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on Regulation |
| By: | Hashimzade, Nigar; Hatsor, Limor; Jelnov, Artyom |
| Abstract: | Recent antitrust regulations in several countries have granted exemptions for col- lusion aimed at achieving environmental goals. Firms can apply for exemptions if collusion helps to develop or to implement costly clean technology, particularly in sec- tors like renewable energy, where capital costs are high and economies of scale are significant. However, if the cost of the green transition is unknown to the competition regulator, firms might exploit the exemption by fixing prices higher than necessary. The regulator faces the decision of whether to permit collusion and whether to commission an investigation of potential price fixing, which incurs costs. We fully characterise the equilibria in this scenario that depend on the regulator’s belief about the high cost of green transition. If the belief is high enough, collusion will be allowed. We also identify conditions under which a regulator’s commitment to always investigate price fixing is preferable to making discretionary decisions. |
| Keywords: | policy, antitrust, collusion, environment |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:305321 |
| By: | David P. Brown; Lucija Muehlenbachs |
| Abstract: | To avoid electric-infrastructure-induced wildfires, millions of Californians had their power cut for hours to days at a time. We show that rooftop solar-plus-battery-storage systems increased in zip codes with the longest power outages. Rooftop solar panels alone will not help a household avert outages, but a solar-plus-battery-storage system will. Using this fact, we obtain a revealed-preference estimate of the willingness to pay for electricity reliability, the Value of Lost Load, a key parameter for electricity market design. Our estimate, with an average of $4, 980/MWh, suggests California’s wildfire-prevention outages resulted in losses from foregone consumption of $406 million to residential electricity consumers. |
| Keywords: | batteries, reliability, averting expenditures, power outages, Value of Lost Load |
| JEL: | Q40 Q54 Q58 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11377 |
| By: | Mahirah Mahusin (Economic Research Institute for ASEAN and East Asia (ERIA)); Hilmy Prilliadi (Economic Research Institute for ASEAN and East Asia (ERIA)) |
| Abstract: | ASEAN’s digital economy is growing rapidly, offering both significant opportunities and challenges. Ensuring a competitive digital market is essential for fostering innovation, reducing costs, and enhancing product quality and choice for consumers and businesses, particularly MSMEs. This policy brief assesses the current digital market competition landscape in ASEAN, emphasising the need for robust competition policies to mitigate anti-competitive behaviours and establish a level playing field. It discusses key initiatives like the ASEAN Competition Action Plan (ACAP) 2025 and the ASEAN Guidelines for Sharing Merger Cases, while examining the complexities of digital markets, including the influence of dominant platforms, algorithmic impacts, and data privacy considerations. Policy recommendations focus on aligning provisions in the ASEAN Digital Economy Framework Agreement (DEFA) with regional standards and international best practices, enhancing regulatory capabilities, fostering regional cooperation, and promoting consumer education and protection. Latest Articles |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:pb-2024-07 |
| By: | Piyush Akimitsu |
| Abstract: | Do price regulations lead to inefficiencies and trade loss? The answer depends on the type of regulation, monetary and non-monetary factors influencing demand, technological factors affecting supply elasticities, difference between pre-regulation and expected post-regulation prices, and geographical area. State-level variations in telehealth parity laws provide a unique opportunity to study the effects of Price Controls and Cost Controls on healthcare service quantity, proxied by physician count, across metro and non-metro areas, with broadband as a technological mediator. At the micro level, Price Controls distort the input mix, causing production inefficiency and rotating the supply curve. Cost Controls change the consumption mix, causing consumption inefficiency and rotating the demand curve. This results in equilibrium quantity shifts causing allocative inefficiency in healthcare provision, signified by physician redistribution at the macro level. The micro-founded non-price competition models predicts shifts from unregulated to regulated equilibrium quantities under various combinations of Price Control and Cost Control types. Empirical analysis supports these predictions, showing that a Price Ceiling or Price Floor positively affects physician count in metro areas but negatively in non-metro areas. Conversely, Cost Parity has a negative effect in metro areas, while a Cost Ceiling positively impacts physician count in both regions. When examining combinations of different types of Price and Cost Controls, Cost Parity tends to dominate with a net negative effect, whereas a Cost Ceiling amplifies the positive effect of a Price Ceiling. The findings challenge the conventional narratives and underscore the role of regional disparities and technology in shaping policy outcomes. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.22616 |
| By: | G. Spano |
