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on Regulation |
| By: | Burtraw, Dallas (Resources for the Future); Palmer, Karen (Resources for the Future); Roy, Nicholas (Resources for the Future) |
| Abstract: | This paper examines three frameworks to achieve 100 percent clean energy for electricity consumption in Maryland with full compliance by 2040. Increasing the stringency of the existing Renewable Portfolio Standard (RPS) is insufficient to achieve this goal. A higher alternative compliance payment is essential for boosting policy-driven clean energy development.A Clean Energy Standard (CES), similar to the RPS, but credits all nonemitting generation and includes an increasing alternative compliance payment, achieves greater investment in clean energy. This standard might be met with imported clean energy or imported clean energy credits, both of which enable continued fossil generation in Maryland, potentially for export.The third framework, an Emissions Intensity Standard (EIS), would cover Maryland’s generated and imported power, focusing on the emissions intensity of consumption. This approach provides incentives for a greater set of compliance opportunities, including substitution away from coal in imported power, and improving the cost effectiveness of emissions reductions. The EIS yields lower electricity prices, negligibly above business as usual through 2035, and modestly higher thereafter.We identify several essential elements of policy design. Compliance could be achieved by placing an obligation upon retail suppliers to achieve clean energy goals. Enforcement would require a resource planning process. Suppliers might demonstrate compliance through power purchase agreements and potentially through joint compliance planning. A regulatory process involving oversight by the Public Service Commission could aim to balance the imperatives to maintain affordability and electricity resource adequacy with clean energy goals. The regulatory process might involve planning, procurement obligations (e.g., power purchase agreements), and ongoing compliance evaluation.Increasing demand for clean energy by large private loads such as data centers could lead to future increases in the price of clean energy, hence early commitments to contracts for clean energy could help limit exposure to such price increases.These policy designs retain Pennsylvania-New Jersey-Maryland’s (PJM’s) role of assuring resource adequacy in the broader region including Maryland, while accelerating the transition toward clean energy consumption within the state. The reliability of electricity supply in Maryland is not necessarily tied to locating generation in Maryland, however, locating a greater amount of generation in the state may provide greater local resilience and give Maryland more options in future energy planning. |
| Date: | 2025–03–14 |
| URL: | https://d.repec.org/n?u=RePEc:rff:dpaper:dp-25-09 |
| By: | Brent, Daniel A.; Wietelman, Derek (Resources for the Future); Wichman, Casey (Resources for the Future) |
| Abstract: | Using price incentives to allocate scarce resources is a core tenet of economics but may result in unpalatable distributional outcomes. We analyze the efficacy of prices as a means of inducing water conservation during severe drought by studying the introduction of surcharges enacted within existing nonlinear rate structures. Embedding machine learning counterfactual prediction methods within a demand framework to isolate exogenous price variation, we find evidence that households exhibit a significant demand response despite the temporary nature of surcharges. However, further investigation reveals that surcharges alone cannot explain a majority of the conservation observed despite steep price increases. “Budget-based” rates undercut scarcity signals by shielding large users from binding price increases, and surcharges themselves do little to reduce the regressivity of water expenditures. Simpler rate structures can dominate along equity dimensions, and their progressivity can be enhanced via lump-sum transfers within the rate structure. |
| Date: | 2025–03–12 |
| URL: | https://d.repec.org/n?u=RePEc:rff:dpaper:dp-25-07 |
| By: | Kay, Owen; Hausman, Catherine; Ham, Dasom |
| Abstract: | The US electrical grid is experiencing a rapid transition as cheap renewable electricity transforms the energy mix. With these grid changes, new supply is not spatially matched to demand, and the transmission network has become more strained. Better market integration could thus lower US generation costs. This report estimates the excess generation costs associated with transmission congestion and other spatial constraints across the lower 48 states, as an extension of a 2024 report on the MISO/SPP regions. We document that eliminating interregional constraints would have reduced generation costs by $5.8–7.1 billion in 2022 and $3.4–5.0 billion in 2023. Despite these overall potential cost savings, we show that market integration creates winners and losers among generation companies—of interest because generators have a large say in whether transmission projects are developed. We show clear spatial patterns in generation company outcomes, documenting that producers in some regions have incentives to delay or block grid integration despite the overall system benefits.Keywords: Electricity markets, transmission constraints, renewable energy, market integration, political economy of energy markets, energy transitionJEL Codes: L94, P18, Q41, Q42, Q48 |
