|
on Regulation |
| By: | Jean-Michel Glachant |
| Abstract: | Having identified the basic characteristics of the current energy crisis and its particular shape in the European Union, three questions immediately arise. 1) If gas is at the ‘core’ of the EU mixof energy crises, why hastily reform the internal electricity market? Is the electricity market badly affecting the gas crisis, amplifying it or worsening its consequences? Are we short of sufficientlygood emergency tools to immediately intervene against the detrimental effects of the EU gas crisis on the EU electricity market and vice versa? 2) If one assumes that most of the detrimental priceeffects of the gas crisis can be addressed with regular EU emergency tools, should we nevertheless revisit the EU electricity market to make it stronger vis-à-vis such a major energy shock? Wouldstrengthening our internal EU electricity market against future energy shocks reinforce or weaken our well-established policy of securing an EU decarbonisation path to 2030 or 2050? 3) If strengthening and reforming our EU electricity market can help our EU electrification strategy and our general path to decarbonisation, can we already foresee other conditions and constraints which could slow down or block this securitisation of our energy future? |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2023/03&r=reg |
| By: | Marc Bourreau; Lukasz Grzybowski; Ángela Muñoz-Acevedo |
| Abstract: | In this paper, we evaluate the efficiency of the French State aid plan for broadband deployment, the Plan France Très Haut Débit. According to State aid rules, public subsidies should not be substitute for private investment and should target areas with market failures. We estimate a structural model of fiber entry using a rich dataset on fiber deployment for more than 34, 000 municipalities in mainland France over 2014-2019. We then assess whether private investment would have occurred in subsidized municipalities in the absence of public subsidies. We find that between 64% and 93% of the time, public subsidies were granted to municipalities where private entry would not have occurred. Overall, we estimate the cost of "inefficient" public subsidies to be between 243 and 902 million euros, with total subsidies amounting to 2, 203 million euros by the end of 2019. Finally, we find that the plan helped to increase fiber coverage in subsidized municipalities in the early stages of fiber deployment. |
| Keywords: | state aid, ex-post evaluation, broadband, entry, coverage, crowding out |
| JEL: | D22 L10 L40 L33 L96 H44 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10440&r=reg |
| By: | Juan Montero; Matthias Finger; Teodora Serafimova |
| Abstract: | The European Union’s Fourth Railway Package dating from 2016, introduces a number of substantive reforms with a view to revitalize the rail sector and boost its competitiveness vis-à-vis other modes of transport by completing the process of gradual market opening. Its so-called ‘market pillar’ establishes the general right for railway undertakings established in one Member State to operate all types of passenger services everywhere else in the EU, lays down rules aimed at improving impartiality in the governance of railway infrastructure and preventing discrimination, and introduces the principle of mandatory tendering for public service contracts in rail. These reforms are grounded in the premise that competition in rail passenger service markets would induce railway operators to become more responsive to customer needs, improve the quality of their services and their cost-effectiveness. Not least, competitive tendering of public service contracts would enable cost savings.The introduction of these reforms and general principles, however, takes place against the backdrop of Member States and regions retaining a certain degree of discretion in shaping public service contracts. In other words, both have the basic right to decide which type of services is to be provided under public service obligations, whether such services are to be tendered out under a single contract or divided into several contracts, and whether these contracts should be tendered simultaneously or progressively over time, for instance.In this report, we set out to identify the optimal solution(s) for tendering rail public service contracts, both in terms of contract volume and scheduling of the tenders, while suggesting possible accompanying measures to ensure an optimum outcome. |
| Keywords: | Railways, Public Service Contracts, Progressive Tendering, Fourth Railway Package, Regulation |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2022/61&r=reg |
| By: | Gert Brunekreeft; Marius Buchmann; Martin Palovic; Anna Pechan |
