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on Regulation |
| By: | Genakos, C.; Roumanias, C.; Valletti, T. |
| Abstract: | We present novel evidence from a large panel of UK consumers who receive personalized reminders from a specialist price-comparison website about the precise amount they could save by switching to their best-suited alternative mobile telephony plan. We document three phenomena. First, even self-registered consumers with positive savings exhibit inertia. Second, we show that being informed about potential savings has a positive and significant effect on switching. Third, controlling for savings, the effect of incurring overage payments is significant and similar in magnitude to the effect of savings: paying an amount that exceeds the recurrent monthly fee weighs more on the switching decision than being informed that one can save that same amount by switching to a less inclusive plan. We interpret this asymmetric reaction on switching behavior as potential evidence of loss aversion. In other words, when facing complex and recurrent tariff plan choices, consumers care about savings but also seem to be willing to pay upfront fees in order to get “peace of mind†. |
| Keywords: | tariff/plan choice, inertia, switching, loss aversion, mobile telephony |
| JEL: | D91 D12 D81 L96 M30 |
| Date: | 2023–07–11 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:2351&r=reg |
| By: | Ana Maria Ruiz Rivadeneira; Patrick Mcmaster |
| Abstract: | Multiple institutions are responsible for and contribute to ensuring that infrastructure investments meet policy objectives. The responsibilities of these institutions have evolved over time and vary from country to country, depending on tradition, constitutional arrangements, and government capacities. While they are often complementary, sometimes these responsibilities overlap, creating an additional level of complexity.Understanding the impact of the institutions involved with infrastructure will allow policymakers to make informed decisions. This paper explores both the ‘why’ and the ‘what’ of institutional arrangements. It provides a snapshot of the various institutions involved in the planning, financing, and delivery of infrastructure across OECD Member countries and identifies three broad types of institutional arrangements. The paper contributes to a better understanding of current trends in institutional change, the strengths and challenges of these institutional arrangements, and the potential for sharing experience and expertise among institutions and countries. |
| Keywords: | infrastructure, infrastructure banks, infrastructure commissions, infrastructure governance, institutional arrangements |
| JEL: | F55 H54 O18 D02 |
| Date: | 2023–07–18 |
| URL: | http://d.repec.org/n?u=RePEc:oec:govaaa:62-en&r=reg |
| By: | Klaus Gugler (Department of Economics, Vienna University of Economics and Business); Florian Szücs (Department of Economics, Vienna University of Economics and Business) |
| Abstract: | We exploit the regulatory environment in the Austrian pharmaceutical market to study the effects of price regulation on market outcomes and consumer welfare. We evaluate all mergers of drug producers in the 2009-2017 period and find that the coexisting regulated and unregulated markets were unequally affected. While M&A have substantially increased prices without regulation, particularly for price-inelastic products, prices did not increase under regulation. Instead, variety increased in regulated markets. Therefore, regulation can successfully mitigate the effects of market power: whereas M&A decrease consumer welfare absent regulation, the additional product variety increases consumer welfare in the regulated market. |
| Keywords: | pharmaceuticals, regulation, market power, consumer welfare, pharma mergers, product variety |
| JEL: | L65 I18 D22 I11 L51 G34 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp343&r=reg |
| By: | Sebastian Busch; Ruben Kasdorp; Derck Koolen; Arnaud Mercier; Magdalena Spooner |
| Abstract: | Renewable energy sources (RES) play a crucial role in the decarbonisation of the electricity system. Their share in electricity production has grown significantly since 2005 and it is expected to grow further to reach over 70% of gross electricity generation in 2030. This development will change electricity market dynamics and increase the need for flexible power. The introduction of RES has so far been policy driven. Technology development has progressed thanks to massive public support to deployment. Different modes of support have been used, with various impacts on the market. We need to continue to move towards more market-based instruments in order to reduce both overall support costs and the distortive impact on the market, and in particular towards self-standing instruments such as power purchase agreements (PPAs). The key question is whether and when renewable technologies can become competitive in the electricity market. A complication is their cost structure, with close to zero marginal costs. Our analysis shows that their profitability depends on both the price level of energy commodities and the carbon price, and the flexibility of the electricity system to reduce the cannibalisation effect that renewables have on their own revenues. As renewables move to open merchant markets, we need to ensure adequate investments by introducing different forms of long-term contracts. Such contracts would contribute to stabilise market revenues of these investments, thereby benefiting both consumers and producers while ensuring market-based solutions. |
