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on Regulation |
| By: | Windekilde, Iwona; Henten, Anders |
| Abstract: | During the past few years, there has been a steeply increasing political interest in regulating Big Tech companies and digital platforms in general. For many years, from the establishment of the first Internet-based IT companies and onwards, the dominant political view has been that policymaking should, to a large extent, stay away from regulating or only lightly regulate the Internet-based industries. The risk of doing more harm than good would be too high - not having sufficient knowledge on how these industries would develop and risking constraining the innovativeness of the Internet-based industries. This has clearly changed today. In Europe as well as the US and elsewhere around the world, policy initiatives are taken to regulate Big Tech and the Internet-based industries in general. This applies to the protection of individuals/users/consumers as well as regulating competition. The reason is that a consensus has been gaining ground that we now have sufficient experience not only with the benefits to the economy, to users, and society as such of the developments of Internet and Internet-based industries but also with the downsides in terms of harm to individuals/users/consumers and social and political relations and institutions and to small and upcoming innovative companies. This has led to an increasing surge in rules and regulations for the protection of individuals as well as the competitive conditions on markets. The aim of this paper is to provide an overview of the ongoing and upcoming trends in Big Tech regulation with a focus on EU. Emphasis is on the Digital Markets Act (DMA) and the Digital Services Act (DSA) though it is well understood that there are other kinds of regulation that also affect digital platforms including Big Tech companies. (...) |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse23:278023&r=reg |
| By: | Földes, Gábor |
| Abstract: | There is an investment gap to reach EU Digital Decade 2030 connectivity targets, requires from operators to provide full broadband fixed and mobile coverage. The reason is the lack of economies of scale, therefore return on investment often lags behind cost of capital in fragmented European national markets. Operators argue for market consolidation in form of horizontal merger, or at least market cooperation, like mobile network sharing. Operators accept horizontal production agreement network sharing as a second best solution, however the bottleneck is the regulatory approval of urban full (active and passive) radio access network (RAN) sharing. Regulators still insist on parallel infrastructure-based competition instead of service-based competition on the same infrastructure. Virtualisation and open RAN technology enablers of mobile 5G transform the industry from closed to open market organisations, where multivendor upstream market competition also strengthen operator downstream and end-user retail market competitions. The research question focused on how virtualized and open RAN with open market multivendor concept could mitigate regulatory anticompetitive concerns of network sharing in high density urban areas in end-user mobile services downstream market competition. The research methodology built on qualitative techniques due to new technology development and limited available data. Exploratory analysis covers relevant academic, research institutes and consultancy papers. Secondary market insight data used for market development analysis. The main finding is that, virtualised and open RAN intensifies competition, differentiation and innovation at vendor upstream market that has similar spillover effect to operator downstream and end-user retail markets. Due to network function virtualisation, software-based competition would permit higher economies of scale via network sharing at least in the physical hardware infrastructure segment, not only in passive, but also for active assets. The novelty of the paper to focus on the bottleneck of mobile network sharing approval in case of urban active RAN sharing and connects with open RAN as a potential mitigation opportunity to resolve regulatory uncertainty and promote an issue of new regulatory guidance on mobile network sharing, helping both operators and customers, resulting a social welfare increase. |
| Keywords: | network sharing, competition regulation, virtualisation, open RAN, 5G, cost efficiency, economies of scale |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse23:277957&r=reg |
| By: | Sousa Prado, Tiago |
