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on Regulation |
| By: | Gillian K. Hadfield; Jack Clark |
| Abstract: | Appropriately regulating artificial intelligence is an increasingly urgent policy challenge. Legislatures and regulators lack the specialized knowledge required to best translate public demands into legal requirements. Overreliance on industry self-regulation fails to hold producers and users of AI systems accountable to democratic demands. Regulatory markets, in which governments require the targets of regulation to purchase regulatory services from a private regulator, are proposed. This approach to AI regulation could overcome the limitations of both command-and-control regulation and self-regulation. Regulatory market could enable governments to establish policy priorities for the regulation of AI, whilst relying on market forces and industry R&D efforts to pioneer the methods of regulation that best achieve policymakers' stated objectives. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2304.04914&r=reg |
| By: | Dirk Bergemann (Cowles Foundation, Yale University); Alessandro Bonatti |
| Abstract: | We analyze digital markets where a monopolist platform uses data to match multiproduct sellers with heterogeneous consumers who can purchase both on and off the platform. The platform sells targeted ads to sellers that recommend their products to consumers and reveals information to consumers about their values. The revenueoptimal mechanism is a managed advertising campaign that matches products and preferences efficiently. In equilibrium, sellers offer higher qualities at lower unit prices on than off the platform. Privacy-respecting data-governance rules such as organic search results or federated learning can lead to welfare gains for consumers. |
| Keywords: | Data, Data, Privacy, Data Governance, Digital Advertising, Competition, Digital Platforms, Digital Intermediaries, Personal Data, Matching, Price Discrimination, Automated Bidding, Algorithmic Bidding, Managed Advertising Campaigns, Showrooming |
| JEL: | D18 D44 D82 D83 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2343r&r=reg |
| By: | Johannes Mauritzen |
| Abstract: | A fundemantal and unanswered question for the widely shared goal of electrifying passenger vehicles is how the price of electricity, which can vary greatly across countries and regions, affects buying behavior. I make use of a natural experiment in Norway in the period 2021-2022 when large price differences between north and south emerged to estimate the effect of electricity prices on the decision to purchase a pure battery-electric vehicle. Simple difference estimates along the border of the price zones as well as a difference-in-difference regression model suggest a significant but economically modest effect of a 2-4\% reduction in the probability of purchasing an electric vehicle in the high price zone. A counterfactual simulation suggests that there would have been about 3000 to 6000 fewer electric vehicles sold in the high-price south compared to a scenario where the south had equally low prices as in the north. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2304.01709&r=reg |
| By: | Thierry Blayac (CEE-M, Univ Montpellier, CNRS, INRAE, Institut Agro, Montpellier, France); Patrice Bougette (Université Côte d'Azur; GREDEG, CNRS, France); Florent Laroche (Université Lyon 2; LAET, CNRS, France) |
| Abstract: | This paper provides an empirical analysis of the determinants of service prices and frequencies of conventional high-speed rail (HSR) in France. We use original data for the period 09/2019-03/2020 and consider the intensity of intermodal competition and the diversification strategy of the incumbent rail operator. The main econometric results show that the determinants of the price per kilometer of conventional HSR services (1st and 2nd class) are partly common (especially for the variables explaining the technical characteristics of the routes and the alternative offer) and partly specific (competitive environment, economic and demographic environment). Frequencies depend mainly on travel time. On the routes for which the conventional HSR does not provide a quality service (frequency and/or price), a complementary alternative offer compensates the low frequency of conventional HSR services. |
| Keywords: | HSR; Intermodal competition; Multiproduct firms' strategies; Low-cost transportation; France |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2023-01&r=reg |
| By: | Dirk Bergemann (Cowles Foundation, Yale University); Alessandro Bonatti (MIT Sloan School of Management); Nicholas Wu (Cowles Foundation, Yale University) |
| Abstract: | We develop an auction model for digital advertising. A monopoly platform has access to data on the value of the match between advertisers and consumers. The platform support bidding with additional information and increase the feasible surplus for on-platform matches. Advertisers jointly determine their pricing strategy both on and off the platform, as well as their bidding for digital advertising on the platform. We compare a data-augmented second-price auction and a managed campaign mechanism. In the data-augmented auction, the bids by the advertisers are informed by the data of the platform regarding the value of the match. This results in a socially efficient allocation on the platform, but the advertisers increase their product prices off the platform to be more competitive on the platform. In consequence, the allocation off the platform is inefficient due to excessively high product prices. The managed campaign mechanism allows advertisers to submit budgets that are then transformed into matches and prices through an autobidding algorithm. Compared to the data-augmented second-price auction, the optimal managed campaign mechanism increases the revenue of the digital platform. The product prices off the platform increase and the consumer surplus decreases. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2359&r=reg |
