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on Regulation |
| By: | Brown, David P. (University of Alberta, Department of Economics); Eckert, Andrew (University of Alberta, Department of Economics); Silveira, Douglas (University of Alberta, Department of Economics) |
| Abstract: | Wholesale electricity markets have several features that increase the likelihood of collusion, including frequent interaction, multimarket contact, and a high degree of information transparency. As a result, screening techniques for detecting collusive agreements are desired. In this paper, we survey the existing literature on collusive screens and collusion in electricity markets. We discuss key features of non-competitive behaviour to be reflected in screens and suggest directions for improved screening in this industry. In particular, there is considerable potential to include machine learning and data mining techniques in screens in the electricity sector due to recent improvements in these methods. |
| Keywords: | Screening Methods; Collusion; Electricity Markets |
| JEL: | L13 L40 L94 Q40 |
| Date: | 2023–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2023_007&r=reg |
| By: | Yassine Lefouili (Toulouse School of Economics); Leonardo Madio (University of Padova Author-Name: Ying Lei Toh; Federal Reserve Bank of Kansas City) |
| Abstract: | We analyze how a privacy regulation setting a cap on information disclosure affects quality-enhancing innovation incentives by a monopolist — who derives revenues solely from disclosing user data to third parties — and consumer surplus. If the share of privacy-concerned users is sufficiently small, privacy regulation has a negative effect on innovation and may harm users. However, if the share of privacy-concerned users is sufficiently large, privacy regulation has a positive effect on innovation. In this case, there is no trade-off between privacy and innovation and users always benefit from privacy regulation. |
| Keywords: | Privacy Regulation; Data Disclosure; Innovation. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0298&r=reg |
| By: | Jose Higueras |
| Abstract: | I study how to regulate firms' access to consumer data when it is used for price discrimination and the regulator possesses non-Bayesian uncertainty about the correlation structure between data and willingness to pay. Therefore, it is unclear how the monopolist will segment the market. I characterize all policies that maximize worst-case consumer surplus: the regulator allows the monopolist to access data, if the database does not reveal a minority group of consumers. |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2305.05822&r=reg |
| By: | FARRELL Eimear (European Commission - JRC); GIUBILEI Miriam (European Commission - JRC); GRICIENE Asta; HARTOG Eddy; HUPONT TORRES Isabelle (European Commission - JRC); KOTSEV Alexander (European Commission - JRC); LOBO Georges; MARTINEZ RODRIGUEZ Eva (European Commission - JRC); SANDU Leontina; SCHADE Sven (European Commission - JRC); STROTMANN Maximilian; TANGI Luca (European Commission - JRC); TOLAN Songul; TORRECILLA SALINAS Carlos (European Commission - JRC); ULRICH Peter (European Commission - JRC) |
| Abstract: | The Public Sector plays different roles with regard to AI. First, it acts as regulator, establishing the legal framework for the use of AI within society. Second, governments play also the role of accelerator, providing funding and support for the uptake of AI. Third, public sector organisations develop and use Artificial Intelligence. To explore these roles, with particular emphasis on the latter, the Joint Research Centre (JRC) and the Directorate-General for Informatics (DIGIT) of the European Commission jointly organised a webinar series and a “science for policy” conference in 2022. This report includes the conclusions of each one of the webinars, together with the material and main findings of the closing event. It reveals recent challenges, opportunities, and policy perspectives of the use of AI in the public sector, and distils a set of short takeaway messages. In a nutshell these finding are (i) AI in the public sector implies multi-stakeholders; (ii) experiment first, scale-up later; (iii) trustworthiness is a must; (iv) there is a need for upskilling public sector to be ready for the AI revolution; and (v) adapt procurement for digital and AI innovation. The report concludes that the AI promise is high for the society and in particular for the Public Sector, but the risks are not to be minimized. Europe has the ambition to succeed as whole in the digital transition powered by data and by AI-based applications, and wants to do it the European way, by putting citizens in the centre of this transformation. |
| Keywords: | Artificial intelligence, digital transformation, innovative public services, Digital Decade |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc133826&r=reg |
| By: | Dongwei Zhao; Audun Botterud; Marija Ilic |
| Abstract: | This paper evaluates market equilibrium under different pricing mechanisms in a two-settlement 100%-renewables electricity market. Given general probability distributions of renewable energy, we establish game-theoretical models to analyze equilibrium bidding strategies, market prices, and profits under uniform pricing (UP) and pay-as-bid pricing (PAB). We prove that UP can incentivize suppliers to withhold bidding quantities and lead to price spikes. PAB can reduce the market price, but it may lead to a mixed-strategy price equilibrium. Then, we present a regulated uniform pricing scheme (RUP) based on suppliers' marginal costs that include penalty costs for real-time deviations. We show that RUP can achieve lower yet positive prices and profits compared with PAB in a duopoly market, which approximates the least-cost system outcome. Simulations with synthetic and real data find that under PAB and RUP, higher uncertainty of renewables and real-time shortage penalty prices can increase the market price by encouraging lower bidding quantities, thereby increasing suppliers' profits. |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2305.12309&r=reg |
