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on Regulation |
| By: | Pisarkiewicz, Anna Renata; Parcu, Pier Luigi |
| Abstract: | The digital economy, which keeps transforming how people and businesses interact and operate, has certain distinctive characteristics that pose unique challenges for regulators. It is highly dynamic and driven by innovation, which in comparison to the past, happens at a much faster pace and is more disruptive. It is technology-based and, more than before, data-driven, which means that it requires notable ICT and analytic capabilities and the ability to interpret and make decisions based on vast amounts of data. For example, to understand the economies of scale in search and the value of targeted advertising, the UK CMA requested and analysed over 4TB of data from Google and Bing during its market study on digital advertising (Hunt, 2022). Moreover, the digital economy with its corresponding digital regulations is increasingly complex and interconnected, making it difficult for regulators to understand and coherently regulate specific problems or components without examining entire digital and regulatory ecosystems. The digital economy also transcends traditional sectoral silos as well as territorial and jurisdictional limitations, thereby presenting challenges in terms of ensuring harmonized regulatory frameworks and effective compliance across different national authorities and different geographical realities. The German Facebook (Meta) case and the subsequent preliminary ruling from the EU perfectly illustrate both the increasingly blurred lines between data protection and competition law enforcement as well as a need for coordination and collaboration between the respective regulators. Finally, the global and interconnected nature of the digital economy creates important dependencies and vulnerabilities that regulators must understand and navigate, which exposes regulation to geopolitical tensions. The interplay between merger control and foreign direct investment (FDI) screening, for example, in cases involving semiconductors shows how regulatory frameworks must adapt to address these dependencies and vulnerabilities, ensuring that economic considerations are balanced with national security interests amidst rising geopolitical tensions. |
| Keywords: | Regulatory agility, digital markets, enforcement, VUCA framework, collaborative regulation, technological gap, technological proficiency, innovative policymaking, competences |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:itsb24:302491 |
| By: | Jens-Uwe Franck; Martin Peitz |
| Abstract: | This paper explains the novelties for sector inquiries as a result of the 11th amendment to the German Competition Act. The Bundeskartellamt is now authorized to impose measures ranging from behavioural requirements to the unbundling of a company in order to remedy identified competition problems. The new regulatory instrument supplements antitrust law in an appropriate manner. |
| Keywords: | Competition law, sector inquiry, market investigation, New Competition Tool, Bundeskartellamt, divestiture |
| JEL: | K2 L41 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_598 |
| By: | Jacopo Gambato; Bernhard Ganglmair; Julia K. Krämer |
| Abstract: | This chapter explores the interaction between the enforcement of and compliance with difficult-to-enforce rules in the context of data regulation. We focus on the effect of the introduction of the GDPR and its transparency principle on the readability of privacy policies for a large sample of German firms. Germany has a system of state-level data protection authorities. These data regulators enforce the same rules but face diverse funding situations, allowing for an ideal setting to study the role of a regulator's capacity in firms' compliance decisions. We find that while, on average, the GDPR lead to less readable policies, firms active in industries that have in the past received more regulatory scrutiny and those active in jurisdictions of better-funded data regulators exhibit a stronger compliance with the GDPR's readability requirement. These results exemplify a more general interaction between regulators' enforcement activity and firms' regulatory compliance. |
| JEL: | D22 K20 L51 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32913 |
| By: | Auriol, Emmanuelle; Gonzalez Fanfalone, Alexia |
| Abstract: | This paper studies how Mobile Network Operator (MNO) impacts traditional banks’ coverage decision in a model of vertical and horizontal differentiation with asymmetric transportation costs. The competitive pressure triggered by MNOs entry on traditional banking sector leads to prices decrease and broadens financial inclusion as the traditional banking sector expands its network in response to the entry of MNOs. The model’s predictions are checked against data from Kenya, where mobile banking has been most successful. Results from the econometric model for the period 2000-2011, suggest that, roughly, for each 7 new mobile agents in a sub-locality, one new bank branch opened. |