| Date: | 2025–04–04 |
| URL: | https://d.repec.org/n?u=RePEc:rff:dpaper:dp-25-10 |
| By: | Erich Muehlegger; Reid Taylor |
| Abstract: | We estimate the effect of competition on incumbent firm pricing by using high frequency price data and the precise geographic location for all gas stations in California. Using an event study design, we find that the entry of a new station is associated with a 2.5 cent decrease in prices at incumbent stores, which equates to a 7 percent reduction in estimated retail markups. The effects are immediate, persistent and show no sign of deterrence or limit pricing behavior. In contrast, nearby exit results in precisely estimated null effects on prices with no evidence of predatory pricing in the lead up to the station departure. We show that these results are consistent across all fuel blends, dissipate with distance and are driven by less concentrated markets. Finally, we explore the asymmetric effects, showing that the difference cannot be attributed to difference in branding, proximity to highway or data quality idiosyncrasies, although we find suggestive evidence that exit tends to happen in more competitive markets and amongst less heavily trafficked stations. |
| Keywords: | competition; entry; exit; retail gasoline; market structure |
| JEL: | D40 L11 L81 Q41 R32 |
| Date: | 2025–03–05 |
| URL: | https://d.repec.org/n?u=RePEc:fip:feddwp:99661 |
| By: | Fan Xiao; Frédéric Dobruszkes; Huihui Mo; Jiaoe Wang |
| Abstract: | Studies have contributed to airport competition issues in metropolitan areas; however, most have focused on passengers’ airport choices. Proposing a more systematic framework as well as a measuring method, this study contributes to the understanding of competition and complementarity in multiple airport systems (MASs). In this context, our research revisits MASs from the perspective of air routes and flights. These two approaches were combined. First, a quantitative analysis was conducted to investigate the degree of route overlap between airports belonging to the same MAS, ranging from strong complementarity to strong competition. In the second step, a qualitative analysis focused on the regulatory and policy context in which five MASs (Seoul, Brussels, Shanghai, Miami, and Montreal) were developed. This helps determine how much airports cooperate or compete with each other. Empirical evidence from 37 two-airport MASs worldwide suggests that inter-airport matches occur on less than 20% of routes that offer more than 40% of seats. Qualitative analysis confirmed a range of contexts, from genuine cooperation to forced regulation to de facto complementarity and head-on competition. Our findings broaden the understanding of MAS competition and complementarity profiles worldwide and their reasons. |
| Keywords: | multi-airport region; competition; airline routes; air transport network; transport management |
| Date: | 2025–03–01 |
| URL: | https://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/389175 |
| By: | Schmal, W. Benedikt; Zombek, Max |
| Abstract: | Die Infrastruktur der deutschen Autobahnen ist von zentraler Bedeutung für den Wirtschafts-verkehr, den Tourismus und die Mobilität der Bürgerinnen und Bürger. Ein zentraler Bestand-teil dieser Infrastruktur sind Haltepunkte entlang der Fernstraßen. Autobahnraststätten und Autohöfe dienen nicht nur der Erholung, sondern auch der Versorgung von Autofahrern mit Kraftstoffen dienen. Im Zuge der Antriebswende hin zur Elektromobilität wird ihre Rolle als wichtige Ladepunkte mutmaßlich noch größer werden. Der Markt für Autobahnraststätten in Deutschland ist jedoch stark monopolisiert: Die Autobahn Tank & Rast Gruppe GmbH & Co. KG (Tank & Rast) besitzt eine marktbeherrschende Stellung mit einem Anteil von über 90 % der Konzessionen für Raststätten entlang der Autobahnen. Dies ist historisch bedingt: In den 1950er Jahren wurde der Betrieb von Autobahnraststätten staatlich organisiert. In den 1990er Jahren wurde die bundeseigene Betriebsgesellschaft als "Tank & Rast" en bloc privatisiert. Dabei wäre eine solche Form der Privatisierung nicht not-wendig gewesen. Viel mehr wäre ein individueller Verkauf der Standorte ratsam gewesen. Ökonomisch hat das einen einfachen Grund: Anders als die Verkehrswege sind die Raststät-ten selbst kein natürliches Monopol. Wettbewerb entlang der Autobahnen ist nicht nur denk-bar, sondern sinnvoll und wünschenswert. Denn die aktuelle Quasi-Monopolstruktur führt zu erheblichen Wettbewerbsverzerrungen, insbesondere in Form überhöhter Preise, geringer Angebotsvielfalt und mangelnder Innovationsanreize. Diese Situation beeinträchtigt sowohl die Konsumentenwohlfahrt als auch die wirtschaftliche Entwicklung alternativer Anbieter wie Autohöfe, die abseits der Autobahnen oft eine preiswertere und qualitativ hochwertigere Al-ternative bieten. Um dieser Problematik zu begegnen und einen funktionierenden Wettbewerb entlang der Fernstraßen zu etablieren, sollten gezielte regulatorische Maßnahmen ergriffen werden. Im Zentrum sollte die Entflechtung der Interessen stehen, um politökonomische Ziel-konflikte zu vermeiden. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:formoe:314942 |
