|
on Regulation |
| By: | Marc Ivaldi (TSE-R - 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); Jiekai Zhang (Department of Management and Organisation, Hanken School of Economics, P.O. Box 479, FI-00101 Helsinki, Finland.) |
| Abstract: | This paper contributes to the analysis of mergers in two-sided markets, notably those in which a platform provides its service for free on one side but obtains all its revenues from the other, as in the digital TV industry. Specifically, we assess a decision of the French competition authority which approved the merger of the broadcasting services of the TV channels involved but imposed a behavioral remedy prohibiting the merger of their respective advertising sales services. To do so, we build a structural model allowing for multi-homing of advertisers and, using a comprehensive dataset, we estimate the demand of viewers and advertisers. Our evaluation provides evidence that the remedy has been ineffective at limiting the increase in prices and amounts of advertising, due to the cross-side externalities between viewers and advertisers. Without resulting in significant positive effects on the viewers' surplus, the remedy has also drastically increased the advertisers' total cost. Nevertheless, the remedy has benefited the competitors of the merging channels. The main lesson of our analysis is that, in the process of designing competition or regulatory policy for two-sided markets, ignoring the interaction between the two sides of platforms can result in unexpected outcomes. |
| Keywords: | Two-sided market, Platform merger, Advertising, TV market, Competition policy |
| Date: | 2022–03–26 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03881366&r=reg |
| By: | Andreea Cosnita-Langlais (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Bjørn Olav Johansen; Lars Sørgard |
| Abstract: | In two-sided markets it is important to consider rebalancing effects following a merger, i.e. the impact of a change in margin on one side of the market, either due to a price change or to efficiency gains, on the pricing incentives on the other side. We propose modified versions for the indices of pricing pressure (UPP and GUPPI) that take this into account. We show that in two-sided markets where the cross-group externalities are positive the upward pricing pressure will typically be overstated if the rebalancing effect is ignored. Our approach explains why competition agencies should look at both sides of the market when assessing platform mergers |
| Keywords: | Merger assessment, Two-sided markets, Upward Pricing Pressure |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03032755&r=reg |
| By: | Markus Dertwinkel-Kalt; Christian Wey |
| Abstract: | To help German households and firms with exploding energy costs, the German government is about to implement a new transfer scheme called “gas price brake.” A unique feature of this energy price relief measure is that both households and the industry receive a transfer that increases in one’s actual gas price. In a formal model, we show that such a transfer scheme creates incentives for moral hazard of gas providers to raise gas prices. We also show that competition does not help to overcome this adverse effect of the gas price brake. An equivalent critique applies to the electricity price brake that is to be implemented at the same time as the gas price brake. |
| Keywords: | energy prices, energy policy, consumer protection policy, gas price brake |
| JEL: | D04 L12 Q48 K33 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10163&r=reg |
| By: | Neuhoff, Karsten; Kröger, Mats; Richstein, Jörn |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esrepo:267882&r=reg |
| By: | Anubhav Ratha (DTU Electrical Engineering [Lyngby] - DTU - Danmarks Tekniske Universitet = Technical University of Denmark); Pierre Pinson (Imperial College London); Hélène Le Cadre (INOCS - Integrated Optimization with Complex Structure - Inria Lille - Nord Europe - Inria - Institut National de Recherche en Informatique et en Automatique - ULB - Université libre de Bruxelles - CRIStAL - Centre de Recherche en Informatique, Signal et Automatique de Lille - UMR 9189 - Centrale Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique); Ana Virag (VITO - Flemish Institute for Technological Research); Jalal Kazempour (DTU Electrical Engineering [Lyngby] - DTU - Danmarks Tekniske Universitet = Technical University of Denmark) |