| JEL: | Q40 Q42 Q47 Q48 |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:euf:dispap:187&r=reg |
| By: | Tesfatsion, Leigh |
| Abstract: | Locational Marginal Pricing (LMP) implemented for grid-supported centrally-managed wholesale power markets is conceptually problematic. In analogy to the standard competitive (marginal cost = marginal benefit) spot-pricing rule, LMP assigns a common unit-price ($/MWh) to each unit (MWh) of grid-delivered energy, conditional on delivery location and time.However, competitive pricing requires the transacted asset be a commodity; that is, an asset with a standard unit of measurement such that, conditional on location and time, each trader (supplier or buyer) considers all "next" units available for trade to be perfect substitutes. In contrast, a trader's valuation of any "next" unit (MWh) of grid-delivered energy, conditional on grid delivery location b and operating interval T, typically depends on the specific dynamic attributes of the path of power injections and/or withdrawals (MW) used to implement this delivery at b during T. One option is to muddle through, forcing suppliers, buyers, and system operators to express cost and benefit valuations for "next" units of grid-delivered energy in per-unit form ($/MWh) without regard for the true costs and benefits of flexible power delivery. Another option is to explore alternative conceptually-coherent product definitions, settlement rules, and bid/offer contract formulations enabling electric power grids to function efficiently as flexibility-support insurance mechanisms. |
| Date: | 2023–07–05 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genstf:202307051413210000&r=reg |
| By: | Bertin Martens |
| Abstract: | This paper explores the crucial role of search engines in modern digital economies and their impact on user welfare. |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:bre:wpaper:node_9228&r=reg |
| By: | Huh, Sun Kyung (Korea Institute for Industrial Economics and Trade) |
| Abstract: | This study analyzes hydrogen policies in key countries and uses the implications carried by the analysis to formulate a strategic framework for the development of the domestic Korean hydrogen industry. A comprehensive national hydrogen strategy is crucial if Korea is to achieve a swift and effective transition to a hydrogen-based economy. The prevailing concerns surrounding climate change and environmental issues have prompted a significant shift in the global energy landscape. Consequently, numerous countries have embraced policies aimed at augmenting the proportion of renewable energy sources in order to mitigate greenhouse gas emissions. This pursuit of an energy transition and efforts toward carbon neutrality have emerged as central tenets of national energy and environmental agendas across the globe. Korea too is a part of this international movement toward cleaner energy and carbon neutrality, exemplified by the Korean government’s promulgation of the Energy Transition Roadmap in 2018. Hydrogen energy addresses a major shortcoming of many renewables: their intermittent nature. They hydrogen sector also contributes to the decarbonization of industries and transportation, and can stimulate economic growth as a burgeoning green sector. Recognizing the pivotal role that the hydrogen industry will play in facilitating the transition toward carbon neutrality, this study ascertains the distinctive features of domestic and international hydrogen industry policies, and proposes a suite of domestic policy strategies based on these findings specifically tailored to the Korean context. |
| Keywords: | hydrogen; hydrogen energy; hydrogen industry; alternative energy; renewable energy; greenhouse gas mitigation; climate change; carbon reduction; emissions reduction; clean energy; green energy; decarbonization; green industry; carbon neutrality; net-zero; Korea |
| JEL: | Q40 Q42 Q43 Q48 Q50 Q53 Q54 Q55 Q56 Q58 |
| Date: | 2023–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kieter:2023_016&r=reg |
| By: | Andor, Mark Andreas; Dehos, Fabian; Gillingham, Kenneth; Hansteen, Sven; Tomberg, Lukas |
| Abstract: | Accelerated by surging inflation, policymakers in many countries have introduced cheap, flat-rate access to public transport. Such measures serve two aims: to cushion the social repercussions of inflation by reducing energy expenses, and to promote more sustainable mobility. Spain, for instance, has introduced a program that allows commuters free access to public transport for regular trips. Austria offers a nationwide ticket for 1, 095 Euros per year and a regional ticket for the city of Vienna for 365 Euros per year. Luxembourg, Malta, and some cities in Europe and the United States have already introduced free public transport. This global trend towards flat fares or free public transport is based on arguments such as simplification, uniformity, and ease-of-control. Germany recently followed suit with an unprecedented reduction in public transport fares. From June to August 2022, the German government granted nationwide access to public transport for just 9 Euros per month. Germany’s experience with the so-called 9-Euro Ticket provides new insights on the impact of cheap flat-rate access to public transport. Based on our evaluation of the 9-Euro Ticket, experiences with similar programs in other European cities, and insights from economic theory, we call for a cheap and dynamic public fare system that prices peak times higher than off-peak times to avoid overcrowding during peak hours. To finance a subsidized public transport system, we propose dynamic road pricing. This would reduce the externalities of car usage by levying a per-kilometer fee that varies by congestion levels of the respective roads. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwipos:82&r=reg |