| By: | Papa, Javier; et., al. |
| Abstract: | Access to energy, in this case to a basic electricity service, is considered a human right as established in most countries’ National Constitution. High electricity costs are frequently seen as an obstacle to get energy access in the case of most vul-nerable households. In Argentina, the size of energy subsidies has been growing up to 2.8% of GDP in 2014. The substantial increase in energy tariffs that has occurred since 2016 brought down the weight of such subsidies to 1.1% of GDP in 2019, though it went up again to 2.2% of GDP in 2020 vis-à-vis a reduction in the level of energy tariffs. The purpose of this paper is to put forward a new mechanism for subsidies focalization which is more efficient to reduce the burden on the national budget while, at the same time, is socially fair to allow low-income consumer access to a basic electricity service. Combining both energy policy and social policies in Argentina, the authors suggest the implementation of the so-called Programa Energizar, which would be made of a fixed discount out of the monthly electricity bill of most vulnerable households. Such a discount would become effective through the use of the existing Tarjeta Alimentar, which is oriented towards the purchase of goods and services of low-income consumers. Any further saving in energy consumption could be used to smooth out seasonal variations in consumption and/or be used towards the purchase of additional goods and services, which would represent and incentive towards energy efficiency measures in vulnerable households |
| Keywords: | Energy, Tariff focalization, Subsidies, Efficiency & Equity, Argentina |
| JEL: | L94 O13 O21 O38 O54 Q41 Q43 Q48 |
| Date: | 2022–02–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:116742&r=reg |
| By: | Aniko …ry (Cowles Foundation, Yale University); Ali Horta su (University of Chicago and NBER); Kevin Williams (Cowles Foundation, Yale University) |
| Abstract: | We introduce a model of dynamic pricing in perishable goods markets with competition and provide conditions for equilibrium uniqueness. Pricing dynamics are rich because both own and competitor scarcity affect future profits. We identify new competitive forces that can lead to misallocation due to selling units too quickly: the Bertrand scarcity trap. We empirically estimate our model using daily prices and bookings for competing U.S. airlines. We compare competitive equilibrium outcomes to those where firms use pricing heuristics based on observed internal pricing rules at a large airline. We find that pricing heuristics increase revenues (4-5%) and consumer surplus (3%). |
| JEL: | C70 C73 D21 D22 D43 D60 L13 L93 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2341r1&r=reg |
| By: | Ali Hortacsu (University of Chicago and NBER); Olivia R. Natan (University of California, Berkeley); Hayden Parsley (University of Texas, Austin); Timothy Schwieg (University of Chicago, Booth); Kevin R. Williams (Cowles Foundation, Yale University) |
| Abstract: | Firms facing complex objectives often decompose the problems they face, delegating different parts of the decision to distinct subordinates. Using comprehensive data and internal models from a large U.S. airline, we establish that airline pricing is inconsistent with canonical dynamic pricing models. However, we show that observed prices can be rationalized as an equilibrium of a game played by departments who each have decision rights for different inputs that are supplied to the observed pricing heuristic. Incorrectly assuming that the firm solves a standard profit maximization problem as a single entity understates overall welfare actually achieved but affects business and leisure consumers differently. Likewise, we show that assuming prices are set through standard profit maximization leads to incorrect inferences about consumer demand elasticities and thus welfare. |
| Keywords: | Dynamic Pricing, Pricing Heuristics, Organizational Structure, Revenue Management, Behavioral IO, Airlines |
| JEL: | C11 C53 D22 D42 L10 L93 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2312r3&r=reg |
| By: | Marc Bourreau; Adrien Raizonville; Guillaume Thébaudin |
| Abstract: | Platform interoperability is considered a powerful tool to promote competition in digital markets when network effects are at play. We study the effect of interoperability on competition between two ad-financed platforms, allowing for endogenous multi-homing of consumers. When the platforms are symmetric and decide non-cooperatively on their level of interoperability, interoperability emerges in equilibrium if the value of multi-homers relative to single-homers is sufficiently low for advertisers. From a welfare perspective, the equilibrium level of interoperability can be either too low or too high. When one (“large”) platform has an installed base of customers, its incentive to make its services interoperable is lower than for the other, smaller platform. However, mandating interoperability between the asymmetric platforms is not always socially optimal. |
