|
on Regulation |
| By: | Döpper, Hendrik; Sapi, Geza; Wey, Christian |
| Abstract: | This paper analyzes vertical integration incentives in a bilaterally duopolistic industry where input market outcomes are determined by bargaining. Vertical integration incentives are a combination of horizontal integration incentives up- and downstream and depend on the strength of substitutability or complementarity and the shape of the unit cost function. In contrast to the widely prevailing view in competition policy, vertical integration can under particular circumstances convey more bargaining power to the merged entity than a horizontal merger to monopoly. In a bidding game for an exogenously determined target firm, a vertical merger can dominate a horizontal one, while pre-emption does not occur. |
| Keywords: | Bargaining,Vertical Mergers,Shapley Value |
| JEL: | L13 L22 L42 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:389&r= |
| By: | David Lowing (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | A gas distribution network connects consumers to a source in gas. It is managed by a network operator, whose task incurs various costs, some of which may not be attributable to a particular consumer. Assuming that the operator wishes to recover these costs by charging for its services, the problem is then to determine how much each consumer should pay. In other words, how should these costs be shared among consumers. In this paper, we address this problem and propose cost sharing rules that depend on the network and the demands of the consumers. To that end, we adopt a normative approach and resort to three principles: (i) the independence of higher demands principle, (ii) the connection principle and (iii) the uniformity principle. Applying (i) and (ii), we derive the Connection rule and applying (i) and (iii), we derive the Uniform rule. It appears that (ii) and (iii) are incompatible. In order to make a trade-off between these two principles, we propose the Mixed rules, which compromise between the Connection rule and the Uniform rule. For each cost sharing rule, an axiomatic characterization is provided. Then, we show that the Connection rule coincides with the multi-choice Shapley value of a specific multi-choice game derived from the network and the demands of the consumers. Moreover, the Connection rule is in the Core of this specific multi-choice game. Similarly, we show that the Uniform rule coincides with the multi-choice Equal division value and the Mixed rules coincide with the multi-choice Egalitarian Shapley values. |
| Keywords: | Gas distribution network,Cost sharing rules,Axiomatization,Multi-choice games |
| Date: | 2022–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03680156&r= |
| By: | Juan Ortner (Boston University); Sylvain Chassang (Princeton University); Kei Kawai (University of California, Berkeley); Jun Nakabayashi (Kindai University) |
| Abstract: | We propose an equilibrium theory of data-driven antitrust oversight in which regulators launch investigations on the basis of suspicious bidding patterns and cartels can adapt to the statistical screens used by regulators. We emphasize the use of asymptotically safe tests, i.e. tests that are passed with probability approaching one by competitive firms, regardless of the underlying economic environment. Our main result establishes that screening for collusion with safe tests is a robust improvement over laissez-faire. Safe tests do not create new collusive equilibria, and do not hurt competitive industries. In addition, safe tests can have strict bite, including unraveling all collusive equilibria in some settings. We provide evidence that cartel adaptation to regulatory oversight is a real concern. |
| Keywords: | collusion, auctions, bidding rings, cartels, procurement, antitrust |
| JEL: | D44 L40 |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:pri:cepsud:300&r= |
| By: | Takuya Hara |
| Abstract: | Studies have evaluated the economic feasibility of 100% renewable power systems using the optimization approach, but the mechanisms determining the results remain poorly understood. Based on a simple but essential model, this study found that the bottleneck formed by the largest mismatch between demand and power generation profiles determines the optimal capacities of generation and storage and their trade-off relationship. Applying microeconomic theory, particularly the duality of quantity and value, this study comprehensively quantified the relationships among the factor cost of technologies, their optimal capacities, and total system cost. Using actual profile data for multiple years/regions in Japan, this study demonstrated that hybrid systems comprising cost-competitive multiple renewable energy sources and different types of storage are critical for the economic feasibility of any profile. |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2205.15451&r= |
| By: | Thomas Longden (Crawford School of Public Policy, Australian National University (ANU) and Zero-Carbon Energy for the Asia-Pacific (ZCEAP) Grand Challenge, ANU); Frank Jotzo (Crawford School of Public Policy, Australian National University (ANU)); Andreas Löschel (Center for Applied Economic Research, University of Münster) |