| By: | Claude Crampes (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - 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); Thomas-Olivier Léautier (EDF - EDF) |
| Abstract: | To encourage building renovations and the replacement of old energy-consuming equipment, some governments have introduced a system of white certificates requiring large producers and distributors of natural gas, electricity and fuel to prove that they have financed energy-saving operations. The system is proving to be much less efficient than expected because energy saving works are "credence goods", which means that their quality can be correctly measured neither before nor after their achievement. Because of this informational bias, white certificates encourage economically inefficient works. Despite this, they are favored by the public authorities because they belong to the panoply of nonpunitive, non-fiscal, decentralized and local job-creating micro-policies. |
| Abstract: | Les certificats d'économie d'énergie (CEE) encouragent la rénovation des bâtiments et le remplacement de vieux équipements en obligeant les fournisseurs de gaz naturel, d'électricité et de fioul à réduire leurs livraisons. L'analyse microéconomique permet de relier le marché des certificats au marché des travaux d'économies d'énergie et à celui de l'énergie. Le handicap informationnel des ménages pour évaluer le lien entre travaux et consommation d'énergie et l'appartenance des travaux à la catégorie des « biens de confiance » expliquent la faible efficacité quantitative et financière du dispositif. Nous expliquons aussi pourquoi les CEE gardent les faveurs des pouvoirs publics malgré leurs mauvaises performances en mettant en avant leur appartenance à la panoplie des micropolitiques non punitives, non fiscales, décentralisées et créatrices d'emplois locaux. |
| Keywords: | Energy savings, White certificates, Micro-politics, Incentive mechanisms, Fuel poverty, Economies d’énergie, Certificats blancs, Micro-politiques, Mécanismes incitatifs |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04128779&r=reg |
| By: | Klaus Gugler (Department of Economics, Vienna University of Economics and Business); Florian Szücs (Department of Economics, Vienna University of Economics and Business); Ulrich Wohak (Department of Economics, Vienna University of Economics and Business) |
| Abstract: | We evaluate the impact of big-tech acquisitions on the incentives for investment and innovation. Using data on several hundred acquisitions by Google, Apple, Facebook, Amazon and Microsoft (GAFAM), we study the evolution of venture capital investment and patenting relative to control groups. The results show a clear negative impact on investment, while the effect on innovation depends on the acquirer and period. Both outcomes improve over time, as GAFAM firms become more similar in terms of their product and tech-portfolios, increasing competition. Yet, around 10% of acquisitions impact both metrics negatively. |
| Keywords: | M&A, big-tech, innovation, investment |
| JEL: | D22 G34 K21 L41 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp340&r=reg |
| By: | Daron Acemoglu; Alireza Fallah; Ali Makhdoumi; Azarakhsh Malekian; Asuman Ozdaglar |
| Abstract: | Many platforms deploy data collected from users for a multitude of purposes. While some are beneficial to users, others are costly to their privacy. The presence of these privacy costs means that platforms may need to provide guarantees about how and to what extent user data will be harvested for activities such as targeted ads, individualized pricing, and sales to third parties. In this paper, we build a multi-stage model in which users decide whether to share their data based on privacy guarantees. We first introduce a novel mask-shuffle mechanism and prove it is Pareto optimal—meaning that it leaks the least about the users’ data for any given leakage about the underlying common parameter. We then show that under any mask-shuffle mechanism, there exists a unique equilibrium in which privacy guarantees balance privacy costs and utility gains from the pooling of user data for purposes such as assessment of health risks or product development. Paradoxically, we show that as users’ value of pooled data increases, the equilibrium of the game leads to lower user welfare. This is because platforms take advantage of this change to reduce privacy guarantees so much that user utility declines (whereas it would have increased with a given mechanism). Even more strikingly, we show that platforms have incentives to choose data architectures that systematically differ from those that are optimal from the user’s point of view. In particular, we identify a class of pivot mechanisms, linking individual privacy to choices by others, which platforms prefer to implement and which make users significantly worse off. |
| JEL: | D62 D83 L86 |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31413&r=reg |
| By: | Sabiou Inoua; Vernon Smith |