| Abstract: | This paper examines the interplay between market power and financial frictions, highlighting the bidirectional relationship between firms' access to finance and competitive dynamics. We develop a theoretical model where firms invest in technology to enhance product quality, which increases their market power. In our model, firms with greater market power can invest more, thereby reinforcing and accumulating additional market power in subsequent periods. However, the general equilibrium effects of reducing financial frictions is not clear. Specifically, when financial frictions are relaxed, firms can invest more, enabling them to produce at higher margins. This results in an increase in aggregate average market power. On the other hand, a reduction in financial frictions could also facilitate the entry of new firms into the market, thereby increasing competitive pressure. Our results indicate that an increase in investment, driven by reduced financial frictions, does not necessarily enhance competition unless the entry of new firms accompanies it. Through empirical analysis, using data from publicly listed U.S. firms, we test that firms with more market power are subjected to less financial frictions pressures in the subsequential periods. Empirical evidence also suggests higher levels of market power in the earlier period are correlated with less financial constraints in later periods. |
| Keywords: | technology ladder;investment;financial frictions;Market power |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:cns:cnscwp:202422 |
| By: | Mark Colas; Emmett Reynier |
| Abstract: | We study the optimal design of income-contingent subsidies for residential solar panels. Using remotely sensed data on solar panel installations across the contiguous US and a border-discontinuity design, we estimate that the responsiveness of installation rates to subsidies is strongly decreasing in income. Using these empirical elasticities, we estimate a model that embeds a solar panel installation decision into a dynamic consumption/savings framework with borrow-ing constraints. Counterfactual simulations reveal that switching to production-maximizing income-contingent subsidies leads to a three-fold increase in public funds received by low-income households and a 2.4% increase in national solar production. Means-tested subsidies are justified on both equity and efficiency grounds. |
| Keywords: | rooftop solar, subsidies, renewable energy |
| JEL: | H21 H23 Q42 Q48 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11378 |
| By: | OECD |
| Abstract: | Structural presumptions in antitrust law refer to the concept that certain market structures, including high market shares and concentration, may presumptively harm competition and consumers. Once established by competition authorities or courts, the burden of proof typically shifts to the firms which need to rebut these presumptions. The use of structural presumption in antitrust enforcement continues to animate debates among competition authorities, academics and practitioners, reflecting different views on their relevance, application and accuracy when assessing potential anticompetitive practices. This paper explores how the use of structural presumptions may enable competition authorities to simplify complex issues related to market analysis and accelerate the competitive process, while maintaining the required degree of legal certainty to achieve the desired outcome. These mechanisms can ultimately make competition enforcement more predictable, transparent and efficient. Yet their use may also increase potential error costs, requiring competition authorities to consider trade-offs between different enforcement strategies (e.g. certainty, administrability and efficiency in decision-making versus accuracy). This paper also analyses the balancing of structural presumptions against detailed economic analysis which can be crucial to ensure fair and effective antitrust enforcement. |
| Date: | 2024–11–09 |
| URL: | https://d.repec.org/n?u=RePEc:oec:dafaac:317-en |
| By: | OECD |
| Abstract: | Competition authorities rarely consider democracy in their day-to-day functioning, yet the notion that competition is important for the maintenance of a healthy democracy was a core part of the motivation for introducing antitrust laws in some jurisdictions. This paper explores the link between competition and democracy and the potential for reduced competition to allow firms to acquire economic power. When economic power grows large, firms may be able, through mechanisms such as lobbying or political donations, to convert it into political power, allowing them to influence and affect political outcomes independent of democratic will. However, the link between competition and economic power is complex and further research is warranted. Furthermore, the paper identifies several approaches to the role of democracy within competition law, arguing irrespective of any changes in policy, increased competition benefits democracy and provides another reason for robust and resourced competition policy to champion and preserve competition. |
| Date: | 2024–11–07 |
| URL: | https://d.repec.org/n?u=RePEc:oec:dafaac:316-en |
| By: | OECD |
| Abstract: | The swift evolution of AI technologies calls for policymakers to consider and proactively manage AI-driven change. The OECD’s Expert Group on AI Futures was established to help meet this need and anticipate AI developments and their potential impacts. Informed by insights from the Expert Group, this report distils research and expert insights on prospective AI benefits, risks and policy imperatives. It identifies ten priority benefits, such as accelerated scientific progress, productivity gains and better sense-making and forecasting. It discusses ten priority risks, such as facilitation of increasingly sophisticated cyberattacks; manipulation, disinformation, fraud and resulting harms to democracy; concentration of power; incidents in critical systems and exacerbated inequality and poverty. Finally, it points to ten policy priorities, including establishing clearer liability rules, drawing AI “red lines”, investing in AI safety and ensuring adequate risk management procedures. The report reviews existing public policy and governance efforts and remaining gaps. |
