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on Regulation |
| By: | Brennan, Tim (Resources for the Future) |
| Abstract: | How to recover the costs of electricity distribution has become a prominent and controversial issue in the wake of California Public Utilities Commission proposals to reform compensation for solar electricity homeowners who sell into the grid, with subsequent proposals to recover more of the distribution costs through fixed charges based on household income. This debate raises questions about the ubiquity of volumetric pricing for fixed-cost recovery in regulated industries. Ideal cost recovery entails marginal cost pricing of kilowatt-hours delivered, per-user connections, and capacity needed to handle coincident peak use. Remaining uncovered costs of distribution should be recovered by fixed charges. Equity and efficiency considerations suggest assigning fixed charges on the basis of willingness to pay or income, although neither is perfect. Nevertheless, volumetric recovery of fixed costs has persisted for several reasons: mistaken analogies to competitive markets, simplicity, network effects, incumbent resistance, and fairness and rights. Getting pricing right matters not just for general efficiency but also to remove pricing barriers to decarbonization. For this reason, electricity regulators should consider recovering more fixed costs through fixed charges. |
| Date: | 2023–10–20 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-23-40&r=reg |
| By: | Willems, Bert (Université catholique de Louvain, LIDAM/CORE, Belgium); Yu, Yueting (Tilburg University) |
| Abstract: | We compare uniform and discriminatory-price auctions in wholesale electricity markets, studying both long-run investment incentives and short-run bidding behaviors. We develop a monopolistic competition model with a continuum of generation technologies ranging from base load to peak load, free entry and uncertain elastic demand. Our findings reveal that discriminatory-price auctions are inefficient because consumers’ willingness to pay exceeds the marginal costs and investment incentives are distorted. Despite having an equal total installed capacity, the generation mix under discriminatory-price auctions skews towards a shortage of base-load technologies. Consequently, this results in a lower long-run consumer surplus. |
| JEL: | D44 D47 L94 |
| Date: | 2023–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2023023&r=reg |
| By: | Belleflamme, Paul (Université catholique de Louvain, LIDAM/CORE, Belgium); Johnen, Johannes (Université catholique de Louvain, LIDAM/CORE, Belgium) |
| Abstract: | Two-sided platforms have a great impact on markets nowadays. Especially, online marketplaces design markets and choose many of the rules that govern how buyers and sellers interact. Researchers studied two-sided platforms very actively over the last two decades. We review the economic literature from two angles: we focus on marketplaces and we concentrate on non-price strategies that marketplaces employ to govern interactions (like user steering, self-preferencing, rating and review systems, data and targeting, privacy, and user protection). |
| Keywords: | Two-Sided Platforms ; Marketplaces ; Platform Governance ; Platform Strategy ; Platform Regulation ; Platform Self-Regulation |
| Date: | 2023–05–31 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2023015&r=reg |
| By: | Briglauer, Wolfgang; Krämer, Jan; Palan, Nicole |
| Abstract: | Ubiquitous high-speed fiber-based and mobile broadband availability is a key economic policy goal in the European Union and other developed countries. Policymakers seek to boost economic growth, productivity, and employment, especially in remote areas, through ambitious broadband targets and substantial public funding. This paper reviews the existing (empirical) literature on high-speed broadband internet and its socioeconomic impact on key outcome variables. Our main findings are that (i) the socioeconomic benefits in terms of economic growth, productivity, house prices, and education, as well as economic resilience, are high but are also subject to diminishing returns beyond a certain broadband quality level, (ii) the effects on employment are more ambiguous, (iii) the positive socioeconomic effects take hold only after broadband adoption on the demand side, but not with mere availability on the supply side, and (iv) the effects of broadband differ significantly for urban vs. rural and high-skilled vs. low-skilled workers. Based on these findings, we develop recommendations for a cost-effective and efficient broadband policy and future funding regime. |
| Keywords: | High-speed broadband, broadband availability, broadband adoption, fiber connections, mobile broadband, economic benefits, survey |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ecoarp:24&r=reg |
| By: | Jeanjean, François; Liang, Julienne |
| Abstract: | In this paper, we address the issue of the appropriate market structure in European mobile markets by presenting empirical evidence on the effect of the number of MNO on investment. Using a structural entry model based on a country-level dataset of 28 European countries, we find that, in average three player markets invest more at country level and offer more data traffic per subscriber than four or more player markets. |