| Abstract: | This paper presents an approach for resilience incentives in the regulation of electricity network operators. Resilience is the ability of the power system to deal quickly and efficiently with large-scale and long-lasting power interruptions. It comprises two related aspects: minimizing the damage caused by an outage and increasing the robustness of the system. The resilience regulation proposed in this paper contains two complementary parts. First, a resilience incentive mechanism, which aims at internalizing external effects of resilience improvement. This part relies on so-called duration-dependent consumer damage functions (CDFs). Second, a forward-looking budget approach with a sharing factor to strengthen incentives for resilience expenses within regulatory constraints. |
| Keywords: | resilience, electricity, network, regulation |
| JEL: | K23 L5 L94 |
| URL: | http://d.repec.org/n?u=RePEc:bei:00bewp:0044&r=reg |
| By: | Eltges, Fabian; Fourberg, Niklas; Wiewiorra, Lukas |
| Abstract: | In this paper, we analyze how wholesale access fees of a crucial input can be utilized to influence demands for products of different technologies and the deployment sequence between an incumbent and entrant firm. In a setting of multi-product competition with horizontally differentiated products we find that the access fee gives rise to asymmetric pricing incentives for the entrant firm if she offers a legacy and new product in parallel. The entrant's price for the new product decreases in the access fee while its legacy price increases with the aim to induce intra-brand legacy-to-new migration of demand. Fur- thermore, a regulator can depart from the socially optimal access fee and use this entrant's pricing channel to effectively promote demand side take-up of the new technology. Lastly, it is welfare beneficial in a sequential deployment process, that the entrant moves first to introduce the new technology while such a move can be fostered by a strategic use of the access fee that lowers profits from competition based on legacy products. |
| Keywords: | Access pricing, Multi-product competition, Product differentiation, Next generation networks |
| JEL: | L13 L51 L96 D4 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wikwps:3a&r=reg |
| By: | Zuloaga, Gonzalo; Plückebaum, Thomas |
| Abstract: | The newly passed German telecommunication regulation has set the deployment and sharing conditions of in-building infrastructure with the purpose of addressing the need of generating proper incentives to network operators to invest in and extend their very high capacity access networks. At the same time, this should help reducing the gap of gigabit speeds reaching end user's buildings door step but not their actual homes. This paper analyses relevant technical aspects of deploying and sharing in-building infrastructures. Particularly, we address, from a technical perspective, the requirements that different transmission technologies have on different in-building infrastructures, the opportunities and limitations on sharing in-building infrastructure, as well as the shortcomings of certain types of in-building infrastructure and topologies in achieving the gigabit objectives. We provide an overview and technical comparison of the different in-building network installations and technologies that are predominantly available in Germany in order to assess which are capable to ensure a delivery of 1 Gbps (in down- and upstream communication) to the end user. In this context, we analyse the implications that the identified technologies have on promoting open access to the building and therefore competition among network providers. By going beyond the new regulation, this paper also assesses the role of standardisation of in-building infrastructure, in securing investments in very high capacity access networks and keeping the infrastructure adaptable to new developments in the future. In absence of binding standards, we gather a set of practical recommendations promoted by German institutions regarding the deployment of new in-building infrastructure. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wikwps:5&r=reg |
| By: | Brühl, Volker |
| Abstract: | Digital platforms have become an important part of the digital economy by facilitating transactions between large numbers of users and by fostering innovation on collaborative platforms. In combination with technical platform services, some platform operators have managed to create powerful ecosystems that create network externalities and benefit from economies of scale and economies of scope. It is striking that, due to the specific economic drivers of the digital infrastructure, platform-based or platform-related services are dominated by a select number of global players. Most of the global platform operators are headquartered in the US, including Alphabet, Amazon, Apple, Meta and Microsoft, also known as the "Big 5". Some are located in Asia (e.g. Alibaba, Tencent). In Europe there are only a limited number of platform operators with a small market share. [...] |
| JEL: | L14 L22 L25 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cfswop:711&r=reg |
| By: | Christophe Carugati |
