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on Regulation |
| By: | Jacopo Gambato; Martin Peitz |
| Abstract: | We analyze consumers’ voluntary information disclosure in a platform setting. For given consumer participation, the platform and sellers tend to prefer limited disclosure of consumer valuations, in contrast to consumers. With endogenous consumer participation, seller and platform incentives may be misaligned, and sellers may be better off when consumers can disclose their valuations. A regulator acting in the best interest of consumers and/or sellers may want to intervene and force the platform to employ a disclosure technology that enables consumers to voluntarily disclose information from a richer message space. |
| Keywords: | Two-sided platform, platform governance, information disclosure, information design, privacy regulation, e-commerc |
| JEL: | L12 L15 D21 D42 M37 |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_468&r=reg |
| By: | Georgios Petropoulos; Bertin Martens; Geoffrey Parker; Marshall Van Alstyne |
| Abstract: | Digital platforms, empowered by artificial intelligence algorithms, facilitate efficient interactions between consumers and merchants that allow the collection of profiling information which drives innovation and welfare. Private incentives, however, lead to information asymmetries resulting in market failures. This paper develops a product differentiation model of competition between two platforms to study private and social incentives to share information. Sharing information can be welfare-enhancing because it solves the data bottleneck market failure. Our findings imply that there is scope for the introduction of a mandatory information sharing mechanism from big tech to their competitors that help the latter to improve their network value proposition and become more competitive in the market. The price of information in this sharing mechanism matters. We show that price regulation over information sharing like the one applied in the EU jurisdiction increases the incentives of big platforms to collect and analyze more data. It has ambiguous effects on their competitors that depend on the exact relationship between information and network value. |
| Keywords: | information sharing, digital platforms, data bottleneck, data portability |
| JEL: | D47 D82 K21 L21 L22 L40 L41 L43 L51 L86 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10663&r=reg |
| By: | Hung Xuan Do; Rabindra Nepal; Son Duy Pham; Tooraj Jamasb |
| Abstract: | Despite the massive impacts of the COVID-19 pandemic and the Russia-Ukraine war on the European energy market, little is known about their effects on the transmission of risks between member states’ electricity markets and key electricity sources. In this paper, we first employ the quantile connectedness approach to quantify the return connectedness between eleven European electricity markets, natural gas, and carbon market, then examine the impacts of the two crises on the interconnectedness. We find a significant return interconnectedness of the system, mainly driven by the spillover effects among European electricity markets. An investigation of the connectedness across quantiles shows that the spillover effects are much stronger at the tails of conditional distribution and the natural gas and carbon markets are net recipients of return shocks across quantiles. More importantly, our results reveal opposite effects of the two crises on interconnectedness. While the COVID-19 pandemic reduces the interconnectedness, the Russia-Ukraine war intensifies the return shock transmission. |
| Keywords: | Natural gas, European Emission Allowance, Electricity markets, COVID-19, Russia-Ukraine war, Quantile connectedness |
| JEL: | D4 L94 Q43 |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2023-46&r=reg |
| By: | Markus K. Brunnermeier; Nicola Limodio; Lorenzo Spadavecchia |
| Abstract: | This paper investigates the tradeoff between competition and financial inclusion resulting from the vertical integration between mobile network and money operators. Joining newly assembled data on mobile money fees through the WayBack machine, with sources on network coverage and financials, we examine the staggering across African operators and countries of platform interoperability – a policy that promotes transactions and competition across mobile money operators. Our results show that interoperability benefits users by lowering mobile money fees and their dispersion across operators. However, these positive effects are offset by a decrease in mobile towers and network coverage, especially in rural and poor districts, which, in turn, leads to a lower financial inclusion. We note that combining interoperability with subsidies for rural telecommunications delivers lower fees without hurting coverage. |
| JEL: | E4 O16 O30 |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31696&r=reg |
| By: | Fetzer, Thiemo (University of Warwick); Gazze, Ludovica (University of Warwick); Bishop, Menna (University of Warwick) |
| Abstract: | Which households are most affected by energy price shocks? What can we learn about the distributional implications of carbon taxes? How do interventions in energy markets affect these patterns? This paper introduces a measurement framework that leverages granular property-level data representing more than 50% of the English and Welsh housing stock. We use this ex-ante measurement framework to investigate these questions and set out an empirical evaluation framework to study the causal effects of the energy crisis more broadly. We find that the energy price shock has a more pronounced effect on relatively more affluent areas highlighting the likely progressive impact of carbon taxation. We document that commonly used untargeted interventions in energy markets significantly weaken market price signals for able-to-pay households. Alternative, more targeted policies are cheaper, easily implementable, and could better align energy saving incentives. |
| Keywords: | Energy crisis, Carbon taxation, Climate change, Energy efficiency gap JEL Classification: Q48, C55 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:671&r=reg |
| By: | Chongwoo Choe (Department of Economics, Monash University); Noriaki Matsushima (Institute of Social and Economic Research, Osaka University); Shiva Shekhar (The corresponding author. Tilburg School of Economics and Management (TiSEM), CESifo Research affiliate) |
| Abstract: | We study the GDPR’s opt-in requirement in a model with a firm that provides a digital service and consumers who are heterogeneous in their valuations of the firm’s service as well as the privacy costs incurred when sharing personal data with the firm. We show that the GDPR boosts demand for the service by allowing consumers with high privacy costs to buy the service without sharing data. The increased demand leads to a higher price but a smaller quantity of shared data. If the firm’s revenue is largely usage-based rather than data-based, then both the firm’s profit and consumer surplus increase after the GDPR, implying that the GDPR can be welfare-improving. But if the firm’s revenue is largely from data monetization, then the GDPR can reduce the firm’s profit and consumer surplus. |
