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on Regulation |
| By: | Joshua S. Gans |
| Abstract: | This paper surveys the relevant existing literature that can help researchers and policy makers understand the drivers of competition in markets that constitute the provision of artificial intelligence products. The focus is on three broad markets: training data, input data, and AI predictions. It is shown that a key factor in determining the emergence and persistence of market power will be the operation of markets for data that would allow for trading data across firm boundaries. |
| JEL: | L15 L40 O34 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32270&r=reg |
| By: | Mariarosaria Comunale; Andrea Manera |
| Abstract: | We review the literature on the effects of Artificial Intelligence (AI) adoption and the ongoing regulatory efforts concerning this technology. Economic research encompasses growth, employment, productivity, and income inequality effects, while regulation covers market competition, data privacy, copyright, national security, ethics concerns, and financial stability. We find that: (i) theoretical research agrees that AI will affect most occupations and transform growth, but empirical findings are inconclusive on employment and productivity effects; (ii) regulation has focused primarily on topics not explored by the academic literature; (iii) across countries, regulations differ widely in scope and approaches and face difficult trade-offs. |
| Keywords: | Artificial Intelligence (AI); labor market; task exposure; productivity; regulation; governance. |
| Date: | 2024–03–22 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2024/065&r=reg |
| By: | Crémer, Jacques; Biglaiser, Gary; Mantovani, Andrea |
| Abstract: | The aim of this report is to present the main facets of the development of cloud services, its economics and the related policy issues. We begin by surveying the sector, its growth and the significant increase in concentration in recent years. We then discuss the tools that economics gives us to study these phenomena before turning to a critical analysis of some of the most prominent policy reports which have been produced on the topic. We finally turn to a more detailed look at the (meagre) economic literature on the industry and of the economic theories which could be used for deeper analysis. |
| JEL: | K21 L13 L51 L86 O33 |
| Date: | 2024–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:129265&r=reg |
| By: | Boa, I.; Elliott, M.; Foster, D.; |
| Abstract: | Merger analysis typically focuses on possible strategic price effects in markets where there is existing competition between the merging firms. We refer to this as the product based approach. This paper proposes a complementary approach based on an assessment of the merging firms’ capabilities that can provide insights on potential merger effects, including in circumstances where the product based approach offers little practical guidance to antitrust authorities. Our approach is rooted in the resource-based view of business strategy that starts from the premise that it is a firm’s capabilities (sometimes called core competencies), which drive its competitive advantage across markets. We argue that mergers in which firms’ capabilities are less overlapping are more pro-competitive on several dimensions: immediate competition in overlapping markets, immediate competition in other markets, long-run competition and innovation. |
| Date: | 2023–02–03 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camjip:2303&r=reg |
| By: | Jeon, Doh-Shin; Choi, Jay Pil; Whinston, Michael |
| Abstract: | We develop a leverage theory of tying in markets with network effects. When a monopolist in one market cannot perfectly extract surplus from consumers, tying can be a mechanism through which unexploited consumer surplus is used as a demand-side leverage to create a “quasi-installed base” advantage in another market characterized by network effects. Our mechanism does not require any precommitment to tying; rather, tying emerges as a best response that lowers the quality of tied-market rivals. While tying can lead to exclusion of tied-market rivals, it can also expand use of the tying product, leading to ambiguous welfare effects. |
| Date: | 2024–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:129287&r=reg |
| By: | Polemis, Michael |
| Abstract: | The longevity of cartels has been a highly contested topic among economists and managers, with numerous researchers arguing that cartels are inherently unstable and their endurance is usually short-lived. Understanding the main factors that influence a cartel duration is essential from a managerial point of view let alone the competition policy perspective. Despite having a large body of literature, there has been no systematic evaluation of the existing driving factors to determine the current understanding and identify potential paths for future research. The present paper employs quantile regression techniques thus allowing for a more thorough and precise depiction of the data in terms of estimations compared to the traditional OLS analysis. The empirical findings support that the number of cartelists imposes an asymmetric effect, reducing (increasing) the lifespan of the collusion only in the short (long) lived cartels. Operating internationally and having a third-party facilitator both lengthen cartels, but the magnitudes of these effects decline monotonically over the range of the distribution. Relative to price-fixing, bid-rigging lengthens cartels in the bottom 20% of the distribution but has no significant effect elsewhere. Finally, the prevalence of leniency programs appears to have no significant effect on cartel duration, except at the very bottom of the distribution where the effect is small in magnitude. |
| Keywords: | Collusion; Longevity; Cartelists; Sanctions; Quantiles |
| JEL: | C31 D43 L13 L41 |
| Date: | 2024–03–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120534&r=reg |
| By: | María Teresa Costa-Campí (Institut d’Economia de Barcelona (IEB) / Universitat de Barcelona / Cátedra de Sostenibilidad Energética (IEB-UB)); Elisa Trujillo-Baute (Universitat de Lleida / Cátedra de Sostenibilidad Energética (IEB-UB)); Andrew Burlinson (University of Sheffield / UK Energy Research Centre); Monica Giulietti (Nottingham University / UK Energy Research Centre); Daire McCoy (Grantham Research Institute / London School of Economics / OFGEM) |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:report:ieb_report_3_2023&r=reg |