| Keywords: | Financial inclusion; Regulation; Mobile banking; Development |
| JEL: | G18 L51 L88 L96 O16 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:129721 |
| By: | Vladimir A. Karamychev (Erasmus University Rotterdam) |
| Abstract: | Aftermarket social welfare is largely determined by a procurement auction design. Auctions select firms for operating aftermarkets, and auctions may also impose restrictions on aftermarket prices the winner can charge. This paper compares aftermarket social welfare generated by first-price and second-price procurement auctions. It reveals that the social welfare ranking depends on the monotonicity properties of the augmented demand elasticity, defined as a product of the demand elasticity and the firm’s relative markup. When the augmented elasticity is price independent, first-price and second-price procurement auctions are welfare-equivalent. When it increases (or decreases) with price, first-price (or second-price) auctions are welfare-superior. |
| Keywords: | Aftermarket, Procurement auctions, Social Welfare, Monopoly |
| JEL: | D44 H57 L12 |
| Date: | 2023–12–22 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20230081 |
| By: | Marco Boccaccio (Università Sapienza di Roma - Dipartimento di Studi Giuridici ed Economici) |
| Abstract: | La politica dela concorrenza è una finestra per comprendere il modo in cui è cambiato nel il ruolo dello Stato in economia. Due paradigmi si sono succeduti in un andamento pendolare, quello di adjudication basato sull’intervento ex post per correggere comportmenti in violazione edlle norme, e quello di regulation volto a discplinare ex ante comportamenti futuri. |
| Keywords: | government intervention; antitrust; law and economics |
| JEL: | A12 H10 K00 K L |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:gfe:pfrp00:00065 |
| By: | Howell, Bronwyn; Potgieter, Petrus H. |
| Abstract: | The services that run on telecommunications providers' infrastructure have evolved from essential to the day-to-day functioning to hyper critical to the minute-by-minute functioning of modern society. Telecommunications firms have however been increasingly exposed to competition and diminishing profitability. In order to face this challenge, it is essential to understand the micro-economic realities of the interaction between content providers and connectivity access providers. In this paper, we unravel options and discuss the insights revealed by micro-economic modeling of the interaction between a retailer of online content and a broadband provider. We show that heterogeneity among consumers leads to heterogeneous outcomes for the firms even where average trends are clear. One of the main results is that the absence of commercial cooperation between the content and the broadband provider delivers bad outcomes in almost all cases. The economic theory underlying the analysis is consumer willingness-to-pay and the resulting economic surplus (often, Marshallian surplus) comprising of the consumer surplus and the producer surplus. It is assumed that the content product increases the cost of delivery of the broadband product due to increased network use. The parameters that are variable are (a) the correlation between consumer valuations of the two products and (b) the additional cost of broadband provision for users of the content product. The paper presents the results of extensive simulation models for different distributions of consumer valuations and incremental additional cost for content product users. Our discrete modelling approach differs from the more common approach of assuming a continuum of consumers (i.e. not only infinitely many but uncountably infinitely many!) and solving for an optimal expected outcome. Our first step is to solve the problem for a finite number of customers and a single allocation valuations (drawn from a specified distribution). This allows one to see what might happen in concrete cases. We then do this many times and compute averages which approximates the expected outcome in the continuum case, of course. This approach allows us to identify more detail than an expected outcome does. We would like to remind the reader than the expected outcome from the roll of a die is 31 2 which is never an actual outcome. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:itsb24:302480 |
| By: | Garcia-Murillo, Martha; MacInnes, Ian |
