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on Regulation |
| By: | McRae, Shaun D; Wolak, Frank A |
| Abstract: | High electricity prices hinder efforts to decarbonize through electrification. In this paper, we demonstrate the inefficiencies of the retail electricity tariffs for both residential and non residential consumers in Colombia. We show the low take up for a 2012 policy in Colombia that reduced electricity prices for industrial users. As an alternative, we propose a novel tariff design that eliminates customer class distinctions, aligns prices with marginal costs, and introduces a fixed charge based on estimated willingness to pay. Using data for the entire population of electricity consumers in Colombia, we illustrate the tariff’s potential to eliminate existing distortions in electricity pricing across customer classes while limiting bill increases for low income households. |
| Keywords: | Energía, |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:dbl:dblwop:2266 |
| By: | Gomes, Renato; Lefouili, Yassine |
| Abstract: | This paper explores the pricing of ancillary payment services by platforms and its implications for welfare. We distinguish between two types of platforms: vertical platforms that operate their own closed payment schemes, and stacked platforms that offer payment services through open schemes operated by third parties. We analyze the impact of a regulation mandating platforms to provide access to third-party payment services and examine the regulation of interchange fees within the context of stacked platforms. |
| Keywords: | platforms, payment services, ancillary services, regulation, interoperability, interchange fee |
| JEL: | L51 L86 E42 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:129914 |
| By: | Andrew J. Hinchberger; Mark R. Jacobsen; Christopher R. Knittel; James M. Sallee; Arthur A. van Benthem |
| Abstract: | The marginal cost of electricity fluctuates hour-by-hour, yet retail customers typically face flat prices. Using data from all seven US wholesale markets and a new method to evaluate alternative rates set in advance that accounts for equilibrium price effects, we estimate efficiency gains from time-varying price schedules that better align price with cost. We have three main results. First, time-of-use rates and critical-peak pricing, the two most common time-varying rate plans, each correct about 10% of mispricing. Second, complex rate structures based on historical prices often backfire. Third, real-time pricing with price ceilings can capture most potential efficiency gains. |
| Keywords: | electricity, time-of-use pricing, critical- peak pricing, real-time pricing, efficiency |
| JEL: | L94 L97 Q41 Q48 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11355 |
| By: | Roxana Dumitrescu; Redouane Silvente; Peter Tankov |
| Abstract: | We study the price impact of storage facilities in electricity markets and analyze the long-term profitability of these facilities in prospective scenarios of energy transition. To this end, we begin by characterizing the optimal operating strategy for a stylized storage system, assuming an arbitrary exogenous price process. Following this, we determine the equilibrium price in a market comprising storage systems (acting as price takers), renewable energy producers, and conventional producers with a defined supply function, all driven by an exogenous demand process. The price process is characterized as a solution to a fully coupled system of forward-backward stochastic differential equations, for which we establish existence and uniqueness under appropriate assumptions. We finally illustrate the impact of storage on intraday electricity prices through numerical examples and show how the revenues of storage agents may evolve in prospective energy transition scenarios from RTE, the French energy electricity network operator, taking into account both the increasing penetration of renewable energies and the self-cannibalization effect of growing storage capacity. We find that both the average revenues and the interquantile ranges increase in all scenarios, highlighting higher expected profits and higher risk for storage assets. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.12495 |
| By: | Ajayi, Victor (Energy Policy Research Centre, University of Cambridge); Andrew Burlinson, Andrew (University of Sheffield); Giulietti, Monica (Nottingham University Business School); Waterson, Michael (University of Warwick & CAGE research centre) |
| Abstract: | In April 2022, consumers in Great Britain (GB) witnessed a 54% increase in the energy price cap, as a result of Russia’s invasion of Ukraine on February 24th, which sent wholesale gas prices spiralling across Europe. We leverage high-frequency data collected by the Smart Energy Research Lab, a representative panel containing daily gas and electricity data for around 13, 000 households in Great Britain between January 2021 and December 2023 to investigate the implications. We exploit several datasets linked to the panel data which include time-varying and cross-sectional information. We rely on two price shocks : 1) in October 2021 a wave of energy retail suppliers leaving the industry. At this time over two million consumers on fixed contracts were forced to join a new supplier and pay a variable tariff, and 2) these consumers were exposed to a second price shock caused by the Ukraine-Russia conflict which fed through April 2022’s energy price cap. Exploiting this pseudo-natural experiment, we use a difference-in-difference framework to estimate average treatment effects on this group of consumers and find that they would have consumed an additional 10 percentage points more electricity and 16 percentage points more gas had their prices remained fixed. These estimates are robust to a battery of robustness checks and point towards a significant loss in welfare for consumers on variable tariffs in the early stages of the energy price crisis |