| Keywords: | GDPR, opt-in, opt-out, privacy management, welfare |
| JEL: | D18 D61 K24 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2023-14&r=reg |
| By: | Federico Etro |
| Abstract: | I survey the literature on eCommerce platforms with particular emphasis on the antitrust debate on self-preferencing by Amazon. The business model of hybrid marketplaces is based on monetization through commissions on third party sellers hosted on the platform and direct margins on own products. Recent theoretical and empirical work on endogenous marketplace structures has analyzed the welfare impact of the dual mode and of recommendation algorithms that have been associated with self-preferencing strategies. The trade offs are complex and one cannot easily conclude that Amazon entry is biased to expropriate third party sellers or that a ban on dual mode, self-preferencing or copycatting would benefit consumers. |
| Keywords: | eCommerce, Endogenous marketplace structures, Business models, Self-preferencing. |
| JEL: | L1 L4 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2023_07.rdf&r=reg |
| By: | Tomic, Slobodan; Dragicevic, Ognjen |
| Abstract: | This article examines how the regulatory state in Serbia, a transitional country transition on the EU's semi-periphery, has evolved and whether it has solidified over the past two decades. Despite the proclaimed goal to develop a democracy based on market principles and sound regulatory principles, Serbia's regulatory state appears to remain unconsolidated. The research reveals deviations from the key principles of the regulatory state, such as the government's non-interference in markets and commitment to Better Regulation guidelines. During the transition period from 2001 to 2023, Serbia's regulatory approach has blended various elements, including features of the developmental state. To grasp the trajectory of the regulatory state's lack of consolidation, decay, reversal, and replacement, we need to consider a consolidation perspective in addition to the prevalent ‘modelling perspective’. The latter mainly distinguishes between the ‘Regulatory State of the South’ and the ‘Regulatory State of the Global North’. The observed lack of consolidation in Serbia's case study calls for a rethinking of theories on internationalisation and trends in global governance's transnationalisation. It implies the possibility of the rise of varied regulatory models, even in countries close to the Global North and within the EU's neighbourhood, diverging from the traditional regulatory state paradigm. This study adds to the conversation on regulatory state frameworks and sheds light on the intricate paths and potential futures of regulatory states in countries undergoing transition. |
| Date: | 2023–09–18 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:7g9zx&r=reg |
| By: | Mr. Anil Ari; Philipp Engler; Gloria Li; Manasa Patnam; Ms. Laura Valderrama |
| Abstract: | The surge in energy prices due to Russia’s February 2022 invasion of Ukraine significantly increased costs for European firms, prompting governments to introduce a range of support schemes. Although energy prices had eased by early 2023, uncertainty around prices remains unusually large. Against this backdrop, this paper examines the case for government intervention and identifies best practices with a view to improving the design of existing energy support schemes, facilitating exit from those schemes, and preparing policymakers for a downside scenario in which energy prices flare up again. The paper argues that support should be limited in size, strictly temporary in nature, narrowly targeted, and accompanied by strong safeguards and conditionality, while preserving price signals as much as possible to encourage energy conservation. Finally, the paper reviews recent support schemes introduced by European governments in light of the identified best practice considerations. |
| Keywords: | Energy prices; energy subsidies; financial support; price caps; energy crisis; Russia’s invasion of Ukraine |
| Date: | 2023–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2023/197&r=reg |
| By: | Li, Xu |
| Abstract: | Research Summary How should firms respond to technological discontinuities in order to achieve greater performance? In contrast to most studies that advocate a timely transition from the old to the new technology, this paper posits that in markets where a discontinuous technology exposes customers' latent preference heterogeneity for certain old technology attributes, firms may ultimately experience a performance surge by adhering to the old technology during technological change. Explicitly, I theorize a U-shaped relationship within such a market between competitors' increasing adoption of the new technology and the performance of firms that stick with the old technology. This prediction is thoroughly examined using comprehensive data from the traditional Chinese medicine industry in China during the 1990s and receives robust empirical support. Managerial Summary In some markets, the rise of a discontinuous technology, besides posing a substitute threat to the old technology, further exposes niche segments where customers continue to favor the old technology. This paper predicts that within such a market, as competitors increasingly adopt the new technology for varied motives, firms sticking with the old technology may see their performance declining before rebounding and potentially reaching new heights. Analyses using archival data from the traditional Chinese medicine industry in China during the 1990s provide robust support for this prediction. The arguments and findings of this paper offer an “existence proof” that when confronted with a technological discontinuity, adhering to the old technology may also represent an effective strategy that ultimately improves firm performance. |
| Keywords: | demand heterogeneity; firm performance; old technology; technological discontinuity; Wiley deal |
| JEL: | J50 |
| Date: | 2023–09–21 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:120131&r=reg |
| By: | Szekeres, Szabolcs |
| Abstract: | The question of choice of social discount rate, which is related to the choice of numeraire in CBA, has been unsettled for decades. The solution lies in using both the social time preference rate (STPR) and the social opportunity cost rate (SOCR) simultaneously but in different roles. There are two proposed methods of using the two rates, however, one of which places a great emphasis on the marginal cost of funds (MCF). This paper explores the interaction between these concepts using a numerical example to show how the alternative discounting methods compare and how one of them works even if the SOCR differs from the rate of fall of the value of the possible numeraires. |
| Keywords: | Social discount rate; STP discounting; SOC discounting; Descriptive discounting; Prescriptive discounting; Two-rate discounting; Shadow Price of Capital; Marginal Cost of Funds. |
| JEL: | D61 H43 |
| Date: | 2023–09–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:118725&r=reg |