| Abstract: | We propose a new forward electricity market framework that admits heterogeneous market participants with second-order cone strategy sets, who accurately express the nonlinearities in their costs and constraints through conic bids, and a network operator facing conic operational constraints. In contrast to the prevalent linear-programming-based electricity markets, we highlight how the inclusion of second-order cone constraints improves uncertainty-, asset-, and network-awareness of the market, which is key to the successful transition towards an electricity system based on weather-dependent renewable energy sources. We analyze our general market-clearing proposal using conic duality theory to derive efficient spatially-differentiated prices for the multiple commodities, comprised of energy and flexibility services. Under the assumption of perfect competition, we prove the equivalence of the centrally-solved market-clearing optimization problem to a competitive spatial price equilibrium involving a set of rational and self-interested participants and a price setter. Finally, under common assumptions, we prove that moving towards conic markets does not incur the loss of desirable economic properties of markets, namely market efficiency, cost recovery, and revenue adequacy. Our numerical studies focus on the specific use case of uncertainty-aware market design and demonstrate that the proposed conic market brings advantages over existing alternatives within the linear programming market framework. |
| Keywords: | OR in energy, spatial equilibrium, mechanism design, electricity markets, conic economics |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03799767&r=reg |
| By: | Rohan Best (Department of Economics, Macquarie University); Paul J. Burke (Crawford School of Public Policy, Australian National University) |
| Abstract: | Use of solar photovoltaic (PV) panels by the non-residential sector can contribute to climate-change mitigation and boost economic outcomes. Prior studies have primarily focused on the residential sector. Using data from 1, 595 postcodes across the Australian National Electricity Market, we investigate five novel research questions for non-residential solar-panel adoption. National and sectoral policies, business size, and cross-sectoral influences are found to be key drivers of non-residential solar PV uptake. We find a subsidy elasticity of about 1.2 for Australia’s Small-scale Renewable Energy Scheme (SRES), an economy-wide renewable portfolio standard for small-scale renewables. Residential solar capacity is positively associated with future adoption by the local non-residential sector, and geographical convergence effects are observed. The findings align with the principle that investment is spurred by policies that lower upfront capital costs. Following Australia’s experience, a small-scale renewable portfolio standard is particularly worthy of consideration for further adoption. |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:een:ccepwp:2204&r=reg |
| By: | Stefano Carattini; Kenneth Gillingham; Xiangyu Meng; Erez Yoeli |
| Abstract: | Observability has been demonstrated to influence the adoption of pro-social behavior in a variety of contexts. This study implements a field experiment to examine the influence of observability in the context of a novel pro-social behavior: peer-to-peer solar. Peer-to-peer solar offers an opportunity to households who cannot have solar on their homes to access solar energy from their neighbors. However, unlike solar installations, peer-to-peer solar is an invisible form of pro-environmental behavior. We implemented a set of randomized campaigns using Facebook ads in the Massachusetts cities of Cambridge and Somerville, in partnership with a peer-to-peer company. In the campaigns, treated customers were informed that they could share “green reports” online, providing information to others about their greenness. We find that interest in peer-to-peer solar increases by up to 30% when “green reports, ” which would make otherwise invisible behavior visible, are mentioned in the ads. |
| Keywords: | peer to peer solar, pro-environmental behavior, social rewards, visibility, Facebook |
| JEL: | C93 D91 Q20 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10173&r=reg |
| By: | Antonio Estache; Ardit Litaj |