| Keywords: | AI, AI futures, AI safety, artificial intelligence |
| Date: | 2024–11–14 |
| URL: | https://d.repec.org/n?u=RePEc:oec:comaaa:27-en |
| By: | Ginger Zhe Jin; Ziqiao Liu; Liad Wagman |
| Abstract: | Using data on Software Development Kits (SDKs), we study SDKs in Android apps vis-à-vis the adoption of the General Data Protection Regulation (GDPR) by the European Union in May 2018. Relative to US-only apps, the number of non-Google SDKs used per app in 5 major European countries (EU5) exhibits a 1.3% decline in EU5-only apps after GDPR, and a 6.3% decline in apps multihoming US and EU5. These effects are mostly driven by lower-ranked apps. Using apps’ monthly active users as weights in computing average user exposure to SDKs in app category and country groups, we find no significant change in the average SDK exposure in EU5-only relative to US-only apps. The only significant change in multihoming apps is a 4.2% drop in exposure to SDKs developed by minor SDK providers, although SDKs from Google and major SDK providers were independently assessed as riskier than those from minor SDK providers. |
| JEL: | D22 D8 L15 L51 L86 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33099 |
| By: | Jeon, Doh-Shin; Ichihashi, Shota; Kim, Byung-Cheol |
| Abstract: | We study a mechanism design problem of a monopoly platform that matches content of varying quality, ads with dierent ad revenues, and consumers with heterogeneous tastes for content quality. The optimal mechanism balances revenue from advertising and revenue from selling access to content: Increasing advertising revenue requires serving content to more consumers, which may reduce access revenue. Contrary to the standard monopolistic screening, the platform may serve content to consumers with negative virtual values while, to reduce information rents, limiting their access to higher-quality content. Then, an increase in ad protability reduces its incentive to invest in content quality. |
| JEL: | D42 D82 L15 O31 |
| Date: | 2024–11–13 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:129923 |
| By: | John Asker; Allan Collard-Wexler; Charlotte De Canniere; Jan De Loecker; Christopher R. Knittel |
| Abstract: | Market power reduces equilibrium quantities and distorts production, typically causing welfare losses. However, as Buchanan (1969) noted, market power may mitigate overproduction from negative externalities. This paper examines this in the global oil market, where OPEC’s market power affects oil production and carbon intensity. We estimate that from 1970 to 2021, OPEC’s market power reduced emissions by over 67 GtCO2, equating to $4, 073 billion in climate damages and 17.8% of the carbon budget needed for the 1.5◦ C Paris Agreement target. This environmental benefit outweighs the welfare loss from distorted production allocation. |
| JEL: | L12 Q41 Q54 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33115 |
| By: | Astebro, Thomas B. (HEC Paris); Penalva, José |
| Abstract: | The crowd is usually wise but can be subject to manipulation by insiders. We use internal administrative records from a leading European crowdfunding platform to study platform governance on two-sided crowdfunding platforms. Founders and regular investors naturally have different incentives with their investments. Consistent with model predictions, founders appear to try to exploit regular investors' sensitivity to the public history of a campaign by making anonymous self-investments. This could distort regular investors' belief formation. Founders tend to avoid and regular investors typically do not find public self-investments credible. To make crowdfunding even more attractive for early-stage financing, platforms could consider increasing the transparency of large self-investments. |
| Keywords: | non-price strategies; platform governance; two-sided platforms; wisdom of the crowd; information manipulation |
| JEL: | D83 G24 G41 L26 |
| Date: | 2024–01–09 |
| URL: | https://d.repec.org/n?u=RePEc:ebg:heccah:1499 |
| By: | Commander, Simon (IE Business School, Altura Partners); Estrin, Saul (London School of Economics); Thomas, Naveen (O.P. Jindal Global University); Lingineni, Varun (London School of Economics) |
| Abstract: | We analyse changes in market structure in India between 2000 and 2020 using a rich dataset at high levels of disaggregation. We examine the extent to which business groups – notably family-owned groups – have maintained dominant market positions in the Indian economy. We focus on two key dimensions. The first is the extent of concentration in markets and market shares by industry. The second concerns the dynamics and the extent to which business groups have focussed on consolidating their position in specific, narrow sectors or, rather, entered new sectors and diversified. We find that while market concentration has been falling, a bloc of high concentration sectors remains. Further, diversification has been actively pursued across sectors by most business groups. While this points to greater competition among business groups, the ratio of revenues to variable costs – a measure of the markup – has shifted upwards, particularly after 2013. The weight and persistence of these large business groups in the economy, as measured by the ratio of their revenues to GDP, has also increased. Finally, we discuss possible policy options. |