| Keywords: | Mobile telecommunications, competition, investment, market structure, consumer welfare |
| JEL: | D43 L11 L96 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse23:277979&r=reg |
| By: | Briglauer, Wolfgang; Cambini, Carlo; Gugler, Klaus |
| Abstract: | A broad-scale rollout and adoption of new high-speed broadband networks and services, respectively, is expected to generate innovative services for consumers and create a high potential for productivity increases and economic growth. However, there is no evidence available on the causal impact of both high-speed broadband coverage and adoption on economic outcomes, which we measure as gross domestic product (GDP). Moreover, no study has yet simultaneously considered the impact of both new wireline broadband based on fiber-optic technologies and new wireless (mobile) broadband based on 3G+/4G technologies. Distinguishing these effects is of crucial relevance for the efficient design of broadband policies. In order to provide reliable evidence on causal effects, we utilize comprehensive panel data for 32 OECD countries for the years 2002-2020 and panel fixed-effects estimators including instrumental variables estimation. Exclusionary restrictions follow from micro-funded determinants of network coverage and consumer adoption decisions. Our results show that both fixed and mobile broadband adoption exert a substantial and significant impact on GDP, while network deployment per se exhibits only minor multiplier-related effects on GDP per capita. Contemporaneous effects of a 1% increase in fixed broadband adoption impact GDP per capita growth in a range of 0.026% to 0.034%, while a 1% increase in mobile broadband adoption contributes between 0.079% and 0.088%. While the impact of contemporaneous mobile broadband adoption is substantially higher, fixed broadband adoption shows stronger dynamic and cumulative effects, as well as larger effects in later deployment periods. Generally, our results are consistent with the notion that the diffusion of technologies to substantial proportions of the population is most important in driving economic growth. Supporting policies should be technology neutral and should not neglect the demand side. |
| Keywords: | High-speed broadband, coverage, adoption, OECD panel, ex-post evaluation |
| JEL: | H54 L96 L98 O38 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ecoarp:23&r=reg |
| By: | Jaroonvanichkul, Suppapol |
| Abstract: | Technologies are changing rapidly in the communications industry, posing challenges for communications regulators. Regulators need to anticipate and prepare for future technological changes to make informed decisions on regulatory actions that foster innovation and protect consumers. This paper examines the application of technology foresight in communications regulation, based on a literature review. It discusses the importance of technology foresight in addressing the pacing problem, managing environmental uncertainty, and supporting the roles of communications regulators. The paper discusses a framework for conducting technology foresight in communications regulation, primarily based on "Framework Foresight." Additionally, it explores foresight methods and the institutionalization of foresight within organizations. By utilizing technology foresight, regulators can identify emerging technologies, assess their potential impacts, and develop appropriate regulatory responses. |
| Keywords: | Foresight, Regulation, Technological Change |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse23:277977&r=reg |
| By: | Bonilla, Xavier; Ivaldi, Marc |
| Abstract: | In the midst of an increasing debate concerning the environmental repercussions of transportation decisions in France, this study employs nationally representative data from the 2018-2019 Mobility Survey to investigate the determinants shaping French citizens' preferences for long-distance travel modes. Emphasis is placed on assessing potential CO2 emissions reductions resulting from government-proposed flight bans when a train alternative with a travel time of less than 2 hours and 30 minutes exists (notably, the Paris Orly - Nantes, Paris Orly - Bordeaux, and Paris Orly - Lyon routes). Descriptive analysis reveals a pre-ban inclination among travellers to favour non-flight modes, with just 4% of trips between these cities relying on air travel. Subsequently, econometric analysis challenges the conventional wisdom that income significantly influences air travel choices, instead highlighting its impact on car trip preferences up to a specific income threshold. Additionally, it underscores the expected inverse relationship between travel distance and train travel adoption, coupled with a corresponding increase in flight preference. |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:128645&r=reg |
| By: | Ravazzolo, Francesco; Rossini, Luca |