| Abstract: | The rapid evolution of information technologies has led to a society with worldwide connectivity, efficiency, and convenience. Yet these technological innovations are not free of perils, as they can also negatively impact our economic, political, and social well-being. This paper analyzes the tradeoffs between technological progress and its potential harms, particularly in the United States. Recognizing the historical benefits of digital technologies while also being mindful of their negative consequences, we highlight the complex market dynamics, political influences, and societal forces that determine whether policymakers can pass legislation and regulatory measures to mitigate the potential harm caused by disruptive innovations. The research question driving this paper is: How do market dynamics, political influences, and societal forces interact to shape the prospects of introducing effective legislation and regulatory measures for digital technologies in the United States? In the absence of legal frameworks, what alternative entities are there to mitigate a technology's negative impacts? The research methodology entailed a comprehensive analysis of the scholarly literature and a review of secondary sources related to digital technologies. Synthesizing insights from academic works, reports, and studies, this paper analyzes the multifaceted forces influencing the introduction of legislation and regulatory frameworks for digital technologies in the United States. |
| Keywords: | Digital regulation, social media, digital markets, algorithms, artificial intelligence |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:itsb24:302468 |
| By: | Laorrojwong, Benyathip; Makarathat, Natchaya |
| Abstract: | The Open RAN model has recently been put to the forefront of debate on how the open networking technologies would benefit the telecom operator, vendors and tech sectors in terms of competition, freedom, and openness. The Open RAN has introduced an open interface which allows telecom operators to choose their own combinations of hardware and software. In other words, Open RAN might be replacing the traditional/old model, which offers bundle hardware and software, already integrated , in a monolithic architecture. The traditional 5G tech architect uses proprietary equipment to connect devices to the network. This means all parts (hardware and software) of 5G network are manufactured by the same company. While this architecture guarant ees compatibility and operability of the network, it also leads to the conduct of monopolies in the market as well as technology dependency. The new invention of Open RAN model, in contrast, supports the disaggregation of hardware and software. In the simple terms, the operating system will come from Company A, antennas and cells will come from Company B, and a microchip will be used from Company C. This type of network architecture is designed to reduce the risk of dependencies and disrupt the nature of 5G monopolistic market. The initial purpose of the Open RAN, in this sense, is aimed at developing 5G network technology by using open interfaces, allowing operators to be able to use equipment from different manufacture. From the economics perspective, Open RAN model promotes competition and innovations, avoids the formation of tech oligopolies, diversifies suppliers and mitigates risks, and importantly leads to a decoupling of bi-polarization of the U.S. and Chinese technology. |
| Keywords: | Open-RAN, Economics, Competition, Geopolitics, Bi-polarization, Conflicts, Technology policy |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:itsb24:302455 |
| By: | Matilde Bombardini; Francesco Trebbi; Miao Ben Zhang |
| Abstract: | This article discusses recent methodological innovations in the area of cost and benefit assessment of government regulation, in both a prospective and retrospective sense. Much of the extant progress is presented on the front of private costs of compliance. Private benefits, social costs, and social benefits remain much less systematically organized and more arduous to quantitatively assess, mostly due to the difficulty of standardizing partial and general equilibrium counterfactuals. We offer a discussion of potential future methodological improvements in cost-benefit analysis. |
| JEL: | G28 K2 L50 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32955 |
| By: | Martin Peitz; Anton Sobolev |
| Abstract: | A seller can offer an experience good directly to consumers and indirectly through an intermediary. When selling indirectly, the intermediary provides recommendations based on the consumer’s match value and the prices at which the product is sold. The intermediary faces the trade-off between extracting rents from consumers who strongly care about the match value versus providing less informative recommendations but also serving consumers who do not. We analyze the allocative and welfare effects of prohibiting price parity clauses and/or regulating the intermediary’s recommender system. Prohibiting price parity clauses is always welfare decreasing in our model. |
| Keywords: | intermediation, digital platforms, price parity, recommender system, MFN clause, e-commerce |
| JEL: | L12 L15 D21 D42 M37 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_595 |
| By: | OECD |
