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on Regulation |
| By: | Didier Laussel; Ngo Van Long; Joana Resende |
| Abstract: | Using a Markov-perfect equilibrium model, we show that the use of customer data to practice intertemporal price discrimination will improve monopoly profit if and only if information precision is higher than a certain threshold level. This U-shaped relationship lends support to a popular view that knowledge is good only if it is sufficiently refined. When information accuracy can only be achieved through costly investment, we find that investing in profiling is profitable only if this allows to reach a high enough level of information precision. Consumers expected surplus being a hump-shaped function of information accuracy, we show that consumers have an incentive to lobby for privacy protection legislation which raises the cost of monopoly’s investment in information accuracy. However, this cost should not dissuade firms to collect some information on customers’ tastes, as the absence of consumers’ profiling is actually detrimental to consumers. |
| Keywords: | consumers profiling, endogenous investment in profiling capability, dynamic monopoly, consumers‘ collective action on privacy protection legislation |
| JEL: | C73 D42 L12 L15 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9346&r= |
| By: | Marcel Wieting (KU Leuven, Department of Management, Strategy and Innovation (MSI), Naamsestraat 69, 3000 Leuven, Belgium); Geza Sapi (Düsseldorf Institute for Competition Economics, Heinrich Heine University of Düsseldorf, Universitätsstraße 1, 40225 Düsseldorf, Deutschland) |
| Abstract: | We analyze algorithmic pricing on Bol.com, the largest online marketplace in the Netherlands and Belgium. Based on more than two months of pricing data for around 2,800 popular products, we find that algorithmic sellers can both increase and reduce the price of the Buy Box (the most prominently displayed offer for a product). Consistently with collusion, algorithms benefit from each other's presence: Prices are particularly high if two algorithms bid against each other and there is a medium number of sellers in the market. We identify several algorithmic pricing patterns that are often associated with collusion. Algorithmic sellers are more likely to win the Buy Box, implying that consumers may face inflated prices more often. We also document efficiencies due to algorithmic pricing. With a sufficient number of competitors, algorithmic sellers reduce the Buy Box price and compete particularly fiercely. Algorithms furthermore reduce prices in monopoly markets. We explain this by the inability of traditional product managers to manually adjust prices product-by-product for a large number of items, which automated agents may correct. Overall, our findings call for careful policy with respect to pricing algorithms, that considers both the risk of collusion and the need to preserve potential efficiencies. |
| Keywords: | Algorithmic pricing; Artificial intelligence; Collusion; Forensic economics |
| JEL: | D42 D82 L42 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:2106&r= |
| By: | Doh-Shin Jeon (Toulouse School of Economics, University of Toulouse Capitole, 1, Esplanade de l’Université, 31080 Toulouse, Cedex 06, France); Yassine Lefouili (Toulouse School of Economics, University of Toulouse Capitole, 1, Esplanade de l’Université, 31080 Toulouse, Cedex 06, France); Leonardo Madio (University of Padova, Department of Economics and Management, Via del Santo, 33, 35139 Padova, Italy) |
| Abstract: | We study an e-commerce platform's incentives to delist IP-infringing products and the effects of introducing a liability regime that induces the platform to increase its screening intensity. We identify conditions under which platform liability is socially desirable (respectively, undesirable) by analyzing its intended and unintended effects on the innovation incentives of brand owners. We show that making the platform liable for the presence of IP-infringing products can lead to a reduction (instead of an increase) in brand owners' innovation if the platform responds to more screening by raising its commission rate. We then consider various extensions that allow us to identify additional forces that strengthen (respectively, weaken) the social desirability of liability. We conclude by presenting some implications for policymakers. |
| Keywords: | Platforms, Platform Liability, Intellectual Property, Innovation, Delisting |
| JEL: | L13 L43 L96 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:2105&r= |
| By: | Philippe Gagnepain (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Stéphane Gauthier (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | This paper exploits the repeal of the Wright amendment as a natural experiment in order to contribute to the ongoing discussion on how the enlargement of the relevant market affects the ability of firms to coordinate on a Nash equilibrium. Using data on the U.S. air transportation industry, we present a Difference-inDifference procedure which sheds light on the significant loss of accuracy in airlines' predictions in markets originating in Dallas after the Love Field airport started operating long distance services in 2014. This suggests that competition authorities should be careful when they refer to the Nash equilibrium following market expansion reforms. |
