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on Regulation |
| By: | Billy A. Ferguson; Paul Milgrom |
| Abstract: | Many proposed surface water transfers undergo a series of regulatory reviews designed to mitigate hydrological and economic externalities. While these reviews help limit externalities, they impose substantial transaction costs that also limit trade. To promote a well-functioning market for surface water in California, we describe how a new kind of water right and related regulatory practices can balance the trade-off between externalities and transaction costs, and how a Water Incentive Auction can incentivize a sufficient number of current rights holders to swap their old rights for the new ones. The Water Incentive Auction adapts lessons learned from the US government’s successful Broadcast Incentive Auction. |
| JEL: | D23 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32010&r=reg |
| By: | Bruno Jullien (TSE-R - TSE-R Toulouse School of Economics – Recherche - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Markus Reisinger (Frankfurt School of Finance and Management); Patrick Rey (TSE-R - TSE-R Toulouse School of Economics – Recherche - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | The availability of consumer data is inducing a growing number of firms to adopt more personalized pricing policies. This affects both the performance of, and the competition between, alternative distribution channels, which in turn has implications for firms' distribution strategies. We develop a formal model to examine a brand manufacturer's choice between mono distribution (selling only through its own direct channel) or dual distribution (selling through an independent retailer as well). We consider different demand patterns, covering both horizontal and vertical differentiation and different pricing regimes, with the manufacturer and retailer each charging personalized prices or a uniform price. We show that dual distribution is optimal for a large number of cases. In particular, this is always the case when the channels are horizontally differentiated, regardless of the pricing regime; moreover, if both firms charge personalized prices, a well-designed wholesale tariff allows them to extract the entire consumer surplus. These insights obtained here for the case of intrabrand competition between vertically related firms are thus in stark contrast to those obtained for interbrand competition, where personalized pricing dissipates industry profit. With vertical differentiation, dual distribution remains optimal if the manufacturer charges a uniform price. By contrast, under personalized pricing, mono distribution can be optimal when the retailer does not expand demand sufficiently. Interestingly, the industry profit may be largest in a hybrid pricing regime, in which the manufacturer forgoes the use of personalized pricing and only the retailer charges personalized prices. This paper was accepted by Joshua Gans, business strategy. Funding: The financial support of the European Research Council under the European Union's Horizon 2020 research and innovation programme [Grant Agreement 670494] and of the Agence nationale de la recherche (ANR) [Grant ANITI (ANR Grant 3IA)] and [Grant CHESS ANR-17-EURE-0010] (Investissements d'Avenir program) is gratefully acknowledged. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2022.4437 . |
| Keywords: | Personalized pricing, Distribution strategies, Vertical contracting, Downstream competition |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04282548&r=reg |
| By: | Richeng Piao |
| Abstract: | This study investigates the implications of algorithmic pricing in digital marketplaces, focusing on Airbnb's pricing dynamics. With the advent of Airbnb's new pricing tool, this research explores how digital tools influence hosts' pricing strategies, potentially leading to market dynamics that straddle the line between efficiency and collusion. Utilizing a Regression Discontinuity Design (RDD) and Propensity Score Matching (PSM), the study examines the causal effects of the pricing tool on pricing behavior among hosts with different operational strategies. The findings aim to provide insights into the evolving landscape of digital economies, examining the balance between competitive market practices and the risk of tacit collusion facilitated by algorithmic pricing. This study contributes to the discourse on digital market regulation, offering a nuanced understanding of the implications of AI-driven tools in market dynamics and antitrust analysis. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2312.05633&r=reg |
| By: | Gustavo Ferro; Carlos A. Romero; María Priscila Ramos |