| Abstract: | Competition authorities have developed various tools to detect cartels and substantiate the basis for opening investigations. Ex officio investigations, meaning investigations initiated by the authorities themselves, are derived from detection tools that require a higher level of proactivity from the agency, for instance, industry monitoring and cartel screenings. New technologies such as artificial intelligence also provide competition authorities with greater opportunities to improve their detection tools. This paper provides an overview of detection tools to launch ex officio cartel investigations, including recent trends and experiences from Latin America and the Caribbean. It concludes by highlighting the need for competition authorities to implement a variety of approaches to complement one another and enhance cartel detection. |
| Date: | 2024–09–19 |
| URL: | https://d.repec.org/n?u=RePEc:oec:dafaac:311-en |
| By: | Ihle, Hans; Marsden, Richard; Frizlen, Yasmine |
| Abstract: | The adoption of 4G and 5G technologies has led to a remarkable surge in mobile data consumption, prompting regulators worldwide to make substantial amounts of new spectrum available to mobile operators through spectrum auctions. This paper aims to examine the trends in spectrum pricing and to address the question of how much spectrum mobile networks will need in the long term. Spectrum auction prices should reveal the market value of spectrum which will provide an indication of its scarcity. Therefore, to address this question, the paper utilizes a global dataset of more than 400 spectrum auction prices from 2007 to 2023 to demonstrate that spectrum prices have generally declined over the past two decades. This decline suggests that while mobile data traffic has expanded, the release of new spectrum has generally kept pace and helped avoid capacity issues on mobile networks. In Section 2, we1 examine the trends for different types of spectrum, including low band, lower mid-band, and upper mid-band spectrum, which serve different purposes in mobile networks. The results indicate an overall decline in spectrum prices, with the steepest decline observed in low-band spectrum. This suggests that incremental coverage spectrum is no longer essential, as successive releases of this spectrum have adequately met market demands. Lower mid-band spectrum prices have also decreased, while prices for upper mid-band capacity bands have remained relatively stable, indicating their continued importance in providing capacity. In Section 3, we turn to mobile data consumption. Industry statistics generally show an accelerating growth rate in the early days of 4G, but a decline in the later 5G era. A possible implication is that data consumption is following an S-shaped curve typical for technological innovation. We fit a generalized logistics function to OECD data using least squares and then use it to forecast mobile data demand in the future. These forecasts are then compared to other projections which assume exponential growth. We find that the S-curve provides a more plausible path for mobile data growth, based on historical data, implying that exponential forecasts significantly overestimate future data consumption. Higher growth forecasts may only be justified if there is a significant future change in how we use phones, such as widespread adoption of data-intensive extended reality (XR)2 technology, This finding has significant implications for regulators planning future spectrum releases. Even with slowing data growth, the absolute expansion in data traffic carried by mobile networks over the next ten years will be substantial. Nevertheless, it may be possible to accommodate this with relatively modest increases in spectrum allocation for mobile, as opposed to the huge increases that would be required to support exponential growth in mobile traffic. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:itsb24:302457 |
| By: | Howell, Bronwyn; Potgieter, Petrus H. |
| Abstract: | This paper critically examines the effectiveness of spectrum set-asides as a policy tool to address distributional objectives in telecommunications across four diverse national contexts: Canada, New Zealand, South Africa, and the United States. Spectrum allocation is a crucial factor for the provision of telecommunications services and by extension, for citizens' participation in the digital economy. While economic theory supports auction-based allocations to maximize market efficiency, set-asides aim to facilitate access for disadvantaged groups or to stimulate competition. This study employs case studies from the selected countries to evaluate the impact of these set-asides on market efficiency, competition, and economic development. In Canada, set-asides intended to encourage new market entrants have led to higher spectrum costs and inefficiencies due to speculative behaviour. In New Zealand, allocations to the indigenous M¯aori population have raised concerns over long-term sector efficiency and capital accessibility. South Africa's policy mandates spectrum allocations to entities with significant ownership by historically disadvantaged persons, with mixed outcomes on market dynamics and social equity. Meanwhile, the United States' approach includes grants rather than direct spectrum set-asides, offering a potentially less distortive model. The findings suggest that while set-asides can support social objectives, they often introduce inefficiencies and fail to achieve the desired economic outcomes. The paper concludes by discussing the implications for future spectrum policy, advocating for careful consideration of the trade-offs between equity and efficiency in spectrum management. |