| Abstract: | This paper outlines some early antitrust issues related to answer engines and the response competition authorities should adopt. |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:bre:wpaper:node_9142&r=reg |
| By: | Johannes Brauer; Manuel Villavicencio; Johannes Trüby |
| Abstract: | Low-carbon hydrogen is expected to play a key role in the European energy transition. The production of hydrogen using electricity in an electrolysis process is a promising route. However, depending on the origin of the electricity, hydrogen production is associated with different carbon emissions and costs. While a strict coupling of renewable energies to electrolysers ensures the ‘greenness’ of the product, it likely leads to higher production costs. On the contrary, procuring electricity freely at power markets unleashes the flexibility of electrolysers, allowing them to benefit from price signals and possibly reducing production costs. However, the carbon intensity in both the power system and the resulting hydrogen product might rise. Consequently, there is a tradeoff between environmental integrity and economic viability which affects social welfare and the decarbonisation process. By applying an electricity market model, we assess the impact of various regulatory options for the operation of electrolyser systems on social welfare and carbon emissions. These options are based on the three dimensions proposed in the ongoing regulatory discussions: (1) the origin of the sourced electricity, (2) the temporal correlation of the production of hydrogen and renewable electricity and (3) their spatial correlation. For the case of Germany in 2030, we find that the most environmentally friendly regulation reduces CO2 emissions by 4.7 Mt and the best economic outcome results in 0.9 Billion EUR of welfare gains. While too stringent regulation on the spatial dimension is not recommended, the various advantages of relatively strict requirements in the temporal dimension (e.g., decline in CO2 emissions, financial exoneration of consumers, reduction in natural gas demand) exceed their comparably moderate economic disadvantages. Moreover, we find that with a progressing energy transition, the need for such regulation diminishes, as electricity from renewable energies represents both the best economic and the best environmental option, so that the observed trade-off disappears. |
| Keywords: | Electrolytic hydrogen, Regulation, Electricity market, Welfare |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2022/44&r=reg |
| By: | Martin Palovic |
| Abstract: | We analyse incentive problems in coordination of network operators that purchase services for electricity networks from distributed resources. Such services are often associated with externalities that make the social optimum costly against the individual one. However, a costly reaction of other operators occurs when the social optimum is missed. Regular network situations result in game-theoretical problems like prisoner’s dilemma or chicken that are played in a random order in an infinitely repeated game. The outcome of this complex game-theoretical setting, i.e. adopted strategies, is difficult to predict. Adjustments to network regulation aiming to internalize external effects are discussed as a remedy. |
| Keywords: | network operator coordination, game theory, network regulation |
| JEL: | D42 K23 L51 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:bei:00bewp:0040&r=reg |
| By: | Anna Pechan; Christine Brandstätt; Gert Brunekreeft; Martin Palovic |
| Abstract: | Market design for electricity often ignores network congestion initially and addresses it in a second, so-called 'redispatch' stage. For market participants, any two-stage design offers an opportunity to strategically optimize between the different market stages. The current debate is how to design a market-based redispatch to integrate new actors, in particular consumers, given increasing levels of congestion. Strategic bidding may occur if market players anticipate congestion in their region and manipulate bidding to exploit this congestion. In this paper, we pick up the current debate and study the precise incentives for gaming with respect to competitive conditions on the market with a formal model. We propose that depending on competitive conditions, the expected profits of gaming can be negative and link the range of negative expected gaming profits to a so-called reference bidder, reflecting competitive conditions in the market. We also discuss how several potential remedies can increase the risk of the gaming strategy and can thereby reduce the practical potential for gaming. With this paper, we provide the theoretical framework for authorities and empirical works to assess the potential of market-based as opposed to administrative redispatch. |
| Keywords: | Electricity market, Market-based redispatch, Strategic behaviour, Inc-Dec gaming, congestion management |
| JEL: | D21 D22 D43 L13 L94 |
| URL: | http://d.repec.org/n?u=RePEc:bei:00bewp:0043&r=reg |
| By: | Athir Nouicer; Leonardo Meeus; Erik Delarue |