| Keywords: | Airline industry,Nash equilibrium,Market definition,Transportation |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-03359597&r= |
| By: | Renato Soeiro; Alberto Pinto |
| Abstract: | The partition of society into groups, polarization, and social networks are part of most conversations today. How do they influence price competition? We discuss Bertrand duopoly equilibria with demand subject to network effects. Contrary to models where network effects depend on one aggregate variable (demand for each choice), partitioning the dependence into groups creates a wealth of pure price equilibria with profit for both price setters, even if positive network effects are the dominant element of the game. If there is some asymmetry in how groups interact, two groups are sufficient. If network effects are based on undirected and unweighted graphs, at least five groups are required but, without other differentiation, outcomes are symmetric. |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2110.05891&r= |
| By: | Marta Castellini (Department of Economics and Management, Università degli Studi di Brescia; FEEM); Luca Di Corato (Department of Economics, University Of Venice Cà Foscari); Michele Moretto (Department of Economics and Management, Università degli Studi di Padova); Sergio Vergalli (Department of Economics and Management, Università degli Studi di Brescia; FEEM) |
| Abstract: | In this paper, we provide a real options model framing prosumers’ investment in photovoltaic plants. This is presented in a Smart Grid context where the exchange of energy among prosumers is possible. We determine the optimal size of the photovoltaic installations based on the influence the self-consumption profiles on the exchange of energy among prosumers. We calibrate the model using figures relative to the Northern Italy energy market and investigate the investment decision allowing for different prosumer profiles and consider several combinations of their individual energy demand and supply. Our findings show that the shape of individual energy demand and supply curves is crucial to the exchange of energy among prosumers, and that there could be circumstances under which no exchange occurs. |
| Keywords: | Smart Grids, Renewable Energy Sources, Real Options, Prosumer, Peer to Peer Energy Trading |
| JEL: | Q42 C61 D81 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2021:24&r= |
| By: | Sebastian Linde; Ralph Siebert |
| Abstract: | To limit the dramatic growth of U.S. health care expenditures, some states have mandated that medical providers publicly report their charge prices. Our study evaluates the heterogeneous effects of this price transparency policy. We use a comprehensive database that covers more than 2,000 hospitals nationwide from 1996 to 2017. We employ a flexible generalized synthetic control method that allows for heterogeneous treatment effects. We find that the price transparency policy not only reduced charge prices by 3.9% (which corresponds to savings of $1,164 per hospital stay) but also diminished negotiated prices by 15.9% and hospital costs by 4.7%. Our estimation results show that the effects on charge prices do not last as long as the impacts on negotiated prices and costs. We also find large heterogeneous responses across hospitals that depend on: (1) hospitals’ past charge prices prior to adopting the price transparency law, that is, high-price hospitals reduce charge and negotiated prices, while low-price hospitals increase charges; (2) hospital characteristics such as ownership, case mix, and payer mix; and (3) hospital size and market competition. We also conduct counterfactuals to predict price changes of non-treated states and find large reductions in negotiated prices. |
| Keywords: | charge prices, difference-in-difference, heterogeneous treatment effects, hospitals, hospital costs, interactive fixed effects, negotiated prices, price transparency laws, synthetic controls |
| JEL: | C10 C33 I10 I11 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9348&r= |
| By: | Vanessa Behrmann; Lars Hornuf; Jochen Zimmermann |
| Abstract: | In this article, we investigate the deregulation efforts resulting from the 2015 transposition of the EU’s Transparency Directive into German law and analyze whether a reduction in the minimum content requirements for quarterly reporting increases information asymmetries and decreases firm value. Using a novel dataset of firms that are listed on the Frankfurt Stock Exchange, our results reveal that over the period from 2012 to 2019, lower quarterly reporting levels on average have increased information asymmetry and reduced firm value. We find that this effect is stronger for second-tier stocks and firms with low media coverage. Our results are robust to potential selection effects regarding firms’ choice of quarterly reporting content levels. |
| Keywords: | quarterly reporting, disclosure deregulation, financial reporting, interim management statement, transparency directive |