| Abstract: | The paper summarizes the evidence on regulatory and competition policy weaknesses in dealing with healthcare market failures associated with the entry of private equity (PE) investors in the sector. It also suggests reforms that would address some of the main issues. In that context, it contributes to the debate on how fairness and social concerns could be added more explicitly to the efficiency mandate of regulatory and competition agencies. This debate and related ones in the sector have emerged in view of the growing evidence on the risks of negative coverage, pricing and quality impacts due to the margin for cream-skimming allowed to PE firms to ease their entry in the sector. Although the evidence shows that the negative outcomes are not systematic, there are common and can be associated with the failure of current regulatory and competition policies and tools to protect jointly investors, medical and para-medical staff, patients and taxpayers. The case to internalize the insights of the global experience to reassess the design of current policies aiming at diversifying the financing sources in the health sector seems to be strong. |
| Keywords: | Health Care Financing, Health Expenditures, Health outcomes, Health quality, Private Equity, Fairness, Efficiency, Regulation, Anti-trust |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/354650&r=reg |
| By: | Feng, Wenxiu; Ruiz Mora, Carlos |
| Abstract: | The distributed integration of renewable energy sources plays a central role in the decarbonization of economies. In this regard, energy communities arise as a promising entity to coordinate groups of proactive consumers (prosumers) and incentivize the investment on clean technologies. However, the uncertain nature of renewable energy generation, residential loads, and trading tariffs pose important challenges, both at the operational and economic levels. We study how this management can be directly undertaken by an arbitrageur that, making use of an adequate price tariff system, serves as an intermediary with the central electricity market to coordinate different types of prosumers under risk aversion. In particular, we consider a sequential futures and spot market where the aggregated shortage or excess of energy within the community can be traded. We aim to study the impact of the integration of hydrogen production and storage systems, together with a parallel hydrogen market, on the community operation. These interactions are modeled as a game theoretical setting in the form of a stochastic two-stage bilevel optimization problem, which is latter reformulated without approximation as a single-level mixed-integer linear problem (MILP). An extensive set of numerical experiments based on real data is performed to study the operation of the energy community under different technical and economical conditions. Results indicate that the optimal involvement in futures and spot markets is highly conditioned by the community's risk aversion and self-sufficiency levels. Moreover, the external hydrogen market has a direct effect on the community's internal price-tariff system, and depending on the market conditions, may worsen the utility of individual prosumers. |
| Keywords: | Energy Community; Hydrogen Market; Risk Management; Sequential Energy Markets; Storage Systems |
| Date: | 2023–01–16 |
| URL: | http://d.repec.org/n?u=RePEc:cte:wsrepe:36274&r=reg |
| By: | Kim, Jong Ki (Korea Institute for Industrial Economics and Trade); Kyung, Heekwon (Korea Institute for Industrial Economics and Trade); Shim, Woo Jung (Korea Institute for Industrial Economics and Trade) |
| Abstract: | With the COVID-19 pandemic accelerating digital transformation, demand for 5G networks is soaring. 5G networks are an indispensable part of infrastructure supporting immersive content, self-driving technologies, the Internet of Things (IOT), remote services, and smart manufacturing. Telecommunications equipment is at the center of reaching this next generation of mobile network technology. Given the intense demand for highly advanced technologies, the global 5G network market is already dominated by leading Chinese and European companies, which are raising steep barriers to market latecomers. Despite the fact that Korea was the first in the world to roll out commercially viable 5G networks and services, Korean companies have struggled to expand their share of the global 5G equipment market. The Korean telecommunications equipment industry is currently led by a few large corporations and their long-standing smaller partners. A lack of extensive growth-oriented infrastructure, core technologies, and competitive products, along with the volatility of materials and parts supplies limits the Korean telecommunication industry’s prospects for growth relative to its counterparts in other developed countries. In this report, we examine the structure and characteristics of value chains for the Korean telecommunications equipment industry, assessing its competitiveness at different stages of the value chain against its global competitors, and identify the implications for future growth policy carried by our findings. |
