: D53 D62 F38 F42 G18
    Date: 2021–08
  19. By: Stefan Buehler; Nicolas Eschenbaum
    Abstract: This paper studies dynamic monopoly pricing for a broad class of Coasian and Non-Coasian settings. We show that the driving force behind pricing dynamics is the seller's incentive to trade up consumers to higher-valued consumption options. In Coasian settings, consumers can be traded up from the static optimum, and pricing dynamics arise until all trading-up opportunities are exhausted. In Non-Coasian settings, consumers cannot be traded up from the static optimum, and no pricing dynamics arise. Hence, dynamic monopoly pricing can be characterized by checking for trading-up opportunities in the static optimum.
    Date: 2021–08
  20. By: Bose, Sukanya (National Institute of Public Finance and Policy); Ghosh, Priyanta (Gour Banga University); Sardana, Arvind (Social Science Group, Eklavya); Boda, Manohar (JNU)
    Abstract: The unrecognised school sector in Delhi has grown significantly over the years, and since long ceased to be marginal. The aim of the study is to understand the regulatory practice on the ground in this sector. According to the law, private schools must seek recognition from the appropriate authorities such that their functioning is aligned to public interest. Reading of the laws and an important Court case provides the background to the primary fieldwork on which the analysis is based. The results of the field survey indicate that unrecognised schools are growing unfettered. There is incentive for informality, regulation is totally absent and vested interests attempt to perpetuate the practice. The continuation of hands-off policy of the government vis-à-vis the sector despite the clear pronouncements in the Right to Education Act is explored from a variety of perspectives. Some suggestions towards formalisation are presented.
    Keywords: Low fee private schools ; unrecognised schools ; regulation ; informality in schooling ; educational policy ; educational law ; RTE.
    Date: 2021–08
  21. By: Funke, Franziska; Mattauch, Linus; van den Bijgaart, Inge; Godfray, Charles; Hepburn, Cameron; Klenert, David; Springmann, Marco; Treich, Nicholas
    Abstract: Livestock is known to play a significant role in climate change and to negatively impact global nitrogen cycles and biodiversity. However, economically efficient policies for regulating meat production and consumption are under-researched. In the absence of first-best policy instruments for the livestock sector, second-best consumption taxes on meat can address multiple environmental externalities simultaneously, while improving diet-related public health. Here, we review the empirical basis for the 'social costs of meat' and study rationales for regulatory efforts to tax meat in high-income countries from the perspective of public, behavioural and welfare economics: (i) multiple environmental externalities, (ii) adverse effects on one's own health, (iii) animal welfare, (iv) learning curves for 'alternative protein technologies', and (v) distributional effects. We conclude that meat is significantly underpriced and provide preliminary estimates of the environmental social costs associated with meat consumption. We identify several directions for future research towards optimal meat taxation.
    Date: 2021–03
  22. By: Paul Simshauser (Griffith Business School, Griffith University)
    Keywords: Energy Affordability, Fuel Poverty, Policy Targeting, Targeting Efficiency, Customer Hardship Policy
    JEL: D25 D80 G32 L51 Q41
    Date: 2021–03

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