| Keywords: | Difference-in-differences ; energy consumption ; energy crisis JEL Codes: L94 ; E31 ; D12 ; I19 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1523 |
| By: | Gordon Jochem Klein; Ralph Bernd Siebert; Ralph Siebert |
| Abstract: | Our study provides empirical insights into the extent to which differential market demographics and differential competition environments affect product prices. Using big data, we find that price variations are caused mainly by differential competitive environments. More specifically, we find that Brand Competition Within Stores exerts the largest downward pressure on prices. A 10 percent increase in the number of brands reduces prices by about 10 percent. Product Competition Within Stores exerts the second-largest price effect, followed by Store Competition Within Local Markets. Moreover, retailers operating multiple stores in a local market coordinate prices to attenuate competitive downward pressure on prices. |
| Keywords: | anti-inflammatory drugs, competition, market determinants, price effects, pain killers |
| JEL: | D40 D90 L10 L20 M20 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11344 |
| By: | Payal Malik (Indian Council for Research on International Economic Relations (ICRIER)); Bhargavee Das; Harishankar Thayyil Jagadeesh |
| Abstract: | Cloud computing is the engine powering the Artificial Intelligence (AI) revolution and several other emerging technologies. While current demand and expected market growth have enabled the entry of new players, the market remains highly concentrated, with a few large cloud service providers who enjoy first-mover advantage and leverage certain common characteristics of digital markets such as economies of scale, network effects and conglomerate effects. This report examines these economic characteristics in the context of cloud computing and provides a comprehensive analysis of the competitive landscape of the market in India and worldwide. A key focus of the report is on the competition concerns that have been highlighted by competition authorities across jurisdictions, such as egress fees, committed spending discounts, tying and bundling, limited interoperability, and application portability. This report undertakes a discussion of these technical and financial market barriers within the Indian context through secondary research and stakeholder consultations. It highlights the ways in which the Indian market follows global trends. Finally, the report explores possible options for enhancing competition. |
| Keywords: | Cloud Computing, Competition, Digital Markets, Digital Public Infrastructure, icrier |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:bdc:report:24-r-04 |
| By: | Lukas Brunninger (Department of Economics, Vienna University of Economics and Business); Markus Dertwinkel-Kalt (University of Münster and Max Planck Institute for Collective Goods); Klaus Gugler (Department of Economics, Vienna University of Economics and Business); Sven Heim (Mines Paris – PSL, ZEW – Leibniz Centre for European Economic Research Mannheim and CEPR) |
| Abstract: | In the aftermath of the Russian invasion in Ukraine and rising gas prices, the “gas Price brake” was implemented in Germany. We employ a difference-in-differences Approach and analyze data on offered gas contracts from two countries with comparable gas markets, where one country (Germany) has implemented the gas price brake and the other (Austria) has not. Our findings support the theoretical prediction, indicating that the gas price brake led to an increase in total annual gas costs in Germany. This increase is entirely attributable to incumbents increasing counterfactual gas prices by up to 90%. Non-incumbents do not ’milk‘ the brake. |
| Keywords: | Energy Policy, Gas Price Brake, Moral Hazard, Incumbents |
| JEL: | D04 Q40 Q48 L50 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp372 |
| By: | Frédéric Marty (Université Côte d'Azur, France; GREDEG CNRS) |
| Abstract: | L'articulation entre interventions ex ante et ex post dans le cadre de l'encadrement européen des marchés numériques peut se concevoir de trois façons. La première est relative à la temporalité de l'exercice des contrôles concurrentiels, comme le montre le cas du contrôle des concentrations entre mécanisme de notification ex ante et possibilité de contrôle ex post. La deuxième porte sur les modalités d'application des règles de concurrence. Doivent-elles reposer sur des règles définies ex ante ou résulter d'une balance des effets ex post ? La troisième que nous considérons dans ce texte est celui de l'articulation entre interventions réglementaires et activation des règles de concurrence. Nous considérons cette question sous l'angle de l'économie du droit dans un contexte spécifique, celui de l'articulation entre les différents règlements européens relatifs au secteur numérique et du droit antitrust de l'U.E. |