| Keywords: | interoperability, platform competition, multi-homing, advertising |
| JEL: | L13 L86 L15 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10332&r=reg |
| By: | David W. Berger; Thomas Hasenzagl; Kyle F. Herkenhoff; Simon Mongey; Eric A. Posner |
| Abstract: | While the labor market implications of mergers have been historically ignored as “out of market” effects, recent actions by the Department of Justice (DOJ) place buyer market power (i.e., monopsony) at the forefront of antitrust policy. We develop a theory of multi-plant ownership and monopsony to help guide this new policy focus. We estimate the model using U.S. Census data and demonstrate the model’s ability to replicate empirically documented paths of employment and wages following mergers. We then simulate a representative set of U.S. mergers in order to evaluate merger review thresholds. Our main exercise applies the DOJ and FTC’s product market concentration thresholds to local labor markets. Assuming mergers generate efficiency gains of 5 percent, our simulations suggest that workers are harmed, on average, under the enforcement of the more lenient 2010 merger guidelines and unharmed, on average, under enforcement of the more stringent 1982 merger guidelines. We also provide a framework for further research evaluating alternative concentration thresholds based on assumptions about the efficiency effects of mergers and the resource constraints of regulators. Finally, we provide guidance for using the Gross Downward Wage Pressure method for evaluating the impact of mergers on labor markets. |
| JEL: | D40 E20 H0 J0 K0 L0 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31147&r=reg |
| By: | Luo, Qian; Garcia-Menendez, Fernando; Yang, Haozhe; Deshmukh, Ranjit; He, Gang; Lin, Jiang; Johnson, Jeremiah X |
| Abstract: | China's power system is highly regulated and uses an "equal-share" dispatch approach. However, market mechanisms are being introduced to reduce generation costs and improve system reliability. Here, we quantify the climate and human health impacts brought about by this transition, modeling China's power system operations under economic dispatch. We find that significant reductions in mortality related to air pollution (11%) and CO 2 emissions (3%) from the power sector can be attained by economic dispatch, relative to the equal-share approach, through more efficient coal-powered generation. Additional health and climate benefits can be achieved by incorporating emission externalities in electricity generation costs. However, the benefits of the transition to economic dispatch will be unevenly distributed across China and may lead to increased health damage in some regions. Our results show the potential of dispatch decision-making in electricity generation to mitigate the negative impacts of power plant emissions with existing facilities in China. |
| Keywords: | Humans, Carbon Dioxide, Reproducibility of Results, Coal, Climate, Air Pollution, Power Plants, China, air pollution, power system in China, public health, Climate-Related Exposures and Conditions, Climate Action, Environmental Sciences |
| Date: | 2023–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:agrebk:qt2vq7v90q&r=reg |
| By: | Simplice A. Asongu (Yaounde, Cameroon) |
| Abstract: | This study assesses how corporate telecommunication (telecom) policies follow telecom sector regulation in mobile money innovation for financial inclusion in developing countries. Telecom policies are understood in terms of mobile subscriptions, mobile connectivity coverage and mobile connectivity performance while mobile money innovations represent mobile money accounts, the mobile used to send money and the mobile used to receive money. The empirical evidence is based on Tobit regressions. Telecom sector regulation positively influences mobile money innovations. From net influences, mobile subscriptions and connectivity policies moderate telecom sector regulation to positively influence mobile money innovations; exclusively within the remit of mobile money accounts because the corresponding net influences on the mobile used to send money and the mobile used to receive money are negative. The interactive influences are consistently negative and hence, thresholds for complementary policies are provided in order to maintain the positive influence of telecom sector regulation on mobile money innovations. This study has complemented the extant literature by assessing how corporate telecommunication policies follow telecommunication sector regulation in mobile money innovations for financial inclusion. |
| Keywords: | Mobile money; technology diffusion; financial inclusion; inclusive innovation |
| JEL: | D10 D14 D31 D60 O30 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:23/017&r=reg |
| By: | Shubhdeep Deb (UPF Barcelona); Jan Eeckhout (Institute for Fiscal Studies); Aseem Patel (University of Essex); Lawrence Warren (US Census Bureau) |
| Date: | 2022–09–26 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:22/39&r=reg |