| Keywords: | 5G Networks; Mobile Network Technology; Korean Telecommunication Industry |
| JEL: | D46 L63 |
| Date: | 2022–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kietrp:2022_010&r=reg |
| By: | Maxime Delabarre (Sciences Po - Sciences Po) |
| Abstract: | This essay argues that the common competition framework is not to be applied to the financial sector. If traditionally competition brings efficiency and diversity in a market, financial regulators must also ensure the stability of the financial market. Henceforth, some limits and entry barriers have to exist. This is particularly true for FinTech companies. If the potential of those new actors is not to be contested, the risk they can bring is also quite obvious. If regulators want the market to be disrupted and to see consumers benefiting from the power of innovation of technology-based companies, they need to adapt their regulatory framework. Only under this condition will the benefits outweigh the potential risks. |
| Keywords: | Financial regulations, financial stability, competition, financial market, innovation |
| Date: | 2021–01–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:spmain:hal-03107769&r=reg |
| By: | Ying Chen; Jan Zapal |
| Abstract: | We investigate the effects of buyer heterogeneity in a market in which an incumbent firm prevents entry when it signs enough exclusionary contracts with buyers. With heterogeneous buyers several well-known results in exclusionary contracting with homogenous buyers are overturned and novel ones emerge. First, inefficient equilibria exist in which exclusionary contracts are signed but entry still occurs, and the loss of consumer surplus falls on small buyers. Second, sequential contracting may be more pro-competitive than simultaneous contracting in the sense that entry occurs under sequential but not simultaneous contracting. When this happens, sequential Pareto dominates simultaneous contracting. |
| Keywords: | contracting with externalities; exclusionary contracts; buyer heterogeneity; pro-competitive; anti-competitive; sequential vs simultaneous contracting; |
| JEL: | C78 D21 L12 L42 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp741&r=reg |
| By: | Steffen, Nico; Wiewiorra, Lukas |
| Abstract: | Digitale Plattformen und Geschäftsmodelle stellen ein Kernelement der heutigen Internetökonomie dar. Mit der Entwicklung von großen Internetkonzernen wird das Internet zunehmend zentralistischer. Endanwender werden dabei immer stärker in die Ökosysteme einzelner großer Anbieter eingebunden und sehen sich mit zunehmend steigenden Wechselkosten konfrontiert. Eine besondere Rolle nehmen dabei Apple und Google (Alphabet) ein, die sogenannte mobile Ökosysteme orchestrieren und kontrollieren. Solche mobilen Ökosysteme rund um Smartphones -im Kern bestehend aus Hardware, Betriebssystem, App-Marktplätzen und weiteren integrierten Diensten- stellen zunehmend den wichtigsten Zugang zu Inhalten und Produkten, aber auch zu Informationen, sozialem Leben und mehr dar. Die gleichzeitige Kontrolle über mehrere entscheidende Zugangspunkte zu diesen Inhalten sorgt dafür, dass die Betreiber mobiler Ökosysteme in besonderem Maße über den Zugang zu Hard- und Softwarefunktionalitäten und -diensten verfügen und die Bedingungen für entscheidende Vertriebs- und Zugangswege setzen können. Damit sind Endanwender und Geschäftskunden (z.B. Softwareentwickler) regelmäßig den geltenden Bedingungen und Regelwerken einzelner Anbieter unterworfen. In diesem Diskussionsbeitrag werden die Hintergründe und Auswirkungen sowie mögliche Abhilfemaßnahmen entsprechender Zugangsproblematiken auf den verschiedenen Ökosystemebenen analysiert. Geschäftspraktiken und Fragestellungen rund um Endgeräte, Hardwarefunktionalität, Betriebssysteme, App-Marktplätze, Browser und vertikal integrierte Angebote auf der Diensteebene standen dabei in den letzten Jahren unter wachsender wettbewerbsrechtlicher und regulatorischer Aufmerksamkeit. Neben der gezielten Adressierung einzelner Ebene wächst dabei auch immer mehr Blickpunkt auf Zugangsfragen zu mobilen Ökosystemen und deren starke Verzahnung als Ganzes, wofür sich in der Diskussion teilweise der Begriff der "Device Neutrality" entwickelt hat. Neben wettbewerbsrechtlichen Untersuchungen und Rechtsprechung wandelt sich dabei der internationale Fokus hin zu einer ex ante Regulierung, wobei der europäische Digital Markets Act (DMA) den wohl umfangreichsten Vorschlag darstellt und sich nun bereits in der Umsetzung befindet. Exemplarisch liegt der Fokus dieser Studie daher auf den vorgesehenen Abhilfemaßnahmen des DMA, die im Kontext der betreffenden Zugangsstufen diskutiert und analysiert werden. Diese werden durch Alternativ- und Spezifizierungsvorschläge aus der wissenschaftlichen Literatur und dem internationalen Kontext ergänzt. Ein Fokus der Diskussion liegt dabei auf der Ebene der App-Marktplätze und auf alternativen Zugangswegen zu Apps und Inhalten. Aufgrund von Gewohnheits- und indirekten Netzwerkeffekten bleibt der praktische Erfolg entsprechender Maßgaben in der Breite fraglich, könnte aber Eintrittsmöglichkeiten und Alternativen für bereits markt- und markenstarke Anbieter aus anderen Bereichen schaffen. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wikdps:487&r=reg |
| By: | Tommaso Loizzo (Bank of Italy); Federico Schimperna (Bank of Italy) |
| Abstract: | In line with developments at the global level, the attention of financial regulators on ESG factors, particularly on environmental and climate-related risks, has significantly increased over recent years. In this context, disclosure of relevant climate-related information plays a key role, for both financial and non-financial stakeholders. The EU regulatory framework on disclosure is rather advanced when compared with other jurisdictions and will be almost ready for implementation in the next few months. The Bank of Italy, in line with the ECB and other national supervisors, has started a number of initiatives aimed at actively contributing to major international projects, strengthening the dialogue with the national industry and assessing the progress made by supervised entities. The paper: i) summarises the main regulatory requirements for ESG disclosure; ii) investigates the areas of commonalities at the EU level between the Pillar 3 disclosure requirements and those envisaged by the standards under development by the EFRAG; iii) takes stock of the main supervisory initiatives undertaken so far and presents some preliminary thoughts on the major challenges ahead to be faced by Italian banks. |
| Keywords: | ESG, sustainability, climate change, disclosure, CSRD, banks, Pillar 3, ESRS |
| JEL: | G21 K20 M41 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_744_22&r=reg |
| By: | Yuteng Cheng |
| Abstract: | This paper studies, theoretically and empirically, the unintended consequences of mandatory retention rules in securitization. The Dodd-Frank Act and the EU Securitisation Regulation both impose a 5% mandatory retention requirement to motivate screening and monitoring. I first propose a novel model showing that while retention strengthens monitoring, it may also encourage banks to shift risk. I then provide empirical evidence supporting this unintended consequence: in the US data, banks shifted toward riskier portfolios after the implementation of the retention rules embedded in Dodd-Frank. Furthermore, the model offers clear, testable predictions about policy and corresponding consequences. In the US data, stricter retention rules caused banks to monitor and shift risk simultaneously. According to the model prediction, such a simultaneous increase occurs only when the retention level is above optimal, which suggests that the current rate of 5% in the US is too high. |
| Keywords: | Financial institutions; Financial system regulation and policies; Credit risk management |
| JEL: | G21 G28 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:23-3&r=reg |
| By: | Gert Peersman; Joris Wauters |
| Abstract: | We use survey evidence on reported spending in hypothetical energy price shock scenarios to study novel features of the price elasticity of energy demand and the marginal propensity to consume (MPC) after paying the energy bill. We find that the price elasticity is significantly larger for price increases than price decreases and diminishes heavily for greater price hikes. The elasticity is also larger for households undertaking major home renovations over the next months, and smaller for families with more appetite to consume. For the MPC, we document greater responses of non-energy consumption when energy prices increase compared to price decreases. MPCs are also larger for households with low income and/or saving buffer, and households reporting their future financial situation is difficult to predict. Finally, we show that targeted price subsidies on energy for Belgian low-income households are much more effective in supporting non-energy consumption than the general VAT reduction on energy prices. |
| Keywords: | energy demand, marginal propensity to consume, household heterogeneity |
| JEL: | D12 E21 H31 Q41 Q43 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10157&r=reg |