| Keywords: | économie numérique, régulation, règles de concurrence |
| JEL: | K21 K23 L12 L13 L43 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:gre:wpaper:2024-29 |
| By: | Paul Heidhues; Mats Köster; Botond Kőszegi; Botond Köszegi |
| Abstract: | We develop a theory of digital ecosystems built on the premise that a multi-market firm can steer users it has in one market toward its products in other markets. Due to this “cross-market leverage, ” a leader in an “access-point” market (where users begin their online journeys) derives a high value from offering services in connected markets (where users continue their journeys), and can thus make profitable takeovers. Indeed, because the firm has the outside option of acquiring, and steering users toward, its target’s competitor, it can take over the target at a discount. In contrast, other firms have no or smaller incentives for takeovers, explaining why ecosystems grow out of market leaders at access points. Conversely, cross-market leverage also implies that once an ecosystem has grown, it has an increased value of controlling access points, so it may go to great lengths to dominate these markets. Our theory suggests that ecosystems have mixed implications for consumer welfare. Under plausible assumptions, a to-be ecosystem takes over market leaders, and this consolidation of good services across markets benefits consumers in the short run. But an ecosystem’s takeovers and dominance of access points lower incentives for entry and innovation, and lower the efficiency of access-point markets with superior alternatives. Hence, the long-run welfare implications of ecosystems are often negative. |
| Keywords: | digital ecosystems, takeover, contestability, entry, envelopment, default effects, steering |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11332 |
| By: | Dehez, Pierre (Université catholique de Louvain, LIDAM/CORE, Belgium); Ferey, Samuel (University of Lorraine) |
| Abstract: | Leniency programs in antitrust investigations exist in Europe since the late nineties. They cover secret agreements and concerted practices between companies, and provide total or partial immunity to companies reporting evidence. This raises the question of assessing correctly the contribution of each company that take part in a leniency program. This question is formalized within a cooperative game with transferable utility. The resulting game being convex, its core is nonempty and contains the Shapley value in its center. It defines a reference allocation that treats the participants symmetrically. In practice, companies report sequentially leading to allocations that are vertices of the core. |
| Keywords: | Competition law ; leniency programs ; core ; Shapley value |
| JEL: | L40 K21 C71 |
| Date: | 2024–05–13 |
| URL: | https://d.repec.org/n?u=RePEc:cor:louvco:2024008 |
| By: | Joseph E. Aldy |
| Abstract: | The Inflation Reduction Act could deliver more than $1 trillion in tax expenditures and outlays targeting clean energy deployment, but considerable uncertainty characterizes the economic, emissions, energy, and fiscal implications of the law. I review the features of the political system governing implementation, the regulatory system overlaying performance standards, the innovation responding to IRA incentives, and the energy networks in which IRA-supported investments operate to identify the key factors influencing IRA’s outcomes. Drawing from past research and policy experience, I illustrate how these factors could play out and how future program evaluation could reduce uncertainty and inform better climate policy. |
| JEL: | H23 Q48 Q58 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33092 |
| By: | Susan Athey; Juan Camilo Castillo; Bharat Chandar |
| Abstract: | Online marketplaces have adopted new quality control mechanisms that can accommodate a flexible pool of providers. In the context of ride-hailing, we measure the effectiveness of these mechanisms, which include ratings, incentives, and behavioral nudges. Using telemetry data as an objective measure of quality, we find that drivers not only respond to user preferences but also improve their behavior after receiving warnings about their low ratings. Furthermore, we use data from a randomized experiment to show that informing drivers about their past behavior improves quality, especially for low-performing drivers. Lastly, we find that UberX drivers exhibit behavior comparable to that of UberTaxi drivers, suggesting that Uber’s new quality control mechanisms successfully maintain a high level of service quality. |
| JEL: | J28 J48 L50 L91 R41 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33087 |
| By: | Hennessy, David; Lapan, Harvey |
| Abstract: | Market concentration ratios are popular statistics for characterizing the extent of market dominance in an imperfectly competitive market, but these ratios may not agree when comparing two markets. Neither do they necessarily agree with the Herfindahl-Hirschman or entropy indices. This letter compares two Cournot oligopoly markets in which firms have constant unit costs. It is shown that the majorization pre-ordering on normalized marketing margin vectors is both necessary and sufficient for all aforementioned indices to agree on which is the more concentrated market. |