| Abstract: | The rise of digital platforms as a business model and a critical infrastructure for the digital economy is causing increasing trepidation among scholars and competition policy enforcers. In response to concerns about platform dominance, policies that were in place since the 1990s to keep the digital economy free from traditional regulation are being reconsidered. In these discussions, competition is considered an essential mechanism to harness the social and economic benefits of digital platforms, as it serves to attenuate potential risks to innovation, democracy, and to the media industry. This paper contributes to these discussions theoretically and empirically. It addresses some of the challenges of designing comprehensive responses to safeguard and promote competition in digital markets. The focus of the investigation is the assessment of market power in digital markets. First, a conceptual framework is developed, and it is shown that there is a need for new tests in addition to the traditional evaluation of the competitive structure of platform markets. The analysis concludes that to have significant impact in promoting competition in digital markets policy remedies should be enforced jointly on both the user- and supplier sides of the platforms. Second, the article reports results of an online survey experiment with 550 participants. The results suggest that an analysis of user responses to digital ads and data collection procedures would greatly improve the assessments of market power. Overall, this paper develops theoretically and empirically grounded contributions that will help policymakers and regulatory agencies in the design of workable approaches to assess market power in digital markets. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse23:278014&r=reg |
| By: | Srinuan, Chalita; Srinuan, Pratompong |
| Abstract: | Mobile telecommunications service industry has oligopolistic market structure. Four or three mobile network operators (MNOs) seem to be a magic number for telecom regulators as their competition safeguard. The merger and acquisition (M&A) process of MNOs has been a debate for several decades, both within industry and in academia. There are two forms of mergers which include mergers giving rise to market dominance (anti-merger) and mergers that provide for integration bringing efficiency and innovation (pro-merger). Therefore, this paper aims to explore the patterns, impacts, and specific measures regulatory agencies apply to mobile network providers who are doing through a merger process. From an extensive review of the articles published from 2012 2022, this paper reveals that most MNOs choose to use their stock as the primary acquisition tool. Also, most mergers resulted in a drop in the number of service providers from four to three, with all regulatory bodies ruling in favor of the merger except one (which was soon overturned by the court). Merger approval criteria by regulators have been wide-ranging. However, there has been much focus on the promotion of MVNOs (mobile virtual network operators) and assuring they have bandwidth access to the larger and well-established MNOs. Moreover, infrastructure sharing (such as towers) is another common merger condition as well as roaming agreements and spectrum returns to the government. As in the case of the United States mega-merger of Sprint and T-Mobile, assuring rural access to advanced, expensive, and high-speed technology like 5G becomes the operator's approval bargaining chip. This paper contributes to the international and regulatory discussions concerning the highly charged and complex subject of telecommunications M&A activity. |
| Keywords: | Business integration, Case studies, Merger and acquisitions, Mobile phones, wireless communications carriers |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse23:278019&r=reg |
| By: | Koutroumpis, Pantelis; Castells, Pau; Bahia, Kalvin |
| Abstract: | This paper assesses the impact of mobile network sharing in Europe during the 2000-2019 period, looking at 140 mobile operators in 29 countries. We find that - consistent with economic theory - network sharing generated significant benefits for operators and consumers, including lower prices and improved network coverage and quality. This was driven by cost reductions, higher returns on investment and increased competition. These effects materialised heterogeneously, with the impact of network sharing depending on the type of sharing, the technology cycle in which it is entered into as well as the market position and size of the operators entering the agreement. This has important implications going forward as it shows that network sharing can play a vital role in the deployment of new 5G networks and that the technological and market specificity of each type of sharing agreement can significantly affect its outcomes. |
| Keywords: | Network sharing, infrastructure sharing, mobile communications, network competition |
| JEL: | D22 L10 L20 L96 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse23:277989&r=reg |
| By: | Ioannou, Nikos; Kokkinis, Dimitris; Katsianis, Dimitris; Varoutas, Dimitris |