| By: | Amparo Moyano; Frédéric Dobruszkes |
| Abstract: | This paper investigates the destiny of high-speed rail (HSR) operations as rail liberalisation challenges the cross-subsidy single rail operators established between profitable and non-profitable routes when they monopolised the whole HSR network. When an incumbent HSR operator has to share the cake with newcomers, the resulting decline in revenues and profits may limit the effectiveness of the relevant cross-subsidies. We analyse such scenarios through the case of Spain, in which the state-owned incumbent rail company, Renfe, faces increasing competition in its more lucrative HSR corridors. Scenarios suggest that with only a 30% drop in ticket sales in the northeastern HSR corridor, the financial balance of Renfe’s HSR commercial operations becomes negative. This means that beyond the profits made by new entrants in one or two specific corridors, the outcomes for non-profitable corridors will be quite different: public authorities will have to cover losses and/or Renfe will have to increase ticket prices and/or the frequencies of HSR services will have to be cut. Travellers on the most profitable HSR routes will enjoy greater frequency of services and lower fares, while those on other HSR routes could experience less frequency and higher fares. In geographical terms, rail liberalisation applied to HSR operations may thus have very heterogeneous effects and reinforce spatial inequalities between regions. |
| Keywords: | High-speed rail; Rail market liberalisation; Cross-subsidising; Spatial inequalities |
| Date: | 2025–03–01 |
| URL: | https://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/389172 |
| By: | Rehse, Dominik; Valet, Sebastian |
| Abstract: | On October 4, 2021, all services provided by Meta Platforms, Inc. (then Facebook, Inc.) became unavailable unexpectedly for all its worldwide users for a period of about six hours. We use detailed high-frequency tracking data from smartphones, tablets and desktop computers of thousands of Meta users from Spain and the United States to study their behavioral responses during the outage. We find (1) the strongest substi- tution occurs within social media and messaging services, (2) evidence of substitution across service categories, (3) substitution patterns that vary across demographic groups, (4) substantially higher substitution rates among multi-homers, (5) substitution rates that increase over the course of the outage, (6) distinct differences in substitution patterns between countries, and (7) increased usage of non-Meta digital services after the outage. To our knowledge, this study presents the first comprehensive revealed-preference analysis of substitution patterns when an entire user population simultaneously seeks alternatives to major digital services. |
| Keywords: | Digital services, Competition, Substitution, Attention markets, Outage |
| JEL: | L40 L82 L86 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:314420 |
| By: | Marta Castellini (Department of Economics and Management "Marco Fanno", University of Padova, and Fondazione Eni Enrico Mattei); Chiara D'Alpaos (Department of Civil, Environmental and Architectural Engineering, University of Padova); Fulvio Fontini (Department of Law Studies, University of Salento and Climate Economics Chair, University Paris Dauphine); Michele Moretto (Department of Economics and Management "Marco Fanno", University of Padova) |
| Abstract: | Renewable energy production plays a crucial role in the energy transition. However, many renewable energy sources (RES) are intermittent, and there is often a mismatch between energy production and consumption, which can be partially solved by storage. In this paper, we investigate the investment decision in a photovoltaic (PV) power plant coupled with a Battery Energy Storage System (BESS), namely an Energy Storage System (ESS). We aim to investigate the relationship between the net present value (NPV) of the investment and the technical implications related to the maximum amount of energy to be stored while also accounting for the impact of energy prices. In our setting, the BESS is connected to the national power grid and the PV plant. Energy can be produced, purchased from the grid, stored, self-consumed, and fed into the grid. PV production and energy consumption loads evolve stochastically over time. In addition, as BESS are costly, energy stored has an opportunity cost, which depends on the prices of energy purchased from the grid and energy fed in and sold to the grid, respectively. However, BESS can significantly contribute to increase ESS managerial flexibility and, in turn, ESS value. In detail, we investigate the optimal BESS size that minimizes ESS net operating costs. We also provide insights on ESS optimal management strategy. Our results show that ESS net operating costs are relatively small. They reduce for increasing selling prices of energy, whereas they increase for increasing volatility of the stock of energy stored in the battery. |
| Keywords: | Renewable Energy Sources, Photo-voltaic, Battery Storage |
| JEL: | Q42 C61 D81 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:fem:femwpa:2025.06 |
| By: | Igor Sadoune; Marcelin Joanis; Andrea Lodi |