| Abstract: | Green hydrogen holds promise as a zero-carbon energy carrier if production costs fall low enough to achieve cost-competitiveness with alternatives. We specify reducedform marginal effect relationships that capture the underlying dynamics of existing structural models of hydrogen production via electrolysis. These specifications provide the marginal effect of electricity costs, electrolyser capital costs and capacity utilisation factors on the cost of producing hydrogen. And we use them to identify the potential combinations of cost components that meet threshold production costs under which green hydrogen will be cost-competitive. In the near-term, there is particular promise for low cost green hydrogen production where electrolysers are co-located with renewable energy parks to use electricity that would otherwise be curtailed. Or when they operate during periods of low or negative prices in electricity grids. Green hydrogen stand-alone operations could be commercially viable with continued reductions in renewable energy generation and electrolysers. |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:een:ccepwp:2108&r= |
| By: | Kiani, Behdad; Ogden, Joan |
| Abstract: | The transportation sector is a major source of California’s greenhouse gas emissions, contributing 41% of the state total[1]. California policy is moving rapidly toward Zero Emission battery electric vehicles (BEV) and hydrogen fuel cell vehicles (FCV). Governor Newsom has issued an executive order that all new in-state sales of passenger vehicles should be Zero Emission Vehicles (ZEV) by 2035. Further, the California Air Resources Board has approved rulemaking requiring that more than half of trucks sold in the state must be zero-emissions by 2035, and all of them by 2045 [1a].California has the ambitious goal of achieving a 60% renewable electricity grid by 2030 and 100% carbon free grid by 2045. High penetration of variable renewable energy (VRE) requires seasonal storage to match supply and demand and hydrogen could be a possible candidate for this purpose [1b]. The author has developed the CALZEEV energy-economic model to study possible roles for hydrogen in a VRE intensive future grid with a large Zero Emission Vehicle fleet, comprised of both BEVs and FCVs. In particular, we study whether we can provide sufficient seasonal storage for a 100% zero carbon electricity grid and the potential role of H2 infrastructure in a BEV/FCEV combination for a sustainable path towards a zero-emission energy system. The role of hydrogen infrastructure in seasonal storage for balancing VRE generation while meeting demand for hydrogen vehicles year around has been studied, including economic impacts. |
| Keywords: | Engineering |
| Date: | 2022–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:itsdav:qt2gp9q07n&r= |
| By: | Mara Hammerle (Crawford School of Public Policy, Australian National University); Paul J. Burke (Crawford School of Public Policy, Australian National University) |
| Abstract: | Does variation in household vulnerability influence the effects of switching to new energy efficient electrical appliances in the home? Using the Australian Capital Territory (ACT) Energy Efficiency Improvement Scheme (EEIS) as a case study, this paper examines impacts on energy consumption and greenhouse gas emissions from replacing natural gas heaters and hot water systems with more energy-efficient electric alternatives. To do so we use quarterly billing data over 2015–2020 for a sample of residential customers of the ACT’s largest energy retailer, ActewAGL. Based on fixed effects panel regressions, we find that the electric replacements led to large decreases in residential natural gas consumption and smaller increases in consumption of electricity from the grid in energy content terms. Reductions in natural gas use from switching to electric hot water heaters were particularly large for the more vulnerable households in the scheme. The emissions effects depend on the emissions factor applied for grid electricity and underline the key role that residential electrification can play in decarbonization efforts if electricity is from low-emission sources. |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:een:ccepwp:2201&r= |
| By: | Christine Brandstätt |
| Abstract: | Self-supply can destabilize the finance of a distribution network. This paper analyses under which circumstances the tariff structure of a distribution network is stable or unstable under pressure of self-supply and provides recommendation how to change the tariff structure to restore stability if it is unstable. This paper analyses the occurrence of self-reinforcing dynamics in relation to volumetric network tariffs and surcharges in networks with a high propensity for self-supply. We model the level of self-supply endogenously depending on profitability and explore network tariffs that avoid an unstable dynamic for investments into self-supply in the system. Analysed tariff modifications concern the energy and load split, the extent of netting, and a variation in cost pass-through to lower network levels. Adding to the recent literature, we explore the option to calibrate tariff parameters predetermined as well as endogenously linked to self-supply levels in the network. We find endogenously determined modifications of load- and energy split and variations in the cost pass-through from upper network levels between parallel grids most promising to prevent a self-reinforcing dynamic. The analysed modifications also open up the possibility to calibrate a new, sustainable level of self-supply and to incorporate uncertainties in the tariff design. |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:bei:00bewp:0037&r= |