| Abstract: | Since Russia’s invasion of Ukraine, many countries have pledged to end or restrict their oil and gas imports to curtail Moscow’s revenues and hinder its war effort. Thus, the European ministers agreed to trigger a cap on the gas price. To detect the importance of the price cap for gas, we provide a mixture representation for the gas price to detect the presence of outliers made by a truncated normal distribution and a uniform one. We focus our analysis on Germany and Italy, which are major Russian gas importers by exploiting the response of the different commodities to a gas shock through a Bayesian vector autoregressive (VAR) model. As a result, including a lower gas price cap smooths the impact of a gas shock on electricity prices, while not considering a price cap will increase exponentially this impact. |
| Keywords: | Public Economics, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy |
| Date: | 2023–10–30 |
| URL: | http://d.repec.org/n?u=RePEc:ags:feemwp:338790&r=reg |
| By: | Tania Babina; Simcha Barkai; Jessica Jeffers; Ezra Karger; Ekaterina Volkova |
| Abstract: | We hand-collect and standardize information describing all 3, 055 antitrust law suits brought by the Department of Justice (DOJ) between 1971 and 2018. Using restricted establishment-level microdata from the U.S. Census, we compare the economic outcomes of a non-tradable industry in states targeted by DOJ antitrust lawsuits to outcomes of the same industry in other states that were not targeted. We document that DOJ antitrust enforcement actions permanently increase employment by 5.4% and business formation by 4.1%. Using an event-study design, we find (1) a sharp increase in payroll that exceeds the increase in employment, meaning that DOJ antitrust enforcement increases average wages, (2) an economically smaller increase in sales that is statistically insignificant, and (3) a precise increase in the labor share. While we cannot separately measure the quantity and price of output, the increase in production inputs (employment), together with a proportionally smaller increase in sales, strongly suggests that these DOJ antitrust enforcement actions increase the quantity of output and simultaneously decrease the price of output. Our results show that government antitrust enforcement leads to persistently higher levels of economic activity in targeted industries. |
| Keywords: | antitrust enforcement, economic activity, employment, business formation |
| JEL: | L4 E24 K21 J21 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:23-50&r=reg |
| By: | Teng, Huei-Wen; Härdle, Wolfgang Karl; Hafner, Christian M.; , e.a. |
| Abstract: | The rapid emergence of digital assets, underpinned by technological advancements such as blockchain, distributed ledger technology (DLT), and smart contracts, has triggered a paradigm shift in the global financial ecosystem. These digital assets, which encompass cryptocurrencies, tokenized securities, stablecoins, non-fungible tokens (NFTs), and central bank digital currencies (CBDCs), hold the potential to transform financial markets by enabling new business models, investment opportunities, and efficient transaction mechanisms. However, their accelerated growth also introduces a unique set of challenges and risks, such as fraud, market manipulation, cybersecurity threats, and regulatory uncertainties. This position paper presents an interdisciplinary, empirical analysis of the digital asset landscape, focusing on the definition and classification of digital assets, their evolution from novelty to necessity, and the current state of adoption and regulation. We explore the various types of digital assets, their unique characteristics and use cases, and the technological innovations that have shaped their development, such as the advent of blockchain technology and the rise of decentralized finance (DeFi) and NFTs. Moreover, we examine the regulatory landscape surrounding digital assets, highlighting jurisdictional approaches, regulatory classifications, and key developments in the space, as well as the challenges and opportunities that regulators face in devising effective regulatory frameworks. To address the risks associated with the proliferation of digital assets, we outline several mitigation strategies and recommendations for regulators, market participants, and stakeholders based on quantitative analysis and empirical findings. These include balancing innovation and risk, by formulating regulations that safeguard the interests of consumers and investors while fostering an environment conducive to innovation; promoting global regulatory coordination and harmonization, to reduce the potential for regulatory arbitrage and enhance cross- border cooperation; and leveraging regulatory sandboxes and innovation hubs, to support the growth of digital asset businesses and facilitate continuous learning and adaptation. By adopting a forward-looking and flexible approach to regulation and engaging in ongoing dialogue with market participants and stakeholders, regulators can ensure that the benefits of digital assets are realized while mitigating the associated risks. |
| Keywords: | Digital assets ; Blockchain technology ; Regulatory frameworks ; Decentralized finance (DeFi) ; Non-fungible tokens (NFTs) |
| JEL: | G2 E4 K2 L5 O3 O1 |
| Date: | 2023–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:aiz:louvad:2023030&r=reg |
