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on Regulation |
| By: | AMORES Antonio F (European Commission - JRC); CHRISTL Michael; DE AGOSTINI Paola (European Commission - JRC); DE POLI Silvia; MAIER Sofia (European Commission - JRC) |
| Abstract: | The hike in energy prices across Europe in 2022 and 2023 led to significant government interventions. Several governments introduced ‘energy price cap’ measures to alleviate the increased burden on households’ expenditures. This paper presents an ex ante assessment of the expected distributional impact of the inflation surge and the cushioning effect of these price cap policies introduced in 2023 in Germany, the Netherlands and Austria. Our analysis combines macroforecasting techniques with microsimulation methods and shows that the inflationary shock of 2023 will more severely affect those households at the bottom of the income distribution. Our results also highlight that the price cap measures will only partly absorb the negative distributional consequences of the inflationary shock while it would completely offset the increase in energy poverty. Additionally, we show that simpler measures, such as lump-sum cash transfers, are more efficient (considering government's budgetary costs) in cushioning the inequality-increasing effects of inflation, especially when such measures are targeted. Price caps, on the other hand, are more efficient in reducing energy poverty, given the non-negligible incidence of energy poverty in middle-income groups. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:taxref:202311&r=reg |
| By: | Sean Ennis (UEA - University of East Anglia [Norwich]); Marc Ivaldi (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); Vicente Lagos (IP Paris - Institut Polytechnique de Paris) |
| Abstract: | This paper examines the impact of most favored nation (MFN) clauses on retail prices, taking advantage of two natural experiments that changed vertical contracting between hotels and major digital platforms. The broad E.U. intervention narrowed the breadth of "price parity" obligations between hotels and major Online Travel Agencies (OTAs). Direct sales by hotels to customers subsequently became relatively cheaper. Comparisons with hotel pricing outside the E.U. confirm the reduction in prices for mid-level and luxury hotels. France and Germany went further and eliminated all price-parity agreements. This stronger intervention was associated solely with a significant additional price-reducing effect for mid-level hotels in Germany. Overall, wide MFNs are associated with higher retail prices. Regulating MFNs reduced prices with primary effects coming either from the narrow price-parity intervention or, perhaps, from direct sales becoming cheaper than OTAs in both E.U. and non-E.U. countries, and, interestingly, not from complete elimination of MFNs. |
| Keywords: | Price Parity Clause (PPC), Most favored nation (MFN), Most favored customer (MFC), Hotel Industry, Impact Evaluation, Online Travel Agency (OTA), digital platforms |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04315828&r=reg |
| By: | Frédéric Marty; Thierry Warin |
| Abstract: | This paper examines algorithmic collusion from legal and economic perspectives, highlighting the growing role of algorithms in digital markets and their potential for anti-competitive behavior. Using bandit algorithms as a model, traditionally applied in uncertain decision-making contexts, we illuminate the dynamics of implicit collusion without overt communication. Legally, the challenge is discerning and classifying these algorithmic signals, especially as unilateral communications. Economically, distinguishing between rational pricing and collusive patterns becomes intricate with algorithm-driven decisions. The paper emphasizes the imperative for competition authorities to identify unusual market behaviors, hinting at shifting the burden of proof to firms with algorithmic pricing. Balancing algorithmic transparency and collusion prevention is crucial. While regulations might address these concerns, they could hinder algorithmic development. As this form of collusion becomes central in antitrust, understanding through models like bandit algorithms is vital, since these last ones may converge faster towards an anticompetitive equilibrium. Cet article examine la collusion algorithmique du point de vue juridique et économique, mettant en évidence le rôle croissant des algorithmes dans les marchés numériques et leur potentiel comportement anticoncurrentiel. En utilisant les algorithmes de bandit comme modèle, traditionnellement appliqués dans des contextes de prise de décision incertaine, nous mettons en lumière la dynamique de la collusion implicite sans communication explicite. Sur le plan juridique, le défi réside dans le discernement et la classification de ces signaux algorithmiques, en particulier en tant que communications unilatérales. Sur le plan économique, la distinction entre une tarification rationnelle et des schémas collusifs devient complexe avec les décisions pilotées par des algorithmes. L'article met l'accent sur l'impératif pour les autorités de la concurrence d'identifier les comportements de marché inhabituels, laissant entendre un transfert du fardeau de la preuve aux entreprises pratiquant la tarification algorithmique. Équilibrer la transparence algorithmique et la prévention de la collusion est crucial. Bien que la réglementation puisse traiter ces préoccupations, elle pourrait entraver le développement des algorithmes. À mesure que cette forme de collusion devient centrale dans le domaine de la concurrence, la compréhension à travers des modèles tels que les algorithmes de bandit est essentielle, car ces derniers peuvent converger plus rapidement vers un équilibre anticoncurrentiel. |