| Abstract: | A smart grid is the superposition of one physical electricity network on an information system. “Digitalization” (the growing application of information and communication technologies across the economy) enables electricity to break away from exclusive and centralized generation, opening it up to the increased integration of small-scale renewable sources in distribution networks. Digitalization also facilitates two-way communications between clients and providers, transforming them -progressively into “prosumers”. This suggests a new electricity system requiring changes in regulatory and technical norms. Transmission improves, losses decrease, renewables can be better integrated, and demand peaks can be smoothed. On the other hand, there is an important need for investments in smart meters, and IT technology, as well as concerns over the correct treatment of clients’ data. The massive introduction of dynamic tariffs is a consequence of smart grid development. |
| Keywords: | Smart Grids; Renewable Energy Sources; Electricity markets |
| JEL: | C14 Q42 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:cem:doctra:859&r=reg |
| By: | Majid Hashemi; Glenn Jenkins (Queen's University); Frank Milne (Queen's University) |
| 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 Ontario’s FIT program has successfully promoted the adoption of solar DER across communities. However, the program has caused inequitable societal outcomes through a crosssubsidization with a present value of 9 CAD billion, paid for by the electricity consumer base for the benefit of only the 0.06 percent of electricity consumers who could install solar systems. The cost imposed on the Canadian economy ranges from 2.86 to 5.37 CAD billion, depending on the discount rate applied. The sensitivity analysis results indicate that the burden of this program on the Canadian economy would have been reduced by 50 percent if the program had been delayed and implemented in 2016 instead of 2010 due to the declining trend in solar system investment costs. The lessons from this analysis provide insights for designing future environmental and emission reduction policies. |
| Keywords: | Renewable Energy Subsidy, Distributed Energy Resources, Feed-in Tariff, Stakeholder Analysis, Benefit-cost Analysis, Ontario, Canada |
| JEL: | H23 O13 Q42 Q48 |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1514&r=reg |
| By: | Bryan Bollinger; Naim Darghouth; Kenneth Gillingham; Andres Gonzalez-Lira |
| Abstract: | Product complementarities can shape market patterns, influencing the demand for related products and their accessories. This study examines complementarities in the demand for rooftop solar and an accessory, battery energy storage. Using nationwide administrative data, we estimate a dynamic nested-logit model of solar and storage adoption. We quantify the demand complementarity between solar and storage, and find that if storage was not available, 20% of households who coadopt solar and storage would not adopt anything. We find that the demand for solar and storage bundles increases with power outages, with a larger effect in California. |
| JEL: | C51 L94 Q48 Q58 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32003&r=reg |
| By: | Camille Megy (LGI - Laboratoire Génie Industriel - CentraleSupélec - Université Paris-Saclay) |
| Abstract: | Alongside our baseline scenario without PTG, we define a series of alternative scenarios that represent various PTGownership structures. |
| Date: | 2022–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04325987&r=reg |
| By: | Hunold, Matthias; Werner, Tobias |
| Abstract: | This paper investigates the collusive and competitive effects of algorithmic price recommendations on market outcomes. These recommendations are often non-binding and common in many markets, especially on online platforms. We develop a theoretical framework and derive two algorithms that recommend collusive pricing strategies. Utilizing a laboratory experiment, we find that sellers condition their prices on the recommendation of the algorithms. The algorithm with a soft punishment strategy lowers market prices and has a pro-competitive effect. The algorithm that recommends a subgame perfect equilibrium strategy increases the range of market outcomes, including more collusive ones. Variations in economic preferences lead to heterogeneous treatment effects and explain the results. |
| Keywords: | Collusion, Experiment, Human-Machine Interaction, Bertrand Oligopoly |
| JEL: | C92 D43 L13 L41 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:280937&r=reg |
| By: | Wentian Zhang |
| Abstract: | This paper studies the effect of antitrust enforcement on venture capital (VC) investments and VC-backed companies. To establish causality, I exploit the DOJ's decision to close several antitrust field offices in 2013, which reduced the antitrust enforcement in areas near the closed offices. I find that the reduction in antitrust enforcement causes a significant decrease in VC investments in startups located in the affected areas. Furthermore, these affected VC-backed startups exhibit a reduced likelihood of successful exits and diminished innovation performance. These negative results are mainly driven by startups in concentrated industries, where incumbents tend to engage in anticompetitive behaviors more frequently. To mitigate the adverse effect, startups should innovate more to differentiate their products. This paper sheds light on the importance of local antitrust enforcement in fostering competition and innovation. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2312.13564&r=reg |