| Abstract: | The deployment of 5G standalone (5G SA) broadband networks in European rural areas lags behind urban and suburban regions due to high infrastructure costs and the unique characteristics of these areas. However, the advancements in 5G and Beyond-5G (B5G) telecommunication networks have presented new opportunities for cost-effective network deployment through infrastructure sharing. This paper conducts a comprehensive techno-economic study to determine the most cost-effective infrastructure sharing business model for providing affordable broadband in European rural areas, taking into account the specific attributes of each country. By examining real data from EU statistics and considering diverse infrastructure sharing scenarios, the study aims to bridge the research gap regarding the evaluation of 5G infrastructure sharing models on a per-country basis. The study applies a bottom-up model based on Discounted Cash Flow (DCF) analysis, encompassing both Mobile Broadband and Fixed Wireless Access (FWA) use cases. Leveraging the Eurostat database for geographical and demand data, the research utilizes logistic models to forecast demand based on the diffusion characteristics of broadband telecom services. The techno-economic analysis is adjusted for different infrastructure sharing models, including Single Host Network (SHN), Multiple Host Network (MHN) via Passive Sharing and Active Sharing, and Neutral Host Network (NHN). The paper presents total cost results, CAPEX/OPEX outcomes, Net Present Value (NPV), Return on Investment (ROI), and payback periods for each infrastructure sharing model in each country group consisting of European countries with similar density characteristics. Sensitivity and risk analyses are conducted to identify the most influential factors affecting the investment viability for each model and case. Moreover, the study examines the profitability of each scenario, considering the Average Revenue Per User (ARPU) and demand conditions necessary for investment sustainability. The discussion encompasses the reuse of existing infrastructure, network slicing implications, and regulatory policy considerations. |
| Keywords: | techno-economic feasibility, 5G Standalone, rural, infrastructure sharing, network slicing, neutral host, business models |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse23:277973&r=reg |
| By: | Layton, Roslyn; Potgieter, Petrus |
| Abstract: | The United Nations in pursuit of global connectivity estimates a gap in broadband investment of $2 trillion and the stalling of internet adoption for lack of access and affordability. To ensure broadband access and affordability for end users, policymakers now explore broadband cost recovery, a rational, linear process to account for and attribute network traffic and cost to its source and the associated augmentation of financing to ensure the economic sustainability of broadband networks. The political economy of the evolving cost recovery approaches in South Korea, the United States, and the European Union are compared for philosophy, shortfall, goal, policy instrument, and legislation. The categories of recovery solutions (market-based, regulatory, or technological) are described with associated policy instruments (market-based negotiation, contributions to universal service etc.). Broadband Cost recovery is pursued for more than the nominal need to address market shortfalls, but for social goals such as affordability, fundamental rights, and the legitimacy of the state itself. As digitization and broadband-enabled technologies become increasingly integrated, the set of broadband regulatory policies is an important activity of government. Nations increasingly consider broadband cost recovery policy in light of their connectivity goals and attempt to optimize the business models of the digital economy to resolve shortfalls in broadband investment, adoption, and affordability. European regulatory policymaking is explored as something more than merely serving political interests but in delivering the larger goal of European Union legitimacy within the global sphere. European Union appears to increasingly call upon fundamental rights as justification for state intervention. This is contrasted with the US approach of pragmatism in technology policy, where the role of "rights" frequently vitiates regulation and state intervention. South Korea appears to maintain its approach of strengthening its long-standing framework to deliver global broadband technology leadership. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse23:277996&r=reg |
| By: | Houngbonon, Georges V.; Ivaldi, Marc; Palikot, Emil; Strusani, Davide |
| Abstract: | A substantial number of individuals remains unconnected to the Internet despite an increasing emphasis on infrastructure-based competition. This paper investigates the impact of shared telecom infrastructure on digital connectivity and inclusion using a new dataset on mobile tower sharing transactions between 2008 and 2020, i.e., acquisitions of towers by independent companies from mobile network operators to be rented back to all operators. Estimates based on differencein- differences with different timing of treatment suggest that these transactions resulted in a significant drop in the price of mobile connectivity as well as an increase in availability and uptake of mobile Internet, especially by rural households and women. Our findings suggest that increased competition intensity through reduced market concentration appears to be the main driver of these outcomes. |
| Keywords: | Mobile Telecommunications, Vertical Integration, Digital Technology Adoption |