| Keywords: | Algorithmic Collusion, Bandit Algorithms, Antitrust Enforcement, Unilateral Signals, Pricing Strategies, Collusion algorithmique, algorithmes de bandits, Application du droit de la concurrence, signaux unilatéraux, Stratégies de tarification |
| JEL: | L13 L41 K21 |
| Date: | 2023–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2023s-26&r=reg |
| By: | Martimort, David; Sand-Zantman, Wilfried |
| Abstract: | We analyze the effect of media mergers in a model that stresses, on the one hand, the fact that media are two-sided platforms willing to attract advertisers and viewers and, on the other hand, that strong competitors have emerged to challenge traditional media on both sides. We show that a merger has two conflicting effects on traditional media’s incentives to invest in quality programs and to exploit their market power. When competition is primarily between traditional media, a Business-Stealing Effect dominates, and the merger is detrimental to advertisers and viewers. When the competition is mainly between the traditional media and their new competitors, an Ecosystem Effect dominates, and the merger benefits advertisers and viewers. We extend this setting to discuss the role of financial constraints that might limit investments in the quality of programs and show that the same effects are at play. |
| Keywords: | Media; competition; merger |
| JEL: | L82 L22 G34 |
| Date: | 2023–12–05 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:128764&r=reg |
| By: | Thomas Benison (Motu Economic and Public Policy Research); Julia Talbot-Jones (Victoria University of Wellington) |
| Abstract: | With urbanisation and climate change placing increasing pressure on water security around the world, demand-side mechanisms, such as metering and pricing, have emerged as core components of urban water management. Yet the impacts of metering and pricing on water production and consumption in Aotearoa New Zealand are not well understood. This constrains the ability of decision-makers to make targeted wellbeing improvements for the communities they serve. In this paper, we endeavour to estimate the impact of metering and pricing on urban water consumption in Aotearoa. We collect data on residential water production and consumption from 67 local councils and provide comparisons of water use across regions and over time, with particular attention given to Tauranga and Wellington. Our experience reveals the extent of the drinking water data gaps in urban areas in Aotearoa, raising questions about how evidence is being used to inform the design of urban water policy in Aotearoa and issues of public accountability. |
| Keywords: | Data gaps; demand management; drinking water; metering; policy; pricing |
| JEL: | Q21 Q25 Q28 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:mtu:wpaper:23_11&r=reg |
| By: | Johanna Fink |
| Abstract: | This paper estimates how electricity price divergence within Sweden has affected incentives to invest in photovoltaic (PV) generation between 2016 and 2022 based on a synthetic control approach. Sweden is chosen as the research subject since it is together with Italy the only EU country with multiple bidding zones and is facing dramatic divergence in electricity prices between low-tariff bidding zones in Northern and high-tariff bidding zones in Southern Sweden since 2020. The results indicate that PV uptake in municipalities located north of the bidding zone border is reduced by 40.9-48% compared to their Southern counterparts. Based on these results, the creation of separate bidding zones within countries poses a threat to the expansion of PV generation and other renewables since it disincentivizes investment in areas with low electricity prices. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2312.16161&r=reg |
| By: | Zinke, Jonas (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)) |
| Abstract: | As redispatch costs and their associated distributional impacts continue to rise, the discussion on reconfiguring bidding zones in European power markets persists. However, determining an appropriate bidding zone configuration is a non-trivial task, as it must prove beneficial under varying weather conditions, load situations, and an uncertain future, essentially necessitating persistent benefits. This paper uses the German-Luxembourg market area as an example to investigate the impact of uncertain factors, such as short-term weather patterns and long-term system changes, on the potential reduction of redispatch costs resulting from a two-zone split. Employing hierarchical clustering on hourly time series of Locational Marginal Prices for multiple historical weather and future scenario years, the paper derives bidding zone splits and assesses their robustness regarding redispatch cost reduction. Sensitivities to uncertain factors such as grid and renewable expansion, demand development, and fuel prices are investigated. The results indicate that a north-south split of the German-Luxembourg market area can robustly reduce redispatch costs.The impact on the reduction potential of yearly weather fluctuations is limited, owing to the structural nature of grid bottlenecks. However, the long-term transformations within the powersystem, coupled with their associated uncertainties, can significantly diminish the potential forcost reduction through a bidding zonesplit. |