| Keywords: | market concentration, India, business groups, Hirschman Herfindahl Indices, diversification |
| JEL: | D22 L1 L11 O14 O25 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17428 |
| By: | Brüll, Eduard; Rostam-Afschar, Davud; Schlenker, Oliver |
| Abstract: | We study how the threat of entry affects service quantity and quality of general practitioners (GPs). We leverage Germany's needs-based primary care planning system, in which the likelihood of new GPs reduces by 20 percentage points when primary care coverage exceeds a cut-off. We compile novel data covering all German primary care regions and up to 30, 000 GP-level observations from 2014 to 2019. Reduced threat of entry lowers patient satisfaction for incumbent GPs without nearby competitors but not in areas with competitors. We find no effects on working hours or quality measures at the regional level including hospitalizations and mortality. |
| Keywords: | Entry regulation, general practitioners, healthcare provision, threat of entry, regression discontinuity design |
| JEL: | I11 I18 J44 J22 L10 L22 R23 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cexwps:305253 |
| By: | Kalliyil, Muneer (Indian Institute of Management Bangalore); Sahoo, Soham (Loughborough University) |
| Abstract: | This study examines how restricted access to microfinance by households affects children's learning outcomes, utilizing a unique natural experiment that halted all microfinance operations in Andhra Pradesh (AP), India, in 2010. The analysis exploits quasi-random variation in district-level exposure to the shock in states other than AP, as the regulation affected lenders' liquidity nationwide. Using difference-in-differences and event study designs, we find a significant and persistent decline in children's learning outcomes. The restoration of credit access does not fully reverse these effects, highlighting the long-term consequences of short-term financial disruptions. As plausible mechanisms, we find a shift in enrollment from private to government schools, lower household spending on education, reduced food expenditure impacting nutrition, and a decline in mothers' employment. Heterogeneity analysis reveals that the adverse effects were more prominent for girls and younger children. By focusing on the effects of regulatory restrictions rather than micro-finance service provision, this study complements existing literature and provides a more comprehensive understanding of the socioeconomic impacts of microfinance. |
| Keywords: | microfinance regulation, credit constraint, learning outcomes, schooling, education, India |
| JEL: | E51 G21 G28 I2 J16 R51 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17404 |
| By: | Djedjiga KACHENOURA,; David CHETBOUN,; Marine LAGARDE,; Laurent MÉLÈRE,; Damien SERRA |
| Abstract: | In 2015, in the run-up to COP16 in Paris, the speech by Mark Carney, then Governor of the Bank of England and mandated by the G20's Financial Stability Board, made history. He warned of the importance of financial climate risks for the stability of financial institutions and the financial system as a whole. The political burden of transition was left to governments, provided it was orderly, while the responsibility for stability fell to regulators and central banks. Finance”, informed by extra-financial disclosure regimes, would drive demand as a provider of capital. These disclosure regimes were to be initiated by private players and supported by regulators. Mr. Carney feared, however, that they would lack coherence, comparability and clarity. Since then, these schemes have proliferated, covering both risks and the alignment of financial flows with the Paris Agreement. Nevertheless, this “theory of change” and the division of responsibilities between players remain unclear and ambiguous. Financial regulators need to work together to make these different regimes interoperable and clarify their objectives. What's more, compliance costs and the disconnection of certain frameworks from national realities are holding back the mobilization of funding, and may lead to the exclusion of the most vulnerable entities, a subject that has received little attention. |
| JEL: | Q |
| Date: | 2024–11–08 |
| URL: | https://d.repec.org/n?u=RePEc:avg:wpaper:en17553 |
| By: | Saljanin, Salem |
| Abstract: | Kartellschadensersatzzahlungen erfordern eine angemessene Verzinsung, da der entstandene Schaden häufig lange zurückliegt. In Deutschland wird die Verzinsung dieser Ansprüche durch § 33a GWB in Verbindung mit §§ 288 und 289 BGB geregelt, wobei ein fixer Aufschlag von 5 % auf den Basiszinssatz angewendet wird. Dieser Beitrag analysiert die aktuelle Zinsregelung aus ökonomischer Perspektive und präsentiert Reformvorschläge. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:diceop:305266 |
| By: | Elise Viadere |
| Abstract: | This paper explores why energy-sharing communities need policy support via network tariff adjustments and how to optimally design that support. Findings from a case study indicate that, even with high self-consumption, the energy-sharing model may not ensure participants reach break-even. Counterfactual analyses, using machine-learning techniques, indicate that capacity-term adjustments alone had minimal im-pact on peak consumption. Policy recommendations suggest limiting capacity-term adjustments to communities capable of actively managing peak loads through real-time data and flexible assets. |
| Keywords: | Promoting energy-sharing communities |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:eca:wpaper:2013/384253 |