| JEL: | G14 G32 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9344&r= |
| By: | Ghosh, Sanchari; Willett, Keith D. |
| Keywords: | Resource/Energy Economics and Policy, Environmental Economics and Policy, Community/Rural/Urban Development |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea21:313858&r= |
| By: | Jesper Johnsøn; Lech Marcinkowski; Dawid Sześciło |
| Abstract: | Good governance of public agencies requires the application of a set of regulatory and managerial tools to find the right balance between autonomy of agencies and adequate oversight from portfolio ministries and other actors. This paper provides insights from EU and OECD good practices, with a detailed analysis of EU acquis requirements for national regulatory agencies. New empirical evidence shows that public administrations in the Western Balkans and European Neighbourhood area lack clear policies and regulations for agency governance and misinterpret the EU acquis. This leads to a proliferation of agencies, duplication of functions and waste of public resources, a lack of accountability to portfolio ministries and generally a governance vacuum. Implementation of government policy is blocked and democratic accountability generally undermined. Finally, recommendations for better organisation of public administration are provided, based on the empirical analysis and lessons learned from SIGMA's engagement in such reforms. |
| Keywords: | accountability, agency governance, Armenia, autonomy, Georgia, Moldova, public administration reform, regulators, Ukraine, Western Balkans |
| Date: | 2021–10–22 |
| URL: | http://d.repec.org/n?u=RePEc:oec:govaac:63-en&r= |
| By: | Hellqvist, Matti; Korpinen, Kasperi |
| Abstract: | The amount of central bank money, or liquidity, needed to settle payments, depends on the way the settlement is organized. It is largest when payments are settled individually on gross basis and smallest with settlement in one big netting cycle. Retail payments are increasingly processed in instant payment schemes and systems. We evaluate how the result of this transition affects the liquidity needs of the Finnish banks. For the analysis we generate artificial transaction level data, which mimics the Finnish retail payment flows processed in the STEP2 system. This allows us to estimate the difference between the liquidity needs for the settlement in a cycle based model and in a full instant payment mode. We also present a regression model for the bank level additional liquidity needs. A full migration to instant payments is expected to cause only a small aggregate increase in the liquidity needs. However, the variations between banks or between days can be significant and emphasize the need of liquidity buffers. |
| Keywords: | instant payments,liquidity needs,payment systems,netting |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bofecr:72021&r= |
| By: | Cascino, Stefano; Correia, Maria; Tamayo, Ane |
| Abstract: | We study how the interplay of disclosure and regulation shapes capital allocation in reward crowdfunding. Using data from Kickstarter, the largest online reward crowdfunding platform, we show that, even in the absence of clear regulation and enforcement mechanisms, disclosure helps entrepreneurs access capital for their projects and bolsters engagement with potential project backers, consistent with the notion that disclosure mitigates moral hazard. We further document that, subsequent to a change in Kickstarter’s terms of use that increases the threat of consumer litigation, the association between project funding and disclosure becomes stronger. This evidence suggests that consumer protection regulation enhances the perceived credibility of disclosure. We find the effect of the change in terms of use to be more pronounced in states with stricter consumer protection regulations. Taken together, our findings yield important insights on the role of disclosure, as well as on the potential effects of increased regulation on crowdfunding platforms. |
| Keywords: | crowdfunding; Disclosure; Consumer Protection; Regulation; Enforcement |
| JEL: | G18 M41 O31 O38 |
| Date: | 2019–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:102103&r= |
| By: | Majid Hashemi |
| Abstract: | This study analyzes the extent to which electricity consumers of different income levels would increase electricity consumption and change their coping behavior to deal with power outages in response to electricity reliability improvements. The empirical analysis is conducted in two steps: (1) using an unsupervised machine learning technique, a nationally representative sample of Nepalese households is segmented into similar clusters based on the reliability constraints they face; and, (2) using regression models, the impact of reliability improvements on consumption and coping decisions is estimated. The findings point out that improved reliability is positively correlated with the probability of electric appliance ownership. The interaction of income and reliability-constraint indicators suggests that the unreliable electricity supply constrains households equally at all income levels. Moreover, the results from an ordered probit model with three off-grid backup decision alternatives indicate no association between coping decisions and income in the first two income quintiles. In contrast, higher-income quintiles are associated with significant changes in coping behavior when reliable electricity is available from the grid. Putting this paper’s findings into an energy-policy perspective, a connection to the grid by itself does not necessarily translate to realized benefits from electricity consumption. The reliability of the service plays a critical role for households at all income levels. |