| By: | Antoine Dubus (D-MTEC - Department of Management, Technology, and Economics [ETH Zürich] - ETH Zürich - Eidgenössische Technische Hochschule - Swiss Federal Institute of Technology [Zürich]); Patrick Legros (ECARES - European Center for Advanced Research in Economics and Statistics - ULB - Université libre de Bruxelles) |
| Abstract: | Firms may share information to discover potential synergies between their data sets and algorithms, which eventually may lead to more efficient mergers and acquisitions (M&A) decisions. However, as pointed out by Arrow, information sharing also modifies the competitive balance when companies do not merge, and a firm may be reluctant to share information with potential rivals. Under general conditions, we show that firms benefit from (partially) sharing information. Because more sharing of information may increase industry expected profits both when there is head-to-head competition and when there is an M&A, the presence of a regulator who can prevent or allow the M&A can decrease or increase the level of information sharing, as well as consumer surplus, with respect to the no-regulator case. A regulator who can also control the level of information sharing will allow firms to share information. |
| Date: | 2022–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03698203&r= |
| By: | Yikai Zhao; Jun Nagayasu |
| Abstract: | We study the impact of state-owned enterprises'(SOE) privatization on how firm productivity responds to agglomeration and selection effects, and investigate whether and how policymakers can utilize agglomeration and selection to benefit from privatization. As SOEs enjoy privileged treatment because of their government ties, we argue that the agglomeration advantages of SOEs are rooted in their connection with local governments who regulate them, who share local information with surrounding SOEs, such as labor markets, resources, and tacit knowledge. Overall, we attempt to answer the following questions: 1) Will the SOEs f reform negatively (positively) influence enterprises' agglomeration (selection) effects? 2) To what extent is this influence affected by the local government? 3) Is this adverse or favorable impact heterogeneous? |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:toh:dssraa:126&r= |
| By: | Georg Zachmann |
| Abstract: | An earlier version of this paper was co-written with Julia Anderson, providing excellent input on the legal basics and a deep dive into green efficiency that has been used in this paper. Based on this, and many comments (special thanks to Marie Le Mouel), the paper developed into a very broad take on the role of competition in decarbonisation. Research assistance from Ben McWilliams and Giovanni Sgaravatti is gratefully acknowledged.... |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:bre:wpaper:49251&r= |
| By: | Akira Matsushita; Kei Ikegami; Kyohei Okumura; Yoji Tomita; Atsushi Iwasaki |
| Abstract: | This paper develops a framework to conduct a counterfactual analysis to regulate matching markets with regional constraints that impose lower and upper bounds on the number of matches in each region. Our work is motivated by the Japan Residency Matching Program, in which the policymaker wants to guarantee the least number of doctors working in rural regions to achieve the minimum standard of service. Among the multiple possible policies that satisfy such constraints, a policymaker wants to choose the best. To this end, we develop a discrete choice model approach that estimates the utility functions of agents from observed data and predicts agents' behavior under different counterfactual policies. Our framework also allows the policymaker to design the welfare-maximizing tax scheme, which outperforms the policy currently used in practice. Furthermore, a numerical experiment illustrates how our method works. |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2205.14387&r= |
| By: | Maurizio Trapanese (Banca d'Italia) |
| Abstract: | This paper explores the relationship between regulatory complexity and systemic risk. Building upon the distinction between measurable risk and uncertainty, it outlines the fundamentals of the main regulatory frameworks of the last two decades (with a focus on the Basel Accords). The resulting outcome in terms of excessively regulatory complexity might turn out to be costly, and sub-optimal for crisis prevention. Since modern finance is characterized by uncertainty (rather than risk), less complex rules could be given greater consideration. Rebalancing regulation towards simplicity may produce Pareto-improving solutions, and encourage better decision making by authorities and regulated entities. However, addressing systemic risk in a complex financial system should not entail the replacement of overly complex rules with overly simple or less stringent regulations. The challenge is to define criteria and methods to assess the degree of unnecessary complexity in regulation. To this end, the paper proposes some options affecting the content of the rules, the regulatory policy mix for certain financial sectors, as well as the rulemaking process. |
| Keywords: | economic theory, uncertainty, financial crises, financial regulation |
