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on Regulation |
| By: | Catherine Bobtcheff (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Philippe de Donder (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CNRS - Centre National de la Recherche Scientifique); François Salanié (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | We set up a static model of electricity provision in which delivery to consumers is only imperfectly reliable. Blackouts can be either rolling or systemic; in both cases a price cap has to be imposed on the wholesale market. We characterize optimal allocations and we show that for any given value of the price cap on the wholesale market, one can decentralize these allocations thanks to two types of regulatory instruments: a retail tax, and capacity subsidies. Some properties follow. If demand is affected by multiplicative shocks only, capacity subsidies are exactly financed by the revenues from the retail tax. If moreover the distribution of systemic blackouts is exogenous, a price cap is sufficient, provided it is set at the value of lost load. In all other cases, all instruments are needed, and capacity subsidies need to be differentiated, based on the correlation between available capacity and its social value. |
| Keywords: | Electricity, Reliability, Renewables, Climate Change |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:hal:psewpa:hal-04738143 |
| By: | Laura Brandimarte; Jerg Gutmann; Gerd Muehlheusser; Franziska Weber |
| Abstract: | We examine the trade-off between functionality and data privacy inherent in many AI products by conducting a randomized survey experiment with 1, 734 participants from the US and several European countries. Participants’ willingness to adopt a hypothetical, AI-enhanced app is measured under three sets of treatments: (i) installation defaults (opt-in vs. opt-out), (ii) salience of data privacy risks, and (iii) regulatory regimes with different levels of data protection. In addition, we study how the willingness to adopt depends on individual attitudes and preferences. We find no effect of defaults or salience, while a regulatory regime with stricter privacy protection increases the likelihood that the app is adopted. Finally, greater data privacy concerns, greater risk aversion, lower levels of trust, and greater skepticism toward AI are associated with a significantly lower willingness to adopt the app. |
| Keywords: | artificial intelligence, privacy concerns, randomized survey experiment, smart products, technology adoption |
| JEL: | D80 D90 K24 L86 Z10 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11774 |
| By: | Shiva Shekhar; Radostina Shopova |
| Abstract: | We study the welfare effects of a merger between ad-funded platforms facing elastic consumer demand. We show that advertising fees as well as quality investment levels by the platforms fall post-merger. Interestingly, despite the lower advertising fees, advertisers may be worse off when their value of interacting with consumers is high enough. The intuition for this result is that the decrease in quality investments post-merger reduces overall consumer participation. Thus, studying innovation incentives is important in these ad-funded markets as the well-known surplus see-saw result may not hold making both sides of the markets worse while the merged entity emerges as the sole winner. |
| Keywords: | Ad-funded platforms, two-sided markets, horizontal mergers, innovation, quality. |
| JEL: | D42 D43 L12 L13 L22 L86 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11768 |
| By: | Parma Bains; Tamas Gaidosch |
| Abstract: | Ensuring that users and society-at-large derive the maximum benefit from digital technology requires active and open participation in the digital economy. However, such participation is not without risks and users may withhold or withdraw their active participation in response to such factors. One important reason for doing so is users’ privacy concerns, which may induce behavior that limits digital footprints in order to shield personal data from third parties and governments. Coupled with regulation, privacy technologies can help build trust in the digital economy. If designed and deployed appropriately, they could form the basis of trust in the digital economy. We offer three considerations for supervisors. First, they should understand the strengths and weaknesses of privacy technologies, and this primer aims to provide a foundational tool to achieve this. Second, domestic collaboration and international cooperation is indispensable to improving knowledge sharing and providing clarity regarding mandates and rules. Third, they need to understand the cybersecurity implications and tradeoffs in using privacy technologies. |
| Keywords: | Fintech; cyber; digital; privacy; PET; regulation; supervision; encryption; cryptography |
| Date: | 2025–03–28 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/060 |
| By: | Chongwoo Choe; Jiajia Cong; Noriaki Matsushima; Shiva Shekhar |
| Abstract: | Privacy regulations like the General Data Protection Regulation aim to empower consumers with greater transparency and control over their personal data. In response, firms may exercise price discrimination in the form of versioning. This paper studies how these two aspects of privacy regulation—consumer empowerment and versioning—affect market outcomes and welfare. We develop a model where firms earn revenue from sales of service and data monetization, and consumers differ in their preferences for the service and privacy costs incurred when sharing data with the firm. In a monopoly, the firm is better off after regulation because its ability to price discriminate outweighs the effects of increased consumer empowerment. In a duopoly, however, greater consumer choice after regulation intensifies competition, as firms have more ways to deviate from mutually beneficial outcomes. This results in the firm with more data monetization earning smaller profit, while the firm with less data monetization earns larger profit. However, the industry profit as a whole decreases and consumer surplus increases after the regulation. Therefore, the regulation’s impact is nuanced and depends on the market structure. We also examine the regulatory impact on firms’ optimal data-driven revenue models and market entry. |
