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on Regulation |
| By: | Nikhil Agarwal; Eric Budish |
| Abstract: | This Handbook chapter seeks to introduce students and researchers of industrial organization (IO) to the field of market design. We emphasize two important points of connection between the IO and market design fields: a focus on market failures—both understanding sources of market failure and analyzing how to fix them—and an appreciation of institutional detail. Section II reviews theory, focusing on introducing the theory of matching and assignment mechanisms to a broad audience. It introduces a novel “taxonomy” of market design problems, covers the key mechanisms and their properties, and emphasizes several points of connection to traditional economic theory involving prices and competitive equilibrium. Section III reviews structural empirical methods that build on this theory. We describe how to estimate a workhorse random utility model under various data environments, ranging from data on reported preference data such as rank-order lists to data only on observed matches. These methods enable a quantification of trade-offs in designing markets and the effects of new market designs. Section IV discusses a wide variety of applications. We organize this discussion into three broad aims of market design research: (i) diagnosing market failures; (ii) evaluating and comparing various market designs; (iii) proposing new, improved designs. A point of emphasis is that theoretical and empirical analysis have been highly complementary in this research. |
| JEL: | C78 D47 L00 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29367&r= |
| By: | Lyu, Chenyan (Department of Economics, Copenhagen Business School); Jamasb, Tooraj (Department of Economics, Copenhagen Business School); Spanholtz, Jan Peter Georg (Department of Economics, Copenhagen Business School) |
| Abstract: | The 2021 energy crisis comes at an inconvenient time for the green transition agenda and can affect disposable income, unemployment and inflation. This paper discusses the likely effects and implications for energy networks and policy. The economic principals behind the crisis may seem intractable, but they are familiar. A combination of known factors has caused the crisis. Europe is dependent on gas imports and a shortage of supplies has contributed to rising gas and electricity prices. The low-price elasticity of energy demand and supply makes them susceptible to price volatility even with modest quantity shocks. Higher CO2 abatement costs, has forced some firms to increase their reliance on natural gas, which in turn drives up the gas prices. The crisis has brought forward the need for some overdue measures and policies including a more robust transition management, new transmission capacity, more storage, balance of contract types, and network regulation models. |
| Keywords: | Natural gas; Carbon price; Economic recovery; Integrated energy markets |
| JEL: | Q30 Q41 R11 |
| Date: | 2021–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cbsnow:2021_016&r= |
| By: | Aasheesh Dixit; Patanjal Kumar; Suresh Jakhar |
| Abstract: | In this paper, we examine the effect of various contracts between a socially concerned airport and an environmentally conscious airline regarding their profitability and channel coordination under two distinct settings. First, we consider no government interventions, while in the second, we explore government-imposed taxations to curb emissions. Furthermore, we investigate the impact of passenger greening sensitivity, greening cost, and consumer surplus coefficient on conveyance fees, ticket fare, greening level and the channel welfare. Our analysis shows that the revenue sharing and linear two part tariff contracts coordinate the decentralised airport-airline channel. Our findings also reveal that players greening and social efforts can improve both the welfare and efficiency of the channel simultaneously. Importantly, under government interventions, taxation does help improve the greening level of the channel in both coordinating and non coordinating contracts. However, the greening level in the non-coordinating contracts with taxation is still less than the coordinating contracts even without tax. Finally, we also extended the model to include a duopoly airline market with pricing and greening competition. We analyze the effect of competetiton between airlines on airport utility, airline profit, ticket fare and greening level. |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2110.11694&r= |
| By: | Thammarak Moenjak; Veerathai Santiprabhob |
| Abstract: | In the digital era, new forms of non-bank entities have emerged and gained increasingly prominent roles in providing financial services. These non-bank entities, particularly those associated with non-financial conglomerates and large technology companies (BigTech) pose new challenges for financial regulators whether in terms of financial stability, level-playing field competition, or customer protection. This article discusses emerging trends in the rise of non-bank entities in the digital era, the challenges they pose, and what financial regulatory approaches can help to address those challenges. This article proposes that a holding company structure could be applied to regulate non-financial conglomerates or BigTech firms providing financial services through subsidiaries. This proposal is expected to help address regulatory concerns where existing regulatory approaches cannot adequately cope with. |
| Keywords: | Regulation; Global Economy; Industrial Organization |
| JEL: | G23 K21 K23 O16 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:pui:dpaper:154&r= |
| By: | Unsorg, Maximiliane; Rostam-Afschar, Davud |
| JEL: | L4 L5 L2 J44 J23 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc21:242426&r= |
| By: | Barjaková, Martina; Belton, Cameron; Purcell, Karl; Lunn, Pete |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp704&r= |
| By: | Dertwinkel-Kalt, Markus; Wey, Christian |
| JEL: | L12 L41 D42 K21 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc21:242338&r= |
| By: | Cherbonnier, Frédéric; Lévêque, Christophe |
| Abstract: | Competition can theoretically counter or reinforce tendency of experts to pass biased information to customers. Using data from an online company connecting real estate brokers with clients who want to sell their properties, we show that more competition or lower opportunity to collude induce brokers to raise their ini- tial price estimation by more than 3%. This is observed upstream, when experts appraise the property for sale. Competition partially prevents brokers from biais- ing downward evaluations, and is benecial to the client since it translates into a positive eect on listing and sale prices with no signicant eect on the time to sale. |
| Keywords: | Information revelation; Competition; Price appraisal; Real Estate Bro-; kers; |
