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on Regulation |
| By: | Randriamaro, Mary Tiana (A2F Consulting); Espinola-Arredondo, Ana (School of Economic Sciences, Washington State University); Fuente, David (School of the Earth, Ocean & Environment, University of South Carolina); Cook, Joseph (School of Economic Sciences, Washington State University) |
| Abstract: | Utility customer nonpayment and debt is an issue in many cities in the Global South, jeopardizing utilities’ ability to recover operations and maintenance costs through tariffs and their ability to finance system expansions or improvements. We develop a two-stage game that describes the interaction between a utility and a representative household in which the utility chooses whether to disconnect a non-paying household and the household decides whether to pay their bill. The model introduces a moral cost to customers who skip payment and political pressure on utilities to avoid disconnecting a non-paying household. We show that a lower moral aversion to non-payment makes disconnection more likely. We also model the impact of changing the availability of alternative water sources that a disconnected household can access. We find that when the relative price of these sources is high, the household is more likely to pay a bill, making the threat of disconnection less likely. |
| Keywords: | game theory; utility bill payment; water finance; utility policy |
| JEL: | C72 L97 Q25 |
| Date: | 2024–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunefd:2024_001&r=reg |
| By: | Mills, Stuart |
| Abstract: | Regulators are increasingly concerned about deceptive, online choice architecture, including dark patterns and behavioral sludge. From a behavioral science perspective, fostering a regulatory environment which reduces the economic harm caused by deceptive designs, while safeguarding the benefits of well-meaning behavioral insights, is essential. This article argues for a principles-based approach and proposes behavioral audits as a tool to support this approach. |
| Keywords: | regulation; AI; behavioral audits; choice architecture; principles-based regulation |
| JEL: | R14 J01 |
| Date: | 2024–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:122714&r=reg |
| By: | Pedro Teles; João Guerreiro; Sérgio Rebelo |
| Abstract: | We consider an environment in which there is substantial uncertainty about the potential adverse external effects of AI algorithms. We find that subjecting algorithm implementation to regulatory approval or mandating testing is insufficient to implement the social optimum. When testing costs are low, a combination of mandatory testing for external effects and making developers liable for the adverse external effects of their algorithms comes close to implementing the social optimum even when developers have limited liability. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w202319&r=reg |
| By: | Ponthiere, Gregory; Stevens, Nicolas |
| Abstract: | Dewatripont and Tirole (2024) defend the morality of markets on the ground of an irrelevance result: the social production of moral actions is independent from competitive pressure on markets. No matter how strong competitive pressure is, markets perform well in diffusing signals about moral values and in coordinating suppliers of moral actions. In this comment, we argue, on the contrary, that markets lead to a double crowding out of moral values: first, imperfect transmission of moral values on markets leads to an underproduction of moral actions despite the presence of highly ethical suppliers; second, competitive pressure on markets favors the eviction of highly ethical suppliers by less ethical suppliers. |
| Keywords: | competition, markets, morality, crowding out |
| JEL: | D21 D6 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:1433&r=reg |
| By: | Olivier de Groote (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); Axel Gautier (HEC Liège, Université de Liège); Frank Verboven (Department of Economics [Leuven] - KU Leuven - Catholic University of Leuven = Katholieke Universiteit Leuven) |
| Abstract: | We analyze the political impact of a generous solar panel subsidization program. Subsidies far exceeded their social benefit and were partly financed by new taxes on adopters and by electricity surcharges for all consumers. We use local panel data from Belgium and find a decrease in votes for government parties in municipalities with high adoption rates. This shows that the voters' punishment for a costly policy exceeded the potential reward by adopters who received generous subsidies. Further analysis indicates that punishment mainly comes from non-adopters, who change their vote towards anti-establishment parties. |
| Keywords: | Photovoltaic systems, Retrospective voting, Financing climate policy |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04547811&r=reg |
| By: | Martino, Edoardo D; Ringe, W. Georg |
| Abstract: | In the past decade, the legal and economic literature on blockchain technology and its applications has flourished. This new technology holds great promise for enhancing the efficiency of contracting. Building on the classic Coase theorem, blockchain as a decentralised mechanism of decision-making should be superior to centralised regulation, possibly yielding substantial efficiency gains. Notably, it also has the potential to improve the allocation of property rights and reduce transaction costs. However, many of these enthusiastic views about what blockchain technology may bring are overblown. This article demonstrates that blockchain creates a variety of new externalities, which cannot be addressed by the decentralised actors using it. The most obvious of them is the environmental externality stemming from the energy-intensive mining process. In addition, more immediate externalities emerge, for example through the operational and legal risks of being part of a blockchain transaction, which are particularly evident in the crypto economy. Moreover, issues surrounding blockchain governance may exacerbate these challenges. In conclusion, we propose several regulatory strategies to mitigate these shortcomings and harness the full potential of blockchain technology. |
| Keywords: | blockchain technology, Coase theorem, social cost |
| JEL: | K11 K22 K29 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ilewps:80&r=reg |
| By: | Manuel Amador; Javier Bianchi |
| Abstract: | We examine banking regulation in a macroeconomic model of bank runs. We construct a general equilibrium model where banks may default because of fundamental or self-fulfilling runs. With only fundamental defaults, we show that the competitive equilibrium is constrained efficient. However, when banks are vulnerable to runs, banks’ leverage decisions are not ex-ante optimal: individual banks do not internalize that higher leverage makes other banks more vulnerable. The theory calls for introducing minimum capital requirements, even in the absence of bailouts. |
| JEL: | E32 E44 E58 G01 G21 G33 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32341&r=reg |