| JEL: | L96 L14 O14 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse23:277970&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 antiallergics. Second, we find evidence that this exploitation of demand characteristics 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 algorithms takeweb-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: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse23:277958&r=reg |
| By: | Dertwinkel-Kalt, Markus; Wey, Christian |
| Abstract: | To help households and firms with exploding energy costs in the aftermath of the Ukraine war, a new policy called the "energy price brake" was implemented. A unique feature of this relief measure is that it provides a transfer that increases in the consumer's contractual per-unit price of energy. In a formal model, we show that this policy creates incentives for moral hazard of energy providers to raise per-unit prices. Whereas this moral hazard problem increases the policy's fiscal costs, it also reinforces energy savings. Whether the policy's main beneficiaries are consumers or firms depends on the market structure. |
| Keywords: | Energy Price Policies, Energy Crisis, Energy Saving, Energy Price Brake |
| JEL: | D04 L12 Q48 K33 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:407&r=reg |
| By: | Ferrandis, Jesús; Ramos, Sergio; Feijóo, Claudio |
| Abstract: | This paper examines the challenges and progress in meeting the European Gigabit Society's (EGS) targets for high-speed broadband networks and explores the implications of the new targets set for the Digital Decade (DD). With a focus on the availability of gigabit connectivity and 5G networks, the study analyses the existing gaps and their evolution from June 2017 to June 2021. The analysis highlights the significant disparity in broadband deployment, particularly in rural areas, where network operators and private investors face financial constraints and uncertainty regarding returns on investment. By utilizing the latest available data, this research estimates the remaining investment gap to achieve the EGS and DD targets and identifies areas where the gaps are most pronounced. Furthermore, the study assesses the probability of closing these gaps within the specified timeframe. The lack of transparency regarding specific areas and populations without coverage is identified as an additional hurdle for stakeholders and public-private initiatives seeking to initiate actions. In addressing these challenges, the paper proposes alternatives to facilitate network rollouts in rural areas, aiming to bridge the gaps and bring coverage closer to the EGS and DD objectives. This research sheds light on the state of broadband deployment, highlighting areas that face higher risks and challenges. By doing so, it contributes to our understanding of the feasibility of achieving the EGS and DD targets and provides valuable insights to inform strategies aimed at enhancing connectivity in underserved regions. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse23:277956&r=reg |
| By: | Andrea La Nauze; Erica Myers |
| Abstract: | We use an experiment to test whether consumers optimally acquire information on energy costs in appliance markets where, like many contexts, consumers are poorly informed and make mistakes despite freely-available information. We find consumers acquire information suboptimally; there is little correlation between the revealed utility gain from improved decision making due to information and willingness to pay for information. We compare two behavioral interventions to address consumer mistakes: a conventional subsidy for energy-efficient products and a non-traditional subsidy paying consumers to view information on energy costs. We show that paying for attention can target welfare improvements more effectively. |
| JEL: | D12 D83 D91 Q41 |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31742&r=reg |
| By: | Bruno Carballa-Smichowski (European Commission’s Joint Research Centre, Seville, Spain); Yassine Lefouili (Toulouse School of Economics, Toulouse, France); Andrea Mantovani (TBS Business School, Toulouse, France); Carlo Reggiani (European Commission’s Joint Research Centre, Seville, Spain and Department of Economics, University of Manchester, Manchester, United Kingdom) |
| Abstract: | Data combination and analytics can generate valuable insights for firms and society as a whole. Multiple firms can do so by means of new technologies that bring the algorithm to the data (“algorithm sharing†) or, more conventionally, by sharing the data (“data sharing†). Algorithm-sharing technologies are gaining traction because of their advantages in terms of privacy, security, and environmental impact. We present a model that allows us to study the economic incentives generated by these technologies for both firms and a platform facilitating data combination. We find that, first, the platform chooses data sharing unless algorithm sharing’s analytics are sufficiently superior to those associated to data sharing. Second, we identify the properties of the analytics benefit function that ensure that algorithm sharing results in a higher total data contribution. Third, we highlight scenarios in which, in presence of data externalities, there can be a mismatch between the choice of the platform and the preference of a social planner |
| Keywords: | data sharing, algorithm sharing, data platforms, federated learning, data externalities. |