| JEL: | B20 D81 G01 G28 |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_697_22&r= |
| By: | Sei Sugino (Bank of Japan); Yuji Maruo (Bank of Japan) |
| Abstract: | Personal information is actively collected, processed, and transmitted against the backdrop of the digitalization of people's social activities and the rapid improvement of data analysis methods, including artificial intelligence and machine learning. In order for individuals and society to benefit from the effective use of personal information, it is important that a broad range of entities are able to have proper opportunities to use personal information with due consideration to privacy protection. To achieve this goal, self-management of private information is crucial, but not sufficient. There might remain considerable inefficiencies associated with "market failure" and "negative externalities." This article will provide an overview of international discussion of academics and policy makers regarding these issues. In particular, we will illustrate the mechanism, which might generate monopoly power of the digital platform companies, and potential implications of public digital payment instruments in light of eliminating inefficiencies arising from the less competitive market. |
| Keywords: | digital payments; privacy; data intermediaries; informational externalities |
| Date: | 2022–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:boj:bojrev:rev22e05&r= |
| By: | Marie-Laure Allain (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique, X - École polytechnique, IPP - Institut des politiques publiques); Rémi Avignon (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique); Claire Chambolle (UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Hugo Molina (UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | Each year, commercial negotiations highlight the tensions between retailers and their suppliers, and public authorities are regularly called upon to balance the relationship. In this context, buying groups – which allow several large competing retailers to negotiate jointly with their suppliers – are likely to strengthen retailers' buyer power. France experienced two waves of buying groups formation in 2014 and in 2018 and the law was changed to allow the French Competition Authority (CA) – the Autorité de la concurrence – to control the formation of such alliances. This policy brief proposes a framework to analyse the effects of the buying groups on the sector as a whole. After a brief assessment of the economic forces at play based on a review of the literature, we discuss the results of two studies conducted by the authors of this note. The first one adopts an empirical approach to study the effects of buying groups formation in 2014 in France in the bottled water industry. It shows that the introduction of buying groups modified profit sharing at the expense of suppliers but also led to a decline in prices which benefited consumers. The second study discusses the efficiency of excluding private labels from the scope of buying groups – as advocated by the Competition Authority – to protect small suppliers and maintain product variety. |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:ipppap:halshs-03693440&r= |
| By: | Xavier D'Haultf{\oe}uille; Ao Wang; Philippe F\'evrier; Lionel Wilner |
| Abstract: | Despite the wide adoption of revenue management in many industries such as airline, railway, and hospitality, there is still scarce empirical evidence on the gains or losses of such strategies compared to uniform pricing or fully flexible strategies. We quantify such gains and losses and identify their underlying sources in the context of French railway transportation. The identification of demand is complicated by censoring and the absence of exogenous price variations. We develop an original identification strategy combining temporal variations in relative prices, consumers' rationality and weak optimality conditions on the firm's pricing strategy. Our results suggest similar or better performance of the actual revenue management compared to optimal uniform pricing, but also substantial losses of up to 16.2\% compared to the optimal pricing strategy. We also highlight the key role of revenue management in acquiring information when demand is uncertain. |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2206.04424&r= |
| By: | Marvin Nipper; Andreas Ostermaier; Jochen Theis |
| Abstract: | Sustainability reporting enables investors to make informed decisions and is hoped to facilitate the transition to a green economy. The European Union's taxonomy regulation enacts rules to discern sustainable activities and determine the resulting green revenue, whose disclosure is mandatory for many companies. In an experiment, we explore how this standardized metric is received by investors relative to a sustainability rating. We find that green revenue affects the investment probability more than the rating if the two metrics disagree. If they agree, a strong rating has an incremental effect on the investment probability. The effects are robust to variation in investors' attitudes. Our findings imply that a mandatory standardized sustainability metric is an effective means of channeling investment, which complements rather than substitutes sustainability ratings. |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2205.15576&r= |