| Abstract: | In this paper, we investigate two main schemes for contracting demand-side flexibility by the Distribution System Operator (DSO) at the planning stage: a voluntary demand-side connection agreement where consumers offer their flexibility, i.e., load reduction, to the DSO and a mandatory demand-side connection agreement where the DSO sets the flexibility levels, i.e., load curtailment, to be contracted from residential consumers. A different bilevel equilibrium model is used for each demand connection agreement scheme. In both models, the DSO, in the Upper Level, decides on the flexibility price and network tariffs. Residential consumers react to those signals in the Lower Level. They can be prosumers that invest in solar PV and batteries or passive consumers. The paperanswers two regulatory issues. The first is which option to choose for regulators between mandatory and voluntary demand connection agreements. We find that mandatory demand-side connection agreements result in higher welfare gains compared to voluntary ones and a lower price for flexibility. However, such agreements may entail some implementation issues for regulators and different curtailment levels among consumers. This connects with the second issue investigated in this paper on how to implement mandatory demand connection agreements from equity and feasibility perspectives. When introducing a pro-rata constrained mandatory scheme, curtailing consumers equally, we find that welfare levels are still higher than under the voluntary scheme but lower thanin the unconstrained mandatory scheme. The difference in welfare and flexibility levels between the two mandatory schemes could represent a potential for a secondary flexibility mechanism, where consumers trade flexibility between themselves. |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2022/55&r=reg |
| By: | Gaurab Aryal (University of Chicago); Maria Florencia Gabrielli (Universidad Nacional de Cuyo/CONICET) |
| Abstract: | Collusion adversely affects procurement cost and efficiency. It is hard to quantify just how prevalent collusion is, but it’s safe to assume that there’s a lot of collusion going on. Detecting collusion from (just) bid data is hard so the extent of the damages can never be known. A natural response would have been to use collusion-proof procurement, yet, such auctions are hardly used. Why? Using California highway procurements data, we estimate the extra cost of implementing a collusion-proof auction to be anywhere between 1.6% to 5%. Even after we factor in the marginal excess burden of taxes needed to finance the expenses, the cost ranges between 2.08% and 6.5%, which is too small to be the answer. Since other than cost there is no obvious answer, this shows that there is a lacuna in the empirical auction literature. |
| Keywords: | Procurements; Collusion-Proof Auction; Local Polynomial Estimator |
| JEL: | C1 C4 C7 D44 L4 |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:aoz:wpaper:248&r=reg |
| By: | Marco Botta |
| Abstract: | Data is often defined as the ‘oil’ of the 21st century economy: companies that successfully collect and process a large amount of data can provide more personalized services to their customers, develop new products, and reduce their production costs, thus becoming more competitive. Similarly, public institutions can provide more personalized services to citizens if they can access a large dataset. However, small firms and public institutions often cannot collect a sufficiently large amount of data on their own, and via data sharing small firms and public institutions can access larger and more diversified sets of data, thus boosting their efficiency. Despite its well-recognized benefits, several technical, regulatory and economics obstacles currently limit the degree of data sharing.This paper first discusses the market failures that currently limit data ‘access’ and ‘re-use’ – which are jointly defined as ‘data sharing’. Secondly, the paper analyses the legislation recently adopted by the European Union (EU) to foster Business2Business (B2B), Government2Business (G2B) and Business2Government(B2G) data sharing, especially by comparing the terms of the compensation that is provided by the EU legislation. Finally, the paper analyses the meanings of Fair, Reasonable and Non-Discriminatory (FRAND) terms in the context of the licensing of Standard Essential Patents (SEPs) and access remedies in EU competition law, to draw some lessons on how the principle of FRAND, in the context of B2B data sharing, is interpreted. |
| Keywords: | Data access, Data portability, Data Governance Act, Digital Markets Act, Data Act, FRAND, Standard Essential Patents, Antitrust access remedies |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2023/30&r=reg |
| By: | Dokka, Trivikram; SenGupta, Sonali; Bhardwaj, Aaditya |