| By: | Harpenau, Franziska; Magalhaes, Katrin Marques; Steffen, Nico; Wiewiorra, Lukas |
| Abstract: | More efficient and sustainable energy consumption behaviors are crucial to mitigate the adverse effects of climate change. This paper examines how dynamic personal pricing and externality cost incentives interact and affect energy conservation behaviors. We conduct an online lab experiment in which participants complete real-effort tasks under different cost schemes. Increasing personal costs that reduce individual bonuses, significantly decreases participants' energy usage, although it requires more effort in the form of additional time. However, emphasizing increases in externality costs, representing environmental damage through reduced donations, does not impact performance. This suggests that the introduction of such prosocial incentives matters more than their magnitude. While environmental attitudes predict baseline usage, they do not change marginal responses to cost changes. Our results provide novel evidence on the motivational nuances underlying energy conservation and have key implications for policies considering a combination of incentives. |
| Abstract: | Ein effizientes und nachhaltiges Energiesparverhalten ist von zentraler Bedeutung, um die negativen Auswirkungen des Klimawandels abzumildern. In diesem Beitrag wird untersucht, wie dynamische Anreize von Preisen und Externalitäten zusammenwirken und das Energiesparverhalten beeinflussen. Wir nutzen ein Online-Laborexperiment, bei dem die Teilnehmenden "Real-effort" Aufgaben unter verschiedenen Kostenstrukturen lösen. Eine Erhöhung der Kosten, welche individuelle Boni reduzieren, führt zu einem signifikanten Rückgang des Energieverbrauchs der Teilnehmenden, was aber mehr Aufwand in Form von zusätzlicher Zeit erfordert. Allerdings hat die Kommunikation steigender Externalitätskosten - die eine Spende verringern und Umweltschäden simulieren - keine Auswirkungen auf das Verhalten im Experiment. Dies deutet darauf hin, dass die Einführung solcher prosozialer Anreize wichtiger ist als deren Höhe. Während umweltfreundliche Einstellungen den grundsätzlichen Energieverbrauch beeinflussen, ändern sie hier nicht die marginalen Reaktionen auf Kostenänderungen. |
| Keywords: | Energy consumption, Energy conservation, Behavioral, Environment |
| JEL: | Q41 Q56 D91 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wikwps:280956&r=reg |
| By: | Thomas Mariotti (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); Nikolaus Schweizer (Tilburg University [Netherlands]); Nora Szech (KIT - Karlsruher Institut für Technologie); Jonas von Wangenheim (Universität Bonn = University of Bonn) |
| Abstract: | We study the optimal design of information nudges for present-biased consumers who make sequential consumption decisions without exact prior knowledge of their long-term consequences. For any distribution of risks, there exists a consumer-optimal information nudge that is of cutoff type, recommending abstinence if riskiness is high enough. Depending on the distribution of risks, more or less consumers may have to be sacriced in that they cannot be warned even though they would like to be. Under a stronger bias for the present, the target group receiving a credible warning to abstain must be tightened, but this need not increase the probability of harmful consumption. If some consumers are more strongly present-biased than others, traffic-light nudges turn out to be optimal and, when subgroups of consumers differ sufficiently, the optimal traffic-light nudge is also subgroup-optimal. We finally compare the consumer-optimal nudge with those a health authority or a lobbyist would favor. |
| Keywords: | Nudges, Information Design, Present-Biased Preferences, Self-Control |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04198487&r=reg |
| By: | B. F. Oliveira; A. V. M Oliveira |
| Abstract: | This paper describes an econometric model of the Brazilian domestic carrier Azul Airlines' network construction. We employed a discrete-choice framework of airline route entry to examine the effects of the merger of another regional carrier, Trip Airlines, with Azul in 2012, especially on its entry decisions. We contrasted the estimated entry determinants before and after the merger with the benchmarks of the US carriers JetBlue Airways and Southwest Airlines obtained from the literature, and proposed a methodology for comparing different airline entry patterns by utilizing the kappa statistic for interrater agreement. Our empirical results indicate a statistically significant agreement between raters of Azul and JetBlue, but not Southwest, and only for entries on previously existing routes during the pre-merger period. The results suggest that post-merger, Azul has adopted a more idiosyncratic entry pattern, focusing on the regional flights segment to conquer many monopoly positions across the country, and strengthening its profitability without compromising its distinguished expansion pace in the industry. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2312.05630&r=reg |