| Abstract: | The relevance of Adam Smith for understanding human morality and sociality is recognized in the growing interest in his work on moral sentiments among scholars of various academic backgrounds. But, paradoxically, Adam Smith's theory of economic value enjoys a less prominent stature today among economists, who, while they view him as the 'father of modern economics', considered him more as having had the right intuitions about a market economy than as having developed the right concepts and the technical tools for studying it. Yet the neoclassical tradition, which replaced the classical school around 1870, failed to provide a satisfactory theory of market price formation. Adam Smith's sketch of market price formation (Ch. VII, Book I, Wealth of Nations), and more generally the classical view of competition as a collective higgling and bargaining process, as this paper argues, offers a helpful foundation on which to build a modern theory of market price formation, despite any shortcomings of the original classical formulation (notably its insistence on long-run, natural value). Also, with hindsight, the experimental market findings established the remarkable stability, efficiency, and robustness of the old view of competition, suggesting a rehabilitation of classical price discovery. This paper reappraises classical price theory as Adam Smith articulated it; we explicate key propositions from his price theory and derive them from a simple model, which is an elementary sketch of the authors' more general theory of competitive market price formation. |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2307.00412&r=reg |
| By: | Pablo Fajgelbaum; Cecile Gaubert; Nicole Gorton; Eduardo Morales Morales; Edouard Schaal |
| Abstract: | How do political preferences shape transportation policy? We study this question in the context of California's High-Speed Rail (CHSR). Combining geographic data on votes in a referendum on the CHSR with a model of its expected economic benefits, we estimate the weight of economic and non-economic considerations in voters'preferences. Then, comparing the proposed distribution of CHSR stations with alternative placements, we use a revealed-preference approach to estimate policymakers' preferences for redistribution and popular approval. While voters did respond to expected real-income benefits, non-economic factors were a more important driver of the spatial distribution of voters' preferences for the CHSR. While the voter-approved CHSR would have led to modest income gains, proposals with net income losses also would have been approved due to political preferences. For the planner, we identify strong preferences for popular approval. A politically-blind planner would have placed the stations closer to dense metro areas in California. |
| Keywords: | transportation, infrastructure, political economy |
| JEL: | H54 P11 R13 R4 |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1866&r=reg |
| By: | Bovin, Andreas; Bos, Iwan (RS: GSBE other - not theme-related research, Organisation, Strategy & Entrepreneurship) |
| Abstract: | Collusion theory robustly predicts non-cartel rivals to raise their price and increase their output. As the typical cartel cuts back production, its competitors are expected to gain market share during the collusive period and to lose market share in the period following the cartel's demise. We provide empirical support for this prediction by showing that it applied to the European truck cartel. We also illustrate how our analysis can be used in the prosecution stage. One truck manufacturer denied cartel participation, whereas the proposed market share test supports the European Commission's finding that this firm was, in fact, a member. |
| JEL: | L10 L40 |
| Date: | 2023–07–11 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2023011&r=reg |
| By: | Merk, Christine; Andersen, Gisle; Nordø, Åsta Dyrnes; Helfrich, Torben |
| Abstract: | Carbon Capture and Storage (CCS) has been identified as an essential part of the lowest-cost path toward reaching the goals of the Paris Agreement. In Europe, an accelerated pace of CCS development indicates that a CO2 transport and storage system could be established by 2030. However, we know little about how the public views the market for transport and storage of CO2 currently under development in Europe. In early 2023, we conducted an experimental comparative survey to study public opinions on cross-border CO2 trade for storage in Denmark, Germany, the Netherlands, Norway and the UK. The share of respondents that perceive CCS as somewhat positive or very positive varies considerably between the countries; we find the highest share in Denmark (69%), followed by the UK (68%), Norway (67%), the Netherlands (57%) and the lowest share in Germany (49%). Especially concerns about environmental risks and costs lead to more negative views, while perceptions of job creation and economic opportunities lead to more positive evaluations. The experimental results show that importing CO2 for storage is among the least preferred options in all countries, while the storage of CO2 that has been captured in the own country is the most preferred option; the gap in the share of positive evaluations is substantial and amounts to up to 20 percentage points in the UK. Respondents who feel that countries are responsible for reducing national greenhouse gas emissions and storing their own captured CO2 drive the pattern of a more positive evaluation of a domestic CCS value chain and a more negative evaluation of importing CO2. |
| Keywords: | carbon capture and storage, public perceptions, trade |
| JEL: | F35 O18 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwkwp:2252&r=reg |