| By: | Hinterlang, Natascha; Jäger, Marius; Stähler, Nikolai; Strobel, Johannes |
| Abstract: | The dependency on imported essential production inputs poses a threat of abrupt price hikes and shortages, potentially triggered by political events. The energy crisis resulting from the Russian war of aggression is an example. This paper investigates whether governments should bolster production via transfers or cost subsidies in the event of a crisis, utilizing a dynamic multi-sector economic model that is calibrated to Germany and incorporates endogenous firm entry and exit. Our findings suggest that subsidizing production costs is more beneficial for economic activity and welfare, provided the energy demand due to the subsidy does not significantly influence the price of the essential production input. If it does, this approach could become exceedingly expensive. In such scenarios, it is economically more efficient to provide lump-sum transfers to firms. The effectiveness of these policies ultimately hinges on their impact on the price of the imported input. |
| Keywords: | Dynamic General Equilibrium Model, Input-Output Matrix, Energy crisis, Gas Price Brake |
| JEL: | E32 E50 E62 H32 Q58 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdps:287760&r=reg |
| By: | Ian Ball; Teemu Pekkarinen |
| Abstract: | We study the design of an auction for a license. Each agent has a signal about his future profit from winning the license. If the license is allocated, the winner can be charged a flexible royalty based on the profits he reports. The principal can audit the winner, at a cost, and charge limited penalties. We solve for the auction that maximizes revenue, net auditing costs. In this auction, the winner pays linear royalties up to a cap, beyond which there is no auditing. A more optimistic bidder pays more upfront in exchange for a lower royalty cap. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2403.19945&r=reg |
| By: | Michelle W. Bowman |
| Date: | 2024–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgsq:98004&r=reg |
| By: | López, Rigoberto A.; Seoane, Luis |
| Abstract: | The meatpacking industry is a crucial intermediary between ranchers and the downstream supply chain, and concentration within the industry has significant implications for stakeholders in terms of competition and transmission of efficiencies. Due to constraints on the efficient transportation of live animals over long distances, ranchers primarily operate within regional markets. In this paper we provide new knowledge about the degree of regional concentration in the beef packing industry and propose a model to examine its impact on the wholesale farm-price spread. Findings indicate a significant increase in concentration across all regions, with some regions experiencing up to a 300 percent rise in the Herfindahl index, although concentration levels vary considerably among the different regions. |
| Keywords: | Livestock Production/Industries |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea22:341195&r=reg |
| By: | Blind, Knut; Münch, Florian |
| Abstract: | To examine the different roles of regulation and standards in the age of globalisation, we hypothesize and investigate the relation of regulation and national and international standards on the one hand with innovation input (R&D expenditure) and innovation output (patents) on the other hand. The analysis is based on data of 26 high-income countries between 1998 and 2018. There are two main results. Firstly, international standards outperform both de-regulation and national standardisation as they are positively associated with R&D expenditure and patenting. On the other hand, national standards – once believed a source of competitiveness – are negatively related to patents and hence seem to localize economies and slow-down innovation. Secondly, de-regulation does not correlate positively with R&D expenditure, but with increased patenting. We argue the former suggest businesses did not – as assumed – spend freed up resources on R&D, but instead strategically used patenting to replace lost regulation-based protection with patent fences. This casts doubts on the added social value of de-regulation induced innovation. |
| Keywords: | globalization; innovation; patents; R&D; regulation; standardization |
| JEL: | R14 J01 N0 |
| Date: | 2024–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:122260&r=reg |
| By: | Macchiavello, Rocco; Reardon, Thomas; Richards, Timothy J. |
| Abstract: | Food value chains (FVCs) in developing countries are transforming rapidly, with some regions in the modern stage (led by supermarkets and large processors) and other regions in a transitional stage (led by midstream small and medium enterprises). With transformation, however, come market-performance issues related to monopoly and monopsony power, vertical bargaining, contracting, and other issues addressed by empirical industrial organization (EIO) researchers. Although the concepts and methods of EIO are evolving rapidly, the two bodies of literature on EIO and FVC transformation as part of the food markets and food industries branches of development economics have not sufficiently cross-pollinated. Applying tools of modern EIO to FVCs in developing countries is now relevant because of the transformation that has occurred and possibly due to the increasing availability of data from surveys of farms, processors, and wholesalers, and for some retailers, from scanner data. We review the transformation trends, the EIO themes and tools relevant to them, and the emerging data sources. |
| Keywords: | development; empirical industrial organization; food value chains; relational contracting; structural modeling |
| JEL: | J22 Q12 Q18 |
| Date: | 2022–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:117430&r=reg |
| By: | Macchiavello, Rocco |