| Keywords: | Spectrum Allocation, Telecommunications Policy, Digital Economy, Market Efficiency, Competitive Supply, Economic Development, Regulatory Strategies |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:itsb24:302463 |
| By: | Pablo D. Azar; Adrian Casillas; Maryam Farboodi |
| Abstract: | This paper considers the “DeFi intermediation chain”—the market structure that underlies the creation and distribution of ETH, the native cryptocurrency of Ethereum—to examine how information asymmetry shapes intermediation rents. We argue that using proof-of-stake blockchain technology in DeFi leads to a novel limit to arbitrage, arising from the tension between arbitrageurs' privacy needs and blockchain transparency. Using a new dataset which distinguishes private and public transactions in Ethereum, we find that a 1% increase in private information advantage leads to a 1.4% increase in intermediaries' profit share. We develop a dynamic bargaining model that predicts information market power stems exclusively from participants' private information advantage. Our analysis illustrates how blockchain technology can sustain arbitrage opportunities despite low entry barriers. |
| JEL: | C83 D82 D86 G23 G29 L86 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32949 |
| By: | D’Annunzio, Anna; Russo, Antonio |
| Abstract: | We study transaction fees applied by marketplace platforms where sellers (e.g., app developers) adopt freemium pricing. An ad valorem transaction fee reduces quality distortions introduced by the price-discriminating seller, thereby increasing consumer surplus. Moreover, a small fee increases welfare, implying that the agency model may be socially preferable to integration between platform and seller. However, the platform may set the equilibrium fee above the socially optimal level. Providing devices needed to access the marketplace (e.g., phones) induces the platform to raise the fee, whereas providing a product that competes with the seller induces a lower fee. |
| JEL: | D4 D21 L11 H22 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:129704 |
| By: | Anton Pichler; Jan Hurt; Tobias Reisch; Johannes Stangl; Stefan Thurner |
| Abstract: | The Russian invasion of Ukraine on February 24, 2022 entailed the threat of a drastic and sudden reduction of natural gas supply to the European Union. This paper presents a techno-economic analysis of the consequences of a sudden gas supply shock to Austria, one of the most dependent countries on imports of Russian gas. Our analysis comprises (a) a detailed assessment of supply and demand side countermeasures to mitigate the immediate shortfall in Russian gas imports, (b) a mapping of the net reduction in gas supply to industrial sectors to quantify direct economic shocks and expected relative reductions in gross output and (c) the quantification of higher-order economic impacts through using a dynamic out-of-equilibrium input-output model. Our results show that potential economic consequences can range from relatively mild to highly severe, depending on the implementation and success of counteracting mitigation measures. We find that securing alternative gas imports, storage management, and incentivizing fuel switching represent the most important short-term policy levers to mitigate the adverse impacts of a sudden import stop. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2409.07981 |
| By: | OECD |
| Abstract: | Interim measures are enforcement tools available to competition authorities to prevent harm to competition that may occur before a final decision on the existence of an infringement. Most often these decisions are related to an ongoing business practice that may potentially constitute an abuse of dominance infringement, when a dominant market player illegally engages in practices limiting competition. In Latin America and the Caribbean (LAC) countries, most competition authorities dispose of interim measures in their legal frameworks and many have used them in past years (e.g. Argentina, Brazil, Chile, Colombia, Dominican Republic, Paraguay and Peru). This paper provides an overview of the state of play of interim measures in the region covering legal frameworks, recent enforcement experiences, as well as challenges and particularities of LAC countries. The paper highlights that interim measures represent a powerful tool for competition authorities and should be carefully used to mitigate enforcement errors and related reputation risks. |
| Date: | 2024–09–19 |
| URL: | https://d.repec.org/n?u=RePEc:oec:dafaac:312-en |