| By: | Dirk Lauinger; Fran\c{c}ois Vuille; Daniel Kuhn |
| Abstract: | Low-carbon societies will need to store vast amounts of electricity to balance intermittent generation from wind and solar energy, for example, through frequency regulation. Here, we derive an analytical solution to the decision-making problem of storage operators who sell frequency regulation power to grid operators and trade electricity on day-ahead markets. Mathematically, we treat future frequency deviation trajectories as functional uncertainties in a receding horizon robust optimization problem. We constrain the expected terminal state-of-charge to be equal to some target to allow storage operators to make good decisions not only for the present but also the future. Thanks to this constraint, the amount of electricity traded on day-ahead markets is an implicit function of the regulation power sold to grid operators. The implicit function quantifies the amount of power that needs to be purchased to cover the expected energy loss that results from providing frequency regulation. We show how the marginal cost associated with the expected energy loss decreases with roundtrip efficiency and increases with frequency deviation dispersion. We find that the profits from frequency regulation over the lifetime of energy-constrained storage devices are roughly inversely proportional to the length of time for which regulation power must be committed. |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2306.02987&r=reg |
| By: | Marco Magnani (University of Padova and ARERA); Federico Navarra (University of Padova) |
| Abstract: | We study the incentives of a monopolistic hybrid platform in sharing its superior market information with the third-party seller hosted on its marketplace. After observing platform information-sharing policy, the seller competes in prices with the platform over a horizontally differentiated good. Despite platform duality, an equilibrium in which the platform shares information with the seller occurs. We highlight how the platform has incentives to share information either for relaxing price-competition or for increasing the volume of transactions. Platform incentives to share information are strongest for intermediate degrees of product differentiation. Information provision results in consumer surplus extraction such that the total welfare is reduced. Although entering as a seller and providing market information is profitable, when analysing platform entry as the acquisition of one of the sellers we may observe equilibria in which the platform either sticks to agency or does not provide information since this would increase the entry cost. |
| Keywords: | hybrid platforms, information provision, data sharing, vertical integration. |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0301&r=reg |
| By: | Ait-Ali, Abderrahman (Swedish National Road & Transport Research Institute (VTI)); Kurt, Filiz (Deutsches Zentrum für Luft- und Raumfahrt (DLR)); Isberner, Alessa (Deutsches Zentrum für Luft- und Raumfahrt (DLR)); Odolinski, Kristofer (Swedish National Road & Transport Research Institute (VTI)); Berg, Mats (KTH Royal Institute of Technology) |
| Abstract: | Innovations in high-speed rail (HSR) have had substantial effects on different stakeholders within and outside the railway system. As part of the European Shift2Rail research programme, several innovative solutions are developed for, among others, improving the HSR infrastructure. The joint undertaking behind this research program has set objectives for these innovations in terms of punctuality, capacity, and life cycle costs. With a focus on infrastructure-related innovations for HSR, this paper aims at assessing their impacts in relation to these targets. We review the relevant research literature about the effects of HSR innovations and their assessment. The paper presents a hybrid assessment methodology combing different approaches to assess capacity, punctuality, and cost effects. This contributes to reducing the existing gap that is found in the research literature. Based on a reference scenario for HSR line and collected data from different stakeholders, the results indicate that infrastructure innovations in HSR, being developed within the European Shift2Rail research programme, can contribute to reaching the target set for punctuality. Further innovations in HSR infrastructure and/or other railway assets may be needed to reach additional targets and for more accurate improvement values giving more insights into their impacts. |
| Keywords: | High-speed; Railway; Infrastructure; Innovation |
| JEL: | R41 R42 R48 |
| Date: | 2023–06–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:vtiwps:2023_007&r=reg |
| By: | Matthias Beestermöller; Levke Jessen-Thiesen; Alexander Sandkamp; Alexander-Nikolai Sandkamp |
| Abstract: | This paper investigates the impact of the largest rail strikes in German history on intercity buses – a then newly liberalised market. Using unique booking data of bus services, we exploit variation in rail service cancellations across routes to show that the disruption in rail transport increases bus ticket sales. Crucially, the effect persists beyond the strike, indicating that travellers do not return to their originally preferred mode of transport. It is particularly pronounced for passengers travelling on weekends. The findings suggest that customers were previously under-experimenting. Beyond transportation, our results highlight the importance of service reliability, as temporary disruptions can cause customers to permanently switch to competitors. |
| Keywords: | experimentation, inter-modal substitution, learning, optimisation, strike, switching costs, transport |
| JEL: | C81 D83 L92 R41 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10483&r=reg |