| JEL: | D43 K21 L11 L13 L41 L86 M21 M31 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:2308&r=reg |
| By: | Estache, Antonio; Foucart, Renaud; Serebrisky, Tomás |
| Abstract: | We study the potential benefits of adding a lottery component to cut the main risks associated with standard negotiated and rule-based auction procurement procedures. We show that adopting a two stage approach in which bureaucrats first negotiate with a small number of bidders to assess their eligibility and, next, rely on a lottery to award the contract reduces corruption risks often observed in negotiated procedures. For rule-based procedures, we show that a “third-price lottery” in which the two highest bidders are selected with equal probability and the project is contracted at a price corresponding to the third highest bid can reduce limited liability, renegotiation, bid rigging and collusion risks. |
| Keywords: | rules;discretion;lotteries |
| JEL: | D44 D73 H57 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:12484&r=reg |
| By: | Kargas, Antonios; Argyroulis, Vasileios; Varoutas, Dimitrios |
| Abstract: | Paper aims to enrich readers understanding on Greek Telecommunication Industry, and more specifically on strategic decisions related with mergers and acquisitions. Even though mergers and acquisitions have long been studied in international level, the effects on market structure, on firms' conduct and, on their performance, remains an interesting topic. Current research contributes to the analysis of Greek telecommunication market, considering its current form, after a series of mergers and acquisitions that took place in previous years. An Industrial Organization's approach was adopted, namely the Structure - Conduct - Performance (SCP) framework. A SCP model, based on quantitative data, is developed for the major three telecom operators, while a two-stages least square regression analysis is conducted. By using a simultaneous equations model with lagged-dependent variables, the relationship between structure, conduct and performance is discussed. Results indicate that entry barriers exist in the market, as part of firms' conduct, shaping market's existing structure and affecting performance. Mergers and acquisitions is expected to keep playing a significant role in Greek telecommunications market since it acts as a reliable strategic option that ensures viability. |
| Keywords: | Structure – Conduct – Performance, Simultaneous equations approach, Mergers and Acquisitions, Strategic Management, Greek Telecommunications Industry |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse23:277984&r=reg |
| By: | Maximilian Schaefer (Institut Mines-Télécom Business School, Department of Law, Economics and Finance, 9 rue Charles Fourrier, 91000 Evry, France); Kevin Ducbao Tran (University of Bristol, School of Economics, 12 Priory Road, Bristol BS8 1TU, United Kingdom) |
| Abstract: | We analyze competition between hotels and Airbnb listings as well as the effect of Airbnb on consumer welfare, hotel profits, and Airbnb host surplus. For this purpose, we use granular daily-level data from Paris for the year 2017. We estimate a random coefficient logit model of demand. We extend prior research by accounting for the localized nature of competition within districts of the city. Our results suggest that demand is segmented by district as well as accommodation type. Based on these demand estimates, we estimate separate supply-side models for hotels and Airbnb, to account for differences in price setting we observe in the data. Using the estimated models, we assess how Airbnb affects hotel profits and consumer welfare and how much Airbnb hosts value the platform. Our simulations imply that Airbnb increases average consumer surplus and decreases hotel profits substantially. Airbnb hosts seem to value the platform moderately. |
| Keywords: | hotel industry; short-term rentals; localized competition; consumer welfare; sharing economy; peer-to-peer markets; Airbnb |
| JEL: | D4 D6 L1 Z38 |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:2304&r=reg |
| By: | Jorge Garcia-Hernandez; Roy Brouwer |
| Abstract: | Water markets represent a policy tool that aims at finding efficient water allocations among competing users by promoting reallocations from low-value to high-value uses. In Canada, water markets have been discussed and implemented at the provincial level; however, at the national level a study about the economic benefits of its implementation is still lacking. This paper fills this void by implementing a water market in Canada and examine how water endowment shocks would affect the economy under the assumptions of general equilibrium theory. Our results show a water market would damp the economic loss in case of reductions in water endowment, but it also cuts back on the economic expansion that would follow from an increase on it. These results provide new insights on the subject and will provide a novel look and reinvigorate informed discussions on the use of water markets in Canada as a potential tool to cope with climate-induced water supply changes. |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2309.16678&r=reg |