| JEL: | L15 D83 R30 L85 |
| Date: | 2021–10–22 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:126130&r= |
| By: | Nicole Allenspach; Oleg Reichmann; Javier Rodriguez-Martin |
| Abstract: | This paper aims at deriving the market's assessment as to whether banks worldwide still benefit from a Too Big To Fail (TBTF) subsidy. Such a subsidy reflects the market's expectation of government support in the event of a crisis and results in reduced funding costs for the benefiting bank. To capture this effect, we use two different extensions of the Merton (1974) framework. We find that large banks benefit from a TBTF subsidy, while large nonfinancial firms do not. This subsidy has declined somewhat since the Global Financial Crisis (GFC) but remains larger than before the crisis. These conclusions also hold when considering Contingent Convertible (CoCos) and bail-in bonds as fully loss-absorbing. Moreover, we find differences in the TBTF subsidy across jurisdictions and provide evidence that these can to a large extent be explained by differences in bank health. |
| Keywords: | Banking, too big to fail, CreditEdge, CreditGrades |
| JEL: | G12 G18 G21 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:snb:snbwpa:2021-18&r= |
| By: | Omar Bamieh (University of Vienna); Andrea Cintolesi (Bank of Italy) |
| Abstract: | We measure the extent to which familism accounts for the intergenerational transmission of jobs in regulated professions. Before 2004, local committees graded the Italian bar exams for lawyers, and after 2004, exams were randomly assigned to external committes for grading. We proxy for family ties with the number of successful candidates sharing a family name and law firm address with an already registered lawyer. We estimate that the number of new entrants with a family tie drops by at least 10 percent, while the number of new lawyers does not change, showing that familism accounts for an important part of the intergenerational transmission in our setting. While we do not find significant differences by gender, familism is stronger in areas with low social capital, which also feature lower rents from licenses. |
| Keywords: | lawyers, regulated professions, familism. |
| JEL: | J44 J62 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1350_21&r= |
| By: | Lundin, Erik (Research Institute of Industrial Economics (IFN)) |
| Abstract: | I evaluate the effect of the 2011 Swedish electricity market splitting reform on the allocation of wind power, exploiting a unique data set of all Swedish applications for wind power since 2003. By comparing investments in each price zone before and after the reform using a difference-in-differences (DiD) estimator, I find that 18 percent of all projects constructed by large firms after the reform were allocated to the high price zone due to the reform. This effect is not driven by geographic differences in approval rates, suggesting that the estimated effect also reflects investor preferences. <p> Small, sometimes locally owned firms, did not react to the reform. A likely reason is that the locational choice set of small firms usually only include one of the price zones. A triple differences estimator using small firms as a control group, and a nearest neighbor matching estimator comparing areas with similar prerequisites for wind power, largely confirm the main DiD results. However, due to the comparatively few applications submitted prior to the announcement of the reform, the parallel trends assumption cannot be entirely verified, suggesting that results should be interpreted with care. |
| Keywords: | Electricity market design; Zonal market; Electricity market integration; Spatial price dispersion; Wind power; Wholesale electricity market; Nord Pool |
| JEL: | D22 D47 Q21 Q48 |
| Date: | 2021–10–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1412&r= |
| By: | Giuseppe Albanese (Bank of Italy); Rosalia Greco (Bank of Italy); Luciano Lavecchia (Bank of Italy); Marco Manile (Bank of Italy) |
| Abstract: | The lack of detailed information on the firms profiting from incentives in Italy makes it very difficult to perform analyses of the characteristics of State aid in this country. To close this gap, this paper exploits a new database, the National State Aid Register, which provides detailed information on incentives falling within the perimeter of State aid in accordance with EU law. Our analysis for the years 2018-19 suggests that industrial policy in Italy is highly fragmented, with fewer resources utilized with respect to the European average. We also show that this aid has been primarily used for SMEs, and to a greater extent (as a ratio of turnover) for those in Southern Italy. |
| Keywords: | state aids, Registro nazionale degli aiuti di Stato, industrial policy, incentives |
| JEL: | O25 L52 H32 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_640_21&r= |
| By: | Frédéric Dobruszkes; Amparo Moyano |
| Abstract: | This chapter first investigates the geography of actual rail transport worldwide. In doing so, we set up a typology based upon network- and traffic-related indicators per country, with special attention paid to the distinction between passenger and freight traffic. Then the chap-ter covers the factors that explain the geography of infrastructures and traffic, taking into account historic factors that may have come into play a long time ago, given that many actu-al lines were built a considerable time ago. As the chapter elucidates, rail transport is shaped by physical geography, geo-economic factors, the shape of urban systems, intermodal com-petition in line with distances, railways logics, and the importance of network effects and political factors. |
| Keywords: | Rail transport geography; Railways; High-speed lines; Rail infrastructure; Rail traffic; Rail network; Transport history; Transport planning; Intermodal competition; Urban systems |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/333204&r= |
| By: | Marie-Laure Cabon-Dhersin (CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université); Nicolas Drouhin (CREM - Centre de recherche en économie et management - CNRS - Centre National de la Recherche Scientifique - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - UNICAEN - Université de Caen Normandie - NU - Normandie Université, UNICAEN UFR SEGGAT - Université de Caen Normandie - UFR de Sciences Économiques, Gestion, Géographie et Aménagement des Territoires - UNICAEN - Université de Caen Normandie - NU - Normandie Université) |
| Abstract: | We show that the long-term properties of price and cost in Chamberlin's (1933) monopolistic competition model can be reproduced with a soft-capacity constrained price competition oligopoly model for a homogeneous good with free entry. |
| Keywords: | price competition,soft-capacity constraint,free entry,U-shaped cost function,monopolistic competition,Chamberlin |
| Date: | 2021–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-03378500&r= |