| Abstract: | This article reviews an emerging body of evidence on relational contracts, defined as informal arrangements sustained by the value of future interactions. We focus on developing and international markets, which are often characterized as contexts with weak formal contract enforcement. We introduce relational contracting between firms as a governance form alternative to both firms and markets. We then review evidence on the prevalence of long-term relationships between firms and discuss why this governance form might be particularly common in developing countries. After introducing a simple framework, we discuss the measurement of relational contracting between firms. We review an approach that takes dynamic incentive compatibility constraints to the data to quantify the value of future interactions and illustrate how different types of shocks can be used to uncover the inner functioning of relational contracting. We also review structural models and conclude with policy implications and promising avenues for future research. |
| Keywords: | governance forms; relational contracts; trust; organizational economics; development economics |
| JEL: | L10 L14 L22 L23 O12 |
| Date: | 2022–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:116662&r=reg |
| By: | Daniel Ofori-Sasu (University of Ghana Business School); Elikplimi Komla Agbloyor (University of Ghana Business School); Dennis Nsafoah (Niagara University); Simplice A. Asongu (Johannesburg, South Africa) |
| Abstract: | This study examines the effect of regulatory independence of the central bank in shaping the impact of electoral cycles on bank lending behaviour in Africa. It employs the dynamic system Generalized Method of Moments (SGMM) Two-Step estimator for a panel dataset of 54 African countries over the period, 2004-2022. The study found that banks lend substantially higher during election years, and reduce lending patterns thereafter. The study shows that countries that enforce monetary policy autonomy of the central bank induce a negative impact on bank lending behaviour while those that apply strong macro-prudential independent action and central bank independence reduce lending in the long term. The study provides evidence to support that regulatory independence of the central bank dampens the positive effect of elections on bank lending around election years while they amplify the reductive effects on bank lending after election periods. There is a wake-up call for countries with weak independent central bank regulatory policy to strengthen their independent regulatory policy frameworks and political institutions. This will enable them better strategize to yield a desirable outcome of bank lending to the real economy during election years. |
| Keywords: | Political Economy; Political Credit Cycles, Electoral Cycle; Central Bank Regulatory Independence; Bank lending Behaviour |
| JEL: | D7 D72 G2 G3 E3 E5 E61 G21 L10 L51 M21 P16 P26 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:24/002&r=reg |
| By: | AMORES Antonio F (European Commission - JRC); SPEITMANN Raffael (European Commission - JRC); STOEHLKER Daniel (European Commission - JRC) |
| Abstract: | In May 2023, the Austrian government announced to set up a new online database to help people compare retail prices across supermarkets and find the cheapest offers in an effort to fight soaring food prices. While plans for a government-built website have been abandoned, private developers released a handful of easy to navigate price comparison websites by June 2023, comprising the assortments of all main supermarket chains in Austria. This brief analyses the extent to which price transparency led to an effective reduction in final consumer prices. To this end, we compare the prices of listed products in Austria with those of the exact same products in Germany, where such price comparison websites are not available. Our results indicate that retail prices of affected products have not decreased since the availability of such websites, potentially due to a low up-take of the service. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc137127&r=reg |
| By: | Attar, Andrea; Bozzoli, Lorenzo; Strausz, Roland |
| Abstract: | We develop a new approach to contract renegotiation under informational frictions. Specically, we consider mediated mechanisms which cannot be contingent on any subsequent offer, but can generate a new source of asymmetric information between the contracting parties. Taking as a reference the canonical framework of Fudenberg and Tirole (1990), we show that, if mediated mechanisms are allowed, the corresponding renegotiation game admits only one equilibrium allocation, which coincides with the second-best one. Thus, the inefficiencies typically associated to the threat of renegotiation may be completely offset by the design of more sophisticated trading mechanisms. |
| JEL: | D43 D82 D86 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:129278&r=reg |
| By: | Jonathan F. Cogliano and Roberto Veneziani |
| Abstract: | In A Mathematical Formulation of the Ricardian System, Pasinetti (1960) lays out the foundations of what has been dubbed the canonical classical model. He proves the model to be logically consistent and determinate in all its macro-economic features, and derives the solutions for all key variables independently of demand conditions. The model thus provides macroeconomic foundations to the classical theory of distribution. This paper examines the decentralised, competitive mechanism underlying the macroeconomic outcomes. First, we model a classical economy with capitalists, workers, and landlords and define the notion of a Classical Competitive Equilibrium (CCE). A unique CCE exists in a large class of concave classical economies and the resulting income distribution is proved to coincide with that of Pasinetti’s canonical classical model. Second, we use an agent-based model in order to examine more explicitly the decentralised competitive mechanisms at play in the classical economy. We show that a realistic competitive interaction between boundedly rational agents with localised knowledge generates classical gravitational dynamics with the key distributive variables oscillating around their equilibrium values. |
| Keywords: | Luigi Pasinetti, Income distribution, Classical competition, Agent-based model. |
| JEL: | B51 C63 D50 |
| Date: | 2024–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:mab:wpaper:2024-01&r=reg |