| By: | Hoai Son Nguyen (NEU - National Economics University [Hanoï, Vietnam]); Minh Ha-Duong (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique); Xuân Tháng Nguyen (NEU - National Economics University [Hanoï, Vietnam]) |
| Abstract: | The study retests the economy of scale in electricity consumption under the tiered electricity pricing conditions with panel data constructed from the Vietnam Household Living Standards Survey (VHLSS) for the years 2014, 2016, and 2018. Using instrumental variables developed by McFadden, Puig, and Kirschner (1977) to represent tiered prices, the study has separated the impact of tiered pricing to estimate the economy of scale in electricity consumption of households in Vietnam from 2014 to 2018. The results show that even under the influence of tiered pricing, households still exhibit economies of scale in electricity consumption. With each additional member, the per capita electricity consumption of each household decreases by 5.36 kWh/month, equivalent to a 15% reduction. This result has a small deviation compared to the results estimated in other Asian countries such as China. Summary for policymakers: This study examines how of electricity consumption by Vietnamese households between 2014 and 2018 depends on households size, income and other factors. It utilizes instrumental variables to adjust for the effects of increasing block tariffs. The result confirm the existence of economies of scale in electricity use among Vietnamese households: each additional member in the household decreases the per capita power consumption by 15%. Results imply that the observed social trend towards smaller households may contributes to the electricity demand increase. Indeed, between 2014 and 2020, the average household size in Vietnam decreased, correlating with a large increase in per capita electricity consumption. However, the study finds that diseconomies of scale only explain a small part (5%) of the households electricity demand increase. The majority of the increase is due to other factors, such as the number of households, their income growth, and urbanization. |
| Abstract: | Nghiên cứu kiểm định lại tính kinh tế theo quy mô trong tiêu dùng điện dưới điều kiện giá điện bậc thang với số liệu mảng được xây dựng từ Khảo sát mức sống dân cư (VHLSS) của ba năm 2014, 2016 và 2018. Sử dụng biến công cụ do McFadden, Puig và Kirschner (1977) phát triển để đại diện cho giá bậc thang, nghiên cứu đã phân tách được tác động của giá bậc thang để ước tính được tính kinh tế theo quy mô trong tiêu dùng điện của các hộ gia đình tại Việt Nam giai đoạn từ năm 2014 đến năm 2018. Kết quả cho thấy, ngay cả dưới ảnh hưởng của giá bậc thang, các hộ gia đình vẫn có tính kinh tế theo quy mô trong tiêu dùng điện. Với mỗi thành viên tăng thêm, lượng điện tiêu thụ trên đầu người của mỗi hộ sẽ giảm đi 5, 36 kWh/tháng, tương đương với lượng giảm 15%. Kết quả này có sai biệt không lớn với các kết quả đã được ước lượng tại các nước châu Á khác như Trung Quốc. |
| Keywords: | Economy of scale, electricity demand function, tiered pricing, Vietnamese households. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04332519&r=reg |
| By: | Luis Bouza García; Alvaro Oleart |
| Abstract: | The growing influence of social media platforms, and the disinformation that circulates in them, has transformed the public spheres. How to deal with disinformation is an open normative, empirical and political question in contemporary democracies. In this article, we outline an agenda on the institutional strategies pursued in the European Union (EU), the normative understandings of the public sphere that such strategies imply, and the analytical challenges to undertake this line of inquiry. We argue that there is an emerging competition in the EU field of disinformation – constructed by actors coming from different pre-existing fields, such as journalism or foreign policy – not only to define what is ‘true’ from what is ‘fake’, but also to determine the sort of the public sphere and democracy we ought to strive for. This perspective allows us to anticipate which actors might be empowered (or disempowered) depending on how disinformation is addressed in regulatory terms. |
| Keywords: | Big Tech; disinformation; European Union; public policy; public sphere |
| Date: | 2023–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/365881&r=reg |