| Abstract: | Sustainable uptake of electric vehicles will require efficient provision of public electric vehicle charging infrastructure for which it is essential to understand plug-in behaviors of electric vehicle users. Using plug-in data from 19 public charging stations and amenities in Durham, clustering, coupled with quantile regression analysis was used. Instead of focusing on the conditional average, we explain the effects of various factors, including availability of other amenities, on the entire distribution of the plug-in duration. Results show that both demand for charging and other amenities surrounding the charging station play an important role. More specifically, these effects are different at different quantiles of plug-in distribution. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:qmsrps:202209&r=reg |
| By: | Fourberg, Niklas; Marques-Magalhaes, Katrin; Wiewiorra, Lukas |
| Abstract: | We analyze pricing patterns and price level effects of algorithms in the market segments for OTC-antiallergics and -painkillers in Germany. Based on a novel hourly dataset which spans over four months and contains over 10 million single observations, we produce the following results. First, price levels are substantially higher for antiallergics compared to the segment of painkillers, which seems to be reflective of a lower price elasticity for antial- lergics. Second, we find evidence that this exploitation of demand character- istics is heterogeneous with respect to the pricing technology. Retailers with a more advanced pricing technology establish even higher price premiums for antiallergics than retailers with a less advanced technology. Third, retailers with more advanced pricing technology post lower prices which contradicts previous findings from simulations but are in line with empirical findings if many firms compete in a market. Lastly, our data suggests that pricing algo- rithms take web-traffic of retailers' online-shops as demand side feedback into account when choosing prices. Our results stress the importance of a careful policy approach towards pricing algorithms and highlights new areas of risks when multiple players employ the same pricing technology. |
| Keywords: | Algorithmic pricing, Collusion, Artificial intelligence |
| JEL: | C13 D83 L13 L41 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wikwps:6&r=reg |
| By: | Zhiqi Chen (Department of Economics, Carleton University) |
| Abstract: | This case study reviews the history and operation of the international air cargo cartel, in which over 20 airlines around the world colluded on the setting and implementation of fuel and other surcharges for international air cargo services from late 1999 to 2006. To an economist, this cartel has several interesting features, including the choice of a simple variable to collude on, the use of a fuel price index as a facilitating device, and the reliance on a complex web of contacts among the executives of different airlines to enforce the cartel. Most interesting of all is that the airlines colluded on the surcharges without coordinating on the freight rates. On the surface, this cartel seemed to be poorly designed because higher surcharges achieved through collusion could have simply been offset by lower freight rates as the airlines competed for customers. But the theoretical analyses by Chen (2017 and 2022) demonstrate that colluding on surcharges without coordination on base prices could be an effective way of raising the full price of a product. |
| Keywords: | cartels, collusion, surcharges |
| JEL: | L41 |
| Date: | 2023–05–31 |
| URL: | http://d.repec.org/n?u=RePEc:car:carecp:23-03&r=reg |
| By: | Pier Luigi Parcu; Giorgio Monti; Marco Botta |
| Abstract: | This working paper includes a collection of case notes written by those national judges who attended the European Networking and Training for National Competition Enforcers (ENTraNCE Judges, 2022). The training programme was organised by RSCAS between November, 2021, and October, 2022, with the financial contribution of the DG Competition of the European Commission. The case notes included in the working paper summarise judgments from different EU Member States that relate to diverse aspects of competition law enforcement. This working paper thus aims to increase the understanding of the challenges that are faced by the national judiciaries in enforcing national and EU competition in the context of the decentralised regime of competition law enforcement that was introduced by Reg. 1/2003. |
| Keywords: | Competition law, Article 101 TFEU, Article 102 TFEU, Reg. 1/2003, judicial training, national judges |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2023/06&r=reg |
| By: | Djankov, Simeon; Luksic, Igor; Zhang, Eva |
| Abstract: | We present suggestive evidence that new technology has reduced business regulation globally over the 2005-2019 period, in the areas of paying corporate taxes and starting a business. Lower-income countries and countries in the French civil law tradition have deregulated the most. |
| JEL: | O30 G38 |
| Date: | 2022–02–25 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:118882&r=reg |