| Keywords: | Market Design; Bidding Zone Review; Electricity Markets; Nodal Pricing; Energy System Modeling; Renewable Energies |
| JEL: | C61 D47 Q40 Q48 |
| Date: | 2023–12–05 |
| URL: | http://d.repec.org/n?u=RePEc:ris:ewikln:2023_007&r=reg |
| By: | Schlund, David (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)) |
| Abstract: | The introduction of clean hydrogen as a future energy commodity has prompted significant interest in developing dedicated transportation and storage infrastructures as an enabler for cross-border hydrogen trade and cost-efficient supply. This paper addresses the complex challenges associated with the development of a European hydrogen infrastructure within the existing natural gas network while maintaining the security of supply for natural gas. Through an extension of an existing dispatch model for European natural gas supply and transportation by endogenous investments in hydrogen production, transportation, and storage infrastructure, a comprehensive analysis of the interplay between natural gas and hydrogen supply becomes accessible. The new model is formulated as a mixed-integer linear program in order to explicitly consider the binary decision of repurposing natural gas pipelines. The results offer insights into the cost-efficient strategic planning of a European hydrogen network by simulating a range of scenarios with varying economic and technical constraints. The case study finds a dominant role of the availability of renewable energy sources in shaping the network. Also, providing flexibility through flexible imports, production, or hydrogen storage becomes an essential element in a future hydrogen supply chain. The interconnection of all European countries with dedicated hydrogen pipelines is robust across all scenarios. However, the sizing and choice of large import pipelines strongly depend on the assumed techno-economic constraints. |
| Keywords: | hydrogen economics; hydrogen infrastructure; hydrogen storage; hydrogen trade; strategic energy planning; mixed-integer linear program |
| JEL: | C61 L95 M20 Q41 Q42 Q48 |
| Date: | 2023–12–05 |
| URL: | http://d.repec.org/n?u=RePEc:ris:ewikln:2023_008&r=reg |
| By: | Al-Ubaydli, Omar; Cassidy, Alecia; Chatterjee, Anomitro; Khalifa, Ahmed; Price, Michael |
| Abstract: | High resource users often have the strongest response to behavioral interventions promoting conservation. Yet, little is known about how to motivate them. We implement a field experiment in Qatar, where residential customers have some of the highest energy use per capita in the world. Our dataset consists of 207, 325 monthly electricity meter readings from a panel of 6, 096 customers. We employ two normative treatments priming identity - a religious message quoting the Qur’an, and a national message reminding households that Qatar prioritizes energy conservation. The treatments reduce electricity use by 3.8% and both messages are equally effective. However, this masks significant heterogeneity. Using machine learning methods on supplemental survey data, we elucidate how agency, motivation, and responsibility activate conservation responses to our identity primes. |
| Keywords: | electricity consumption; natural field experiments; identity; moral suasion; agency; Qatar; super-users; consumer behaviour; electricity; energy; energy saving; household energy |
| JEL: | C93 D90 Q41 |
| Date: | 2023–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:121048&r=reg |
| By: | Renato Soeiro; Alberto Pinto |
| Abstract: | We discuss price competition when positive network effects are the only other factor in consumption choices. We show that partitioning consumers into two groups creates a rich enough interaction structure to induce negative marginal demand and produce pure price equilibria where both firms profit. The crucial condition is one group has centripetal influence while the other has centrifugal influence. The result is contrary to when positive network effects depend on a single aggregate variable and challenges the prevalent assumption that demand must be micro-founded on a distribution of consumer characteristics with specific properties, highlighting the importance of interaction structures in shaping market outcomes. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2312.02865&r=reg |
| By: | James Fenske; Muhammad Haseeb; Namrata Kala |
| Abstract: | Formal rules within organizations are pervasive, but may be interpreted and implemented differently by actors within the organization, impacting organizational outcomes. We consider a delegation reform that changed formal rules within the environmental regulator in an Indian state, by giving decision rights to junior officers over certain types of application. Using novel data on firms' environmental permit applications and internal communications within the regulator, we study how the delegation of formal authority affects its actual allocation, the consequences for applicant firms, and the circumstances that lead senior officers to withhold this authority. The change in decision rights led to greater approval rates for applicant firms. However, only two thirds of applications that should have been delegated according to the rules were actually delegated. We show that senior officers chose to retain decision rights over more difficult applications, namely, applications with higher pollution potential. Furthermore, baseline disagreement with more subordinates' recommendations reduces delegation post-reform, and officers facing a higher backlog of applications are more likely to delegate. These results are consistent with a framework where the allocation of decision rights is determined by a knowledge hierarchy and where different senior officers face varying costs of delegation at different times. |