| By: | Ait-Ali , Abderrahman (Swedish National Road & Transport Research Institute (VTI)); Odolinski, Kristofer (Swedish National Road & Transport Research Institute (VTI)); Pålsson, Björn (Chalmers University of Technology); Torstensson, Peter (Swedish National Road & Transport Research Institute (VTI)) |
| Abstract: | Switches & crossings (S&Cs) are vital assets as they allow for increased railway capacity by introducing flexibility and connectivity in railway networks. At the same time, this makes them critical since they can cause costly delays and disruptions if they are not well maintained. This motivates studies to improve maintenance strategies of S&Cs, considering both the life-cycle costs (LCC) of the assets and socio-economic transportation costs for passengers and freight customers. In this paper, the interdependence between deterioration mechanisms, maintenance activities, and expected LCC (including transportation costs) is investigated using a combination of mechanical and econometric modelling. The interrelation between the degradation of contact geometry and track settlement is analysed using simulations of dynamic vehicle–turnout interaction. Long-term mechanical degradation of the S&C is simulated for different maintenance strategies that correspond to different timing of the associated maintenance measures (crossing repair welding and tamping). This provides the basis for analysing the interdependence between preventive and corrective activities using econometric modelling. Based on a case study of a common type of S&Cs in the Swedish infrastructure, the impact of different maintenance strategies on LCC and transportation costs is analysed. Opportunities and challenges in the development of more socio-economically effective maintenance strategies of S&Cs are discussed. |
| Keywords: | Infrastructure maintenance; Rail infrastructure; Life-cycle cost; Switches and crossings; Preventive maintenance; Corrective maintenance; Mechanical simulation |
| JEL: | R41 R42 R48 |
| Date: | 2023–06–09 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:vtiwps:2023_006&r=reg |
| By: | Sebastian Doerr; Leonardo Gambacorta; Luigi Guiso; Marina Sanchez del Villar |
| Abstract: | We find that, following the introduction of the CCPA, loan applications to fintechs increase by significantly more than those to traditional banks, leading to an increase in fintechs' market share by up to 19%. This increase can be attributed to applicants' increased willingness to share their data. Fintechs, taking advantage of this data, expand their utilisation of information beyond traditional credit scores during the application process. Consequently, they engage in more personalised pricing and reject a larger proportion of applications. These findings suggest that fintechs enhance their screening process, leading to an improvement in the quality of their average borrower. As a result, fintechs are able to offer significantly lower loan rates than banks can following the CCPA's implementation. In sum, the CCPA has benefited consumers by providing fintech lenders, equipped with advanced screening technology, with improved access to data. |
| Keywords: | data privacy, data sharing, fintech, privacy regulation, CCPA |
| JEL: | G21 G23 G28 |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:1103&r=reg |
| By: | Githu, Jackson Macharia |
| Abstract: | This paper reviews the legal and regulatory framework governing digital financial services in Kenya including some of the unanswered questions by the current regulatory framework. The paper focusses on the question of the statutory definition of the rapidly evolving payment services, the architecture of the regulatory framework of the digital financial services and the regulation of digital credit providers. The paper identifies that there are risks and opportunities in the current regulatory framework and the regulatory regime should strike the required balance. The paper concludes by recommending that Parliament amends the definition of payment services in the National Payment Services Act. Further, even though the digital lenders regulatory framework has just come into force, the paper calls for its continued enhancement. The paper also calls for some minimum regulatory guidelines to be issued for the currently unregulated non digital lenders on areas such as interest rates and consumer protection. The paper also urges reconsideration of the regulatory framework to consolidate the regulators, laws and regulations on the area. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:kbawps:68&r=reg |
| By: | Ochen, Ronald; Bulime, Enock Will Nsubuga |
| Abstract: | Digital Financial Services such as mobile money provides immeasurable benefits for financial inclusion and intermediation in East Africa. In this paper, we use a Fixed Effects panel model and annual data collected from 2007 to 2021 to examine the evolution of Digital Financial Services regulatory frameworks and their effects on conventional banking and Financial Inclusion in East African countries - Kenya, Tanzania, and Uganda. Results indicate that digital financial services regulations positively and significantly affect conventional banking services and mobile money (financial inclusion). Also, during the COVID19 pandemic period when the different governments instituted COVID19 policy response measures in the digital payments space to circumvent the use of cash and physical contact, positively affected digital financial services, thereby enhancing financial inclusion in the region. Also, an increase in lending rates and the consumer price index causes mobile money to decline. Therefore, digital financial services regulations are pivotal in advancing financial inclusion and intermediation through mobile money and conventional banking services in East Africa. Also, Central Banks should be concerned with mobile money in the economy because it forms part of the loanable funds by banks thus, stabilizing lending rates and prices in the economy is crucial for financial inclusion. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:kbawps:73&r=reg |