| Date: | 2024–10–29 |
| URL: | https://d.repec.org/n?u=RePEc:isu:genstf:202410291651270000 |
| By: | Yunan Ji; Parker Rogers |
| Abstract: | We investigate the effects of substantial Medicare price reductions in the medical device industry, which amounted to a 61% decrease over 10 years for certain device types. Analyzing over 20 years of administrative and proprietary data, we find these price cuts led to a 25% decline in new product introductions and a 75% decrease in patent filings, indicating significant reductions in innovation activity. Manufacturers decreased market entry and increased outsourcing to foreign producers, associated with higher rates of product defects. Our calculations suggest the value of lost innovation may fully offset the direct cost savings from the price cuts. We propose that better-targeted pricing reforms could mitigate these negative effects. These findings underscore the need to balance cost containment with incentives for innovation and quality in policy design. |
| JEL: | H51 I18 O31 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33083 |
| By: | OECD |
| Abstract: | The increasing need in certain jurisdictions to engage in a “more economic” or an “effects-based” approach to establish competition law violations have raised the question of whether the standard of proof and the related evidentiary standard are set to a level which make it excessively difficult for competition authorities to prove their cases. But what has led to this widespread perception? Is there something that could or should be done? While this paper does not seek to provide definitive answers or recommend specific actions, it does provide an overview of the current policy landscape and an analysis of the evidentiary elements for decision makers . This paper also presents a practical perspective of the standard and burden of proof that could be useful for competition authorities in building their cases. |
| Date: | 2024–11–12 |
| URL: | https://d.repec.org/n?u=RePEc:oec:dafaac:318-en |
| By: | Rösl, Gerhard; Seitz, Franz |
| Abstract: | We analyze the role of a well-functioning cash infrastructure for the stabilizing role of cash and the resilience of cash cycles. For that purpose, experiences from developed countries with low and high cash usage are assessed by distinguishing between demand and supply factors to demonstrate that cash has to keep a vital role as a means of payment not only to maintain its status of a highly liquid store-of-value but also as an efficient tool to combat crises. To do so, access, availability, acceptance, and affordability of cash are crucial building blocks of a robust cash infrastructure. Important aspects are also the public good characteristics of the "institution" cash which should encourage central banks to re-evaluate their position of "neutrality" as a player in the payments market to a more active role. |
| Abstract: | Wir analysieren die Rolle einer gut funktionierenden Bargeldinfrastruktur für die stabilisierende Rolle von Bargeld und die Resilienz des Bargeldkreislaufs. Zu diesem Zweck werden Erfahrungen aus entwickelten Ländern mit geringer und hoher Bargeldnutzung ausgewertet und zwischen Nachfrage- und Angebotsfaktoren unterschieden. Es wird abgeleitet, dass Bargeld als Zahlungsmittel wichtig ist, damit es als hochliquides Wertaufbewahrungsmittel fungieren kann und als effizientes Instrument zur Krisenbekämpfung zur Verfügung steht. Dementsprechend sind Zugang, Verfügbarkeit, Akzeptanz und Erschwinglichkeit von Bargeld entscheidende Bausteine einer robusten Bargeldinfrastruktur. Wichtige Aspekte sind auch die Öffentliches-Gut-Eigenschaften der "Institution" Bargeld, die impliziert, dass Zentralbanken ihre "neutrale" Position als Akteur im Zahlungsverkehr überdenken sollten, um eine aktivere Rolle bei der Unterstützung von Bargeld einzunehmen. |
| Keywords: | Cash, banknotes, ATM, cash infrastructure |
| JEL: | E41 E51 E58 O57 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:hawdps:305297 |
| By: | Rabi Mohtar |
| Abstract: | The fundamental role that water resources play in human development has been highlighted in multiple ways; the United Nations SDGs underline 17 different goals and over a hundred targets to be achieved by 2030. Out of 169 SDG targets, 59 were found to have direct links and synergies with the water goal SDG6 (UN Water, 2016). Careful policy making and interventions need to be implemented to avoid conflict among sectors and tradeoffs must be well established. The Integrated Water Resources Management (IWRM – since 1992) was adopted by most countries and made significant strides in formulating a good foundation for policies and synergies between stakeholders. Nevertheless, IWRM concepts need to be adaptive and revisited to achieve the Agenda 2030 targets. This policy brief introduces water management as a system of interactions between water and other vital resources including food, energy, and health among others; it presents several concepts to bring about policy coherence and quantitative protocols for a more cohesive implementation of policies and tradeoffs in the water sector and beyond. |
| Date: | 2023–02 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:pbcoen:pb_08_23 |