| JEL: | D23 D73 O1 O13 Q50 Q53 Q56 Q58 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31991&r=reg |
| By: | Cui, Hao |
| Abstract: | In the era of algorithmic pricing, there is increasing recognition of the importance of data security. Various countries have begun to establish their own data protection regimes. The most widely discussed are the radically different regimes in the EU and the US, while China has taken a unique direction in data protection development after absorbing the experiences of both Europe and the US and combining them with its own political characteristics. This paper explores the relationship between algorithmic pricing and data protection, and argues for the development of a data protection regime to address data security challenges in the era of algorithmic pricing. Through comparative legal research, this paper compares the data protection legal regimes of the European Union, the United States and China from three perspectives: legal principles, international impact and case applications. Through comparative analyses, this paper concludes that a comprehensive data protection regime is more effective than data regulations scattered in various documents. By studying the comparative analysis of three countries, especially the international impact of the EU data protection regime, this paper concludes that a global data protection standard can be recognised and summarised. Such a standard should have four basic elements: 1) the comprehensive empowerment of data subjects, 2) effective and independent intervention by supervisory authorities, 3) a strict ex ante preventive review mechanism, and 4) a satisfactory ex-post relief system. This paper suggests that each country’s data protection system can be designed with reference to this standard and in the light of the specific conditions of the country. In summary, the comparative analyses in this paper provide new perspectives for an in-depth understanding of the changes in data protection legal regimes in different countries in the era of algorithmic pricing. This will help promote more effective data protection laws and policymaking around the world. |
| Date: | 2023–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:g6z3h&r=reg |
| By: | Axel Gottfries; Gregor Jarosch |
| Abstract: | How do noncompete agreements between workers and firms affect wages and employment in equilibrium? We build a tractable framework of wage posting with on-the-job search and large employers that provides a natural laboratory to assess anti-competitive practices in the labor market. We characterize the impact of market structure and show that noncompetes can sharply suppress wages. We validate the quantitative model with empirical evidence on the impact of mergers and noncompetes on employment and wages. Banning noncompetes in the US would raise wages by 4%. Wage gains are large when demand is inelastic, training costs are high, and when noncompetes are widespread. |
| JEL: | E0 J0 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31965&r=reg |
| By: | Harrison Hong; Jeffrey D. Kubik; Edward P. Shore |
| Abstract: | Many US states have set ambitious renewable portfolio standards (RPS) that require utilities to switch from fossil fuels toward renewables. RPS increases the renewables capacity, bond issuance, maturity, and yield spreads of investor-owned utilities compared to municipal producers that are exempted from this climate policy. Contrary to stranded-asset concerns, the hit to overall firm financial health is moderate. Falling cost of renewables and passthrough of these costs to consumers mitigate the burden of RPS on firms. Using a Tobin’s q model, we show that, absent these mitigating factors, the impact of RPS on firm valuations would have been severe. |
| JEL: | G0 G18 G31 G35 H0 H23 H25 H41 Q42 Q50 Q54 Q56 Q58 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31960&r=reg |
| By: | Weiping Wu (Columbia University) |
| Abstract: | While the public sector is traditionally the sole provider for much of infrastructure, the pendulum is shifting in light of the enormous investment gap. Across the Global South, public utilities and planning agencies are engaging with the private sector to help bridge the gap. What are the key sources of infrastructure investment across countries in the Global South? Specifically, what is the magnitude of public sector financing in the context of rising private participation? What macro factors underscore the volume of investment from either sector? These are the research questions motivating this research, which focuses on the five infrastructure sectors in the Global South and its various regions. Following a historical synthesis of the changing balance of public and private provision, the paper first outlines recent patterns of private participation in infrastructure. A unique dataset on infrastructure investment in the transport sector draws from the World Bank PPI database and the International Transport Forum data. Using this dataset, a regression analysis includes key macro-level predictors for private sector financing and overall investment, to untangle the public-private paradox. Key results point to the importance of effective governance and controlling external debt. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:ays:ispwps:paper2328&r=reg |