| Abstract: | This paper introduces the Minimum Price Markov Game (MPMG), a theoretical model that reasonably approximates real-world first-price markets following the minimum price rule, such as public auctions. The goal is to provide researchers and practitioners with a framework to study market fairness and regulation in both digitized and non-digitized public procurement processes, amid growing concerns about algorithmic collusion in online markets. Using multi-agent reinforcement learningdriven artificial agents, we demonstrate that (i) the MPMG is a reliable model for first-price market dynamics, (ii) the minimum price rule is generally resilient to non-engineered tacit coordination among rational actors, and (iii) when tacit coordination occurs, it relies heavily on self-reinforcing trends. These findings contribute to the ongoing debate about algorithmic pricing and its implications. Cet article présente le jeu du prix minimum de Markov (MPMG), un modèle théorique qui se rapproche raisonnablement des marchés réels qui suivent la règle du prix minimum, tels que les enchères publiques. L'objectif est de fournir aux chercheurs et aux praticiens un cadre pour étudier l'équité du marché et la réglementation dans les processus de marchés publics numériques et non numériques, dans un contexte de préoccupations croissantes concernant la collusion algorithmique sur les marchés en ligne. En utilisant des agents artificiels basés sur l'apprentissage par renforcement multi-agents, nous démontrons que (i) le MPMG est un modèle fiable pour la dynamique du marché au premier prix, (ii) la règle du prix minimum est généralement résistante à la coordination tacite non technique entre les acteurs rationnels, et (iii) lorsque la coordination tacite se produit, elle s'appuie fortement sur des tendances qui se renforcent d'elles-mêmes. Ces résultats contribuent au débat en cours sur la tarification algorithmique et ses implications. |
| Keywords: | Algorithmic Game Theory, Multiagent Reinforcement Learning, Algorithmic Coordination, Algorithmic Pricing, Théorie algorithmique des jeux, apprentissage par renforcement multi-agents, coordination algorithmique, tarification algorithmique |
| Date: | 2025–04–08 |
| URL: | https://d.repec.org/n?u=RePEc:cir:cirwor:2025s-07 |
| By: | Nicolas Schutz; Anton Sobolev |
| Abstract: | We study the competitive effects of dual pricing, a vertical restraint that involves charging a distributor a different price for units intended to be resold online than for units intended to be resold offline. We develop a model in which a manufacturer contracts with hybrid retailers, which sell the manufacturer’s product both in their brick-and-mortar stores and through an online channel. We find that dual pricing allows the manufacturer to induce the industry monopoly outcome whereas uniform pricing does not. Yet, dual pricing does not necessarily harm consumers or society at large, as the market outcome is distorted by market power regardless of whether dual or uniform pricing is used. Indeed, we find that consumer surplus and aggregate surplus tend to be higher under dual pricing if the online market is small, if the search costs faced by offline consumers are high, and if the pass-through rate of cost increases is high. |
| Keywords: | dual pricing, price dispersion, search, vertical restraints |
| JEL: | L13 L42 D43 D83 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_678 |
| By: | Martimort, David; Poudou, Jean-Christophe; Thomas, Lionel |
| Abstract: | A buyer (the principal) procures a good or service from a risk-neutral seller (the agent). The seller, protected by limited liability, has private information on his marginal cost of production (adverse selection), and exerts a non-verifiable effort that increases surplus (moral hazard). Even when the effort and production technologies are separable, the optimal contract always mixes features that are found separately under with pure moral hazard or pure screening. Screening distortions are mitigated in comparison with the pure screening scenario with the possibility of bunching for the least efficient types even in contexts where full separation would be obtained with pure screening. Effort distortions are also used as a screening device. In comparison with a pure moral hazard scenario, those distortions may be lessened for the most efficient types, up to the point of possibly allowing implementation of the first-best effort, while they are worsened for the worst types. Although our analysis is cast in a simple procurement setting, we illustrate our findings in other economic environments of general interest including economic and environmental regulation, financial contracting, provision of quality in services, and price discrimination. |
| Keywords: | Adverse selection; moral hazard; contract theory |
| JEL: | D82 |
| Date: | 2025–03–11 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:130428 |
| By: | Kesler, Reinhold; Skiera, Bernd; Kraft, Lennart; Koschella, Tim |