| Keywords: | Electricity demand, Electricity reliability, Coping behavior, K-means clustering analysis, Low-income countries |
| JEL: | Q40 Q41 L94 O13 C38 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1469&r= |
| By: | Cherbonnier, Frédéric; Salant, David; Van Der Straeten, Karine |
| Abstract: | An auction of transport capacity can only roll forward if competitive bidders show up at the start. To characterize bidding behavior, we develop a model with a single incumbent potentially in competition with a single challenger; should the challenger obtain slots, the two firms will engage post-auction in capacity con-strained price competition. We show how the auction structure, that is, whether the slots are auctioned one at a time, and if not, how they are packaged affects the outcome. Our key finding is that the division of the available slots into tranches can significantly affect the outcome of the auction. Absent any set-asides, a single auc-tion for all the slots will almost certainly be won by an incumbent. Set-asides can enable the challenger to win one or more packages of slots. Further, when the slots are split up, and auctioned one-at-a-time or in batches, a challenger’s prospects improve significantly, and no longer rely only on set-asides. The implications of our analysis are (a) the outcome will depend crucially on auction design decisions,(b) set-asides for challengers can help and (c) an auction that results in successful entry by challengers may result in reduced auction revenues and industry profits. |
| Keywords: | Rail transportation; Open access; Auctions; Regulation |
| JEL: | D40 L12 L13 L40 L92 |
| Date: | 2021–10–18 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:126117&r= |
| By: | Zhang, Ruohao; Khanna, Neha |
| Keywords: | Environmental Economics and Policy, Institutional and Behavioral Economics, Community/Rural/Urban Development |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea21:313875&r= |
| By: | Minh Ha-Duong (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) |
| Abstract: | Vietnam's recent energy transition experience shows that grid congestion issues limit how fast a country can turn to solar PV and wind power. Utility-scale battery storage could alleviate problems by time-shifting the variable electricity production, deferring the urgency to upgrade the transmission network. However, the technology is hardly bankable now in low and middle-income countries. We propose that forming a collective of transmission network operators may accelerate access to this technology. |
| Date: | 2021–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03361262&r= |
| By: | Jonas Teusch; Samuel Ribansky |
| Abstract: | This paper discusses the contribution that kerosene taxes could make to decarbonising international air travel post COVID-19. Reaching climate neutrality by mid-century requires that all sectors, including aviation, cut emissions strongly. The paper argues that clarity on decarbonisation targets, including through carbon price signals in the form of kerosene taxes, will support an orderly transition in aviation. A gradually increasing tax on kerosene can strengthen the incentives for investment and innovation in clean aviation technologies. Taxing kerosene would also provide implementing countries with tax revenues that could be used to support clean investment and innovation, while addressing competitiveness and equity issues. Where legal obstacles to taxing kerosene exist, these can be overcome by renegotiating the relevant air service agreements. |
| Keywords: | Air transportation, Carbon taxes, Environmental externalities, Environmental taxes, Fuel taxes, Greenhouse gas emissions, Policy instruments |
| JEL: | H23 L93 Q58 R48 |
| Date: | 2021–10–20 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ctpaaa:55-en&r= |
| By: | Mathias Reynaert (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: | This paper studies the introduction of an EU-wide emission standard on the automobile market. Using panel data from 1998-2011, I find that firms decreased emission ratings by 14%. Firms use technology adoption and gaming of emission tests to decrease emissions, rather than shifting the sales mix or downsizing. I find that the standard missed its emission target, and from estimating a structural model, I find that the standard was not welfare improving. The political environment in the EU shaped the design and weak enforcement and resulted in firms' choices for abatement by technology adoption and gaming. |
| Keywords: | Environmental regulation,Compliance,Carbon emissions,Automobiles,Fuel economy |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03369684&r= |