| By: | Papathanasopoulos, Athanasios; Varoutas, Dimitris |
| Abstract: | This analysis examines the opportunities and challenges presented by Over-The-Top (OTT) platforms for public service broadcasters in different European countries. Through a cross-country analysis of several EU countries, namely: France, Germany, Greece, Italy, the Netherlands, Romania, and Sweden, this paper provides a comprehensive perspective on the topic. The analysis includes revenue trends, subscriber numbers, and other indicators to evaluate the performance of public broadcaster-owned OTT platforms. The findings suggest that while OTT platforms present challenges for public broadcasters, they also offer opportunities for these broadcasters to compete and attract viewers in a rapidly changing media landscape. |
| Keywords: | OTT platforms, Public Service Broadcasting, media competition |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse23:278010&r=reg |
| By: | Ariel Weinberger (George Washington University); Luca Macedoni (Aarhus University) |
| Abstract: | This paper investigates the positive international spillover effects of non-discriminatory product regulations, such as quality standards. We incorporate regulations into a multi-country general equilibrium framework with firm heterogeneity and variable markups. We model regulations as a fixed cost that any firm selling to an economy must pay, consistent with stylized facts that we present. We demonstrate that in the presence of variable markups, the fixed cost generates a positive spillover on the rest of the world as it induces entry of high-quality firms, and it improves the terms of trade of the non-imposing countries. We argue that the benefits of such regulations are not fully realized under non-cooperative policy settings, leading to a call for international cooperation in setting regulations. We estimate our model and apply its gravity formulation to quantify the global welfare consequences of altering regulatory policies, the extent of the positive externalities across countries, the effects of cooperation, and the comparison with further tariff liberalization. Our analysis reveals that the entry of new high-quality firms, rather than changes in terms of trade, is the main quantitative driver of international spillovers. |
| Keywords: | Allocative Efficiency, International Spillover, Quality Standards, Variable Markups, Trade Policy |
| JEL: | F12 F13 L11 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:gwi:wpaper:2023-10&r=reg |
| By: | Edward J. Oughton; David Amaglobeli; Marian Moszoro |
| Abstract: | Roughly 3 billion citizens remain offline, equating to approximately 40 percent of the global population. Therefore, providing Internet connectivity is an essential part of the Sustainable Development Goals (SDGs) (Goal 9). In this paper a high-resolution global model is developed to evaluate the necessary investment requirements to achieve affordable universal broadband. The results indicate that approximately $418 billion needs to be mobilized to connect all unconnected citizens globally (targeting 40-50 GB/Month per user with 95 percent reliability). The bulk of additional investment is for emerging market economies (73 percent) and low-income developing countries (24 percent). To our knowledge, the paper contributes the first high-resolution global assessment which quantifies universal broadband investment at the sub-national level to achieve SDG Goal 9. |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2310.03694&r=reg |
| By: | Majid Hashemi (Department of Economics Queen’s University Canada); Glenn P. Jenkins (Department of Economics, Queens University, Kingston, Ontario, Canada and Cyprus International University, North Cyprus); Frank Milne (Department of Economics, Queens University, Kingston, Ontario, Canada) |
| Abstract: | This study develops a generalized evaluation framework that can be used to quantify the financial, economic, stakeholder, and environmental impacts of renewable energy support programs. The application of this framework is demonstrated by evaluating the Feed-In Tariff (FIT) program for solar distributed energy resources (DER) in Ontario, Canada. Our analysis reveals that although Ontario’s FIT program has successfully promoted the adoption of solar DER across communities, considering all the criteria of cost-benefit analysis, including optimal timing, economic resource efficiency, environmental cost-effectiveness, and distributional impacts, this policy has been a complete failure. The program has led to a significant cross-subsidization from program non-participants to participants and losses to the Canadian economy in return for insignificant environmental benefits. The losses would have been reduced by approximately 50 percent if the program had been delayed and implemented in 2016 instead of 2010. The lessons from this analysis provide insights for designing future policies to reduce greenhouse gas emissions. |
| Keywords: | renewable energy subsidy; distributed energy resources; feed-in tariff; stakeholder analysis; benefit-cost analysis; Ontario; Canada. |
| JEL: | O2 D61 Q42 Q48 |
| Date: | 2023–10–17 |
| URL: | http://d.repec.org/n?u=RePEc:qed:dpaper:4607&r=reg |