| Abstract: | Digital platforms, now ubiquitous intermediaries in the modern economy, claim to uphold governance rules to ensure a level playing field for their participants. However, there is limited research exploring whether digital platforms fulfill this claim. Furthermore, the antecedents and consequences of any non-compliance remain largely unexamined. This paper addresses this research gap by examining non-compliance in the mobile app market. The empirical study compares the disclosed with the actual behavior concerning device ID transfer for advertising purposes of 852 apps available on Apple and Google platforms across 19 countries. The findings reveal that about 40% of the apps do not comply. Compliance is more prevalent among apps catering to Apple (EU) users than Google (non-European) users. Notably, older apps demonstrate greater compliance. However, popularity and reputation do not explain compliance, while app categories and connections to certain supply-side platforms do. Intriguingly, non-compliant apps earn at least 10% more advertising revenue than they would if being compliant, thus gaining a significant economic edge. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:dicedp:315208 |
| 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 impact 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: | Demand-response; Energy community; Energy-sharing; Network tariffs |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/389043 |
| By: | Reid Taylor; Madeline Turland; Joakim A. Weill |
| Abstract: | An increasing number of people are denied home insurance coverage in the private market and must instead turn to state-sponsored plans known as “Insurers of Last Resort.” This paper examines how insurers of last resort interact with the private market under increasing disaster risks. We first present a simple model of an adversely selected insurance market, highlighting that the insurer of last resort allows strict price regulation to be compatible with full insurance. We then empirically study the California non-renewal moratoriums, a regulation that forced insurers to supply insurance to current customers following wildfires in 2019 and 2020. Using quasi-random geographic variation in regulatory borders and a difference-in-differences strategy, we find that the moratoriums successfully reduced company-initiated non-renewals and cancellations in the short run. The effects only lasted for one year, with insurers dropping policies as soon as the moratorium lapsed. The moratoriums had no discernible effect on participation in the State’s insurer of last resort. |
| Keywords: | insurance; natural disasters; wildfires |
| JEL: | D22 G22 L10 Q54 |
| Date: | 2025–03–26 |
| URL: | https://d.repec.org/n?u=RePEc:fip:feddwp:99740 |
| By: | Leonardo Bursztyn (University of Chicago & NBER); Rafael Jiménez-Durán (Bocconi University, IGIER & Chicago Booth Stigler Center); Aaron Leonard (University of Chicago); Filip Milojević (University of Chicago); Christopher Roth (University of Cologne, NHH, Max Planck Institute for Research on Collective Goods, IZA & CEPR) |
| Abstract: | Firms can increase the demand for their products and consolidate their market power not only by increasing user utility but also by decreasing non-user utility. In this paper, we examine this mechanism by considering the case of smartphones. In particular, Apple has faced criticism for allegedly degrading the Android user experience by making messages to Android devices appear as green bubbles on iPhones—a salient signal often perceived as reflecting a lower socioeconomic status. Using samples of US college students, we show that green bubbles are widely stigmatized and that a majority of both iPhone and Android users would prefer green bubbles to no longer exist. We then conduct an incentivized deactivation experiment, revealing that iPhone users have a significant willingness to pay to prevent their messages from appearing as green bubbles on other iPhones. Next, we examine the market implications of non-user utility and find that respondents are substantially more likely to choose an Android over an iPhone when green bubbles are removed. We conclude by presenting case studies that illustrate how companies use product features to reduce non-user utility in various markets. |
| Keywords: | Non-user utility, Stigma, Market Power, Consumer Welfare, Anti-trust. |
| JEL: | D83 D91 P16 J15 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:360 |
| By: | World Bank |
| Keywords: | Environment-Adaptation to Climate Change Energy-Hydro Power Environment-Forests and Forestry Environment-Sustainable Land Management |
| Date: | 2023–09 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:40350 |
| By: | World Bank |
| Keywords: | Finance and Financial Sector Development-Financial Regulation & Supervision Finance and Financial Sector Development-Financial Structures |
| Date: | 2023–09 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:40335 |
| By: | World Bank |
| Keywords: | Environment-Adaptation to Climate Change Infrastructure Economics and Finance-Infrastructure Finance Environment-Environmental Strategy Rural Development-Rural Roads & Transport Urban Development-Transport in Urban Areas |
| Date: | 2023–09 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:40323 |
| By: | World Bank |
| Keywords: | Water Resources-Flood Control Environment-Coastal and Marine Environment Environment-Adaptation to Climate Change Environment-Ecosystems and Natural Habitats Infrastructure Economics and Finance-Infrastructure Economics |
| Date: | 2023–09 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:40324 |
| By: | World Bank |
| Date: | 2023–09 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:40325 |