| By: | Mueller, Isabella; Sfrappini, Eleonora |
| Abstract: | We identify the effect of climate change-related regulatory risks on credit real-location. Our evidence suggests that effects depend borrower's region. Following an increase in salience of regulatory risks, banks reallocate credit to US frms that could be negatively impacted by regulatory interventions. Conversely, in Europe, banks lend more to firms that could benefit from environmental regulation. The effect is moderated by banks' own loan portfolio composition. Banks with a portfolio tilted towards firms that could be negatively a affected by environmental policies increasingly support these firms. Overall, our results indicate that financial implications of regulation associated with climate change appear to be the main drivers of banks' behavior. JEL Classification: G21, Q51, Q58 |
| Keywords: | climate change, climate risk, credit reallocation, Paris Agreement |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20222670&r= |
| By: | Konstantin A. Kholodilin; Fernando A. López; David Rey Blanco; Pelayo González Arbués |
| Abstract: | This study investigates the effects of short-lived rent control regulations introduced in Catalonia in September 2020 and revoked in March 2022. Using the microdata of the largest Spanish housing advertisement portal idealista between January 2017 and May 2022, we analyze the dynamics of prices and supply for dwellings offered for rent and for sale. We also examine separately the rental and sales markets. We find that the introduction of rent control led to a reduction in rents in both controlled and uncontrolled Catalan municipalities, while quantities virtually did not react to it. The selling prices of dwellings remained unchanged, whereas their supply increased substantially. The revocation of rent control caused a strong increase in the rental and selling prices in all municipalities, no increase in the supply, with the exception of the supply of regulated dwellings for sale. In addition, using the macrodata on housing construction we find that during the rent-control period the average number of monthly dwelling starts in Catalonia declined by 6% compared to January 2019 – September 2020, while nationwide it increased by almost 12%. Thus, the effects are broadly consistent with the predictions of the economic literature on rent controls. |
| Keywords: | Rent control, Catalonia, asking rents, asking selling prices |
| JEL: | C43 O18 R38 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp2008&r= |
| By: | Demary, Vera |
| Abstract: | Die Europäische Kommission hat am 23. Februar 2022 einen Entwurf für ihren Data Act, der in der offiziellen Übersetzung auf Deutsch als Datengesetz bezeichnet wird, vorgelegt. Diese Verordnung soll zukünftig den Zugang zu und die Nutzung von Daten in der Europäischen Union regeln. Sie umfasst Vorgaben zum Zugang von in der Regel unternehmerischen Nutzern zu Daten, die durch ihre vernetzten Geräte generiert wurden, Regeln für den Datenzugang und die Datennutzung durch staatliche Stellen, zu Data-Sharing-Verträgen sowie zum Cloud-Wechsel. Ziel des Data Act ist es, dass mehr Daten in Europa verfügbar sind und die Potenziale der Datenbewirtschaftung ausgeschöpft werden können. Dabei gilt es jedoch eine Balance zu finden: Auf der einen Seite werden durch eine größere Rechtssicherheit und einen verbesserten Datenzugang Potenziale bei den Nutzern gehoben, da hier durch mehr Daten neue und verbesserte Produkte sowie Prozesse ermöglicht werden. Auf der anderen Seite können die Innovations- und Investitionsanreize der Hersteller der Produkte vermindert werden, da eine Monetarisierung erschwert wird. Hier besteht in dem Entwurf noch deutlicher Nachbesserungsbedarf. Die große Komplexität und Detailtiefe gilt es zu reduzieren, um Unternehmen nicht zu überfordern. Auch muss der Schutz von Geschäftsgeheimnissen stärker in den Fokus gerückt werden, damit europäische Unternehmen aufgrund des Data Acts nicht an Wettbewerbsfähigkeit einbüßen. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwkpps:22022&r= |
| By: | Smitkova, L. |
| Abstract: | In this paper, I study financial liberalization between economies that differ in their overall competitiveness. I first show that if firms compete oligopolistically, then competitiveness - relatively low aggregate unit costs of production - is a feature of an economy with fatter tailed productivity distribution and relatively more very large - 'superstar' - firms. Embedding this setup in a two-country model with heterogeneous agents and non-homothetic saving behaviour, I show that if home is more competitive, then: (1) it enjoys a higher aggregate profit rate than foreign; (2) its autarkic interest rate is lower than that in foreign; (3) should the two economies undergo financial liberalization, the capital will be flowing from home to foreign; (4) if one of the sectors is non-tradable, the capital inflows push up the wages in foreign, leading to further losses of competitiveness and to current account overshooting. I calibrate the quantitative version of the model to 8 European economies on the eve of the global financial crisis. I show that the competitiveness gap can explain 27% of variation in the current account imbalances incurred in the period. I conclude by discussing policies for rebalancing. |
| Date: | 2022–06–24 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:2241&r= |