| Keywords: | privacy regulation, privacy management, versioning, monopoly, competition. |
| JEL: | D18 D61 K24 L12 L51 L86 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11769 |
| By: | Jan David Bakker; Nikhil Datta |
| Abstract: | Hidden “junk” fees have the potential to distort competition, creating high costs to consumers. However, regulating them can lead to adverse effects, especially in complex markets with intermediaries where they are most prevalent. To explore the equilibrium adjustments of regulating hidden fees, we leverage a unique matched landlord-broker dataset and a recent policy reform in the UK rental market capping non-salient broker fees charged to tenants. To guide our empirical analysis we first develop a conceptual framework of imperfectly competitive two-sided markets with non-salient price components. We estimate pass-throughs of the broker-tenant fee price cap to broker-landlord fees and advertised rental prices, examine demand responses, and net exit of both brokers and landlords. In line with imperfect competition, brokers absorb 75% of the regulation and landlords the remaining 25%. There is no market exit of landlords or brokers. Combining our reduced-form estimates and the theoretical framework we find that the policy saved tenants £376 per tenancy (equivalent to 4% of median yearly rent), landlords lost £74, and brokers lost £288. Overall, there was an aggregate welfare gain of £14 per tenancy, amounting to at least £16.4 million per year, as the policy reallocated market shares from less to more productive intermediaries. If the fee had been fully salient, consumer savings would be almost halved, and reallocated to landlords. Our results highlight the importance of economic analysis for designing consumer protection regulation. |
| Keywords: | junk fees, price regulation, housing rental brokers |
| JEL: | R28 D91 L51 L85 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11751 |
| By: | Stéphane Caprice; Shiva Shekhar |
| Abstract: | In this paper, we study supplier encroachment in competition with multi-product retailers and its effects on retail profits under endogenous consumer shopping behavior. We find that supplier encroachment (weakly) increases both supplier and retailer profits, as the retailer benefits from better consumer segmentation and price discrimination despite (weakly) higher wholesale prices. The effect of encroachment on consumers is more nuanced: when the competitive product’s value is high, consumers benefit. Instead, when the value of the competitive product is low, consumers buying exclusively from the multi-product retailer are worse off while consumers who mix and match across stores are better off. Overall, supplier encroachment can improve market outcomes if the value of the supplier’s product offering is sufficiently high. |
| Keywords: | supplier encroachment, vertical contracting, downstream competition, consumer shopping costs. |
| JEL: | L13 L22 L42 L81 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11767 |
| By: | Khanna, Tarun M.; Danilenko, Diana; Tomberg, Lukas; Hansteen, Sven; Andor, Mark Andreas; Lohmann, Paul; Minx, Jan C. |
| Abstract: | Energy efficiency is often cited as a critical component of mitigation pathways that avoid the worst effects of climate change but suffers from chronic underinvestment. This paper evaluates the efficacy of a range of voluntary approaches-monetary incentives, information and behavioral interventions-on the willingness of households to pay for energy efficient appliances, the market share of efficient appliances, and the subsequent savings in energy consumption to understand which interventions work, under what conditions, and why. We find that information provision, labeling, rebates and subsidies increase willingness to pay for efficient appliances moderately, while loans are ineffective. The effects of such interventions on market shares and associated rebound effects on energy consumption of purchase of energy-efficient appliances remain unclear given the limited evidence. Closing this should be a priority to facilitate better understanding of the role of such interventions in climate and energy policy. Real-world effects are also likely to be smaller than those reported due to study design limitations and potential reporting biases. Overall, the existing evidence does not strongly support the effectiveness of these interventions in achieving large-scale energy efficiency improvements required for decarbonization. |
| Abstract: | Energieeffizienz wird oft als kritische Komponente von Klimaschutzmaßnahmen genannt, die die schlimmsten Auswirkungen des Klimawandels vermeiden sollen, leidet aber unter chronischer Unterinvestition. In diesem Papier wird die Wirksamkeit einer Reihe freiwilliger Ansätze - monetäre Anreize, Informationen und Verhaltensmaßnahmen - auf die Bereitschaft der Haushalte, für energieeffiziente Geräte zu zahlen, den Marktanteil effizienter Geräte und die daraus resultierenden Einsparungen beim Energieverbrauch untersucht, um zu verstehen, welche Maßnahmen unter welchen Bedingungen und warum funktionieren. Wir stellen fest, dass die Bereitstellung von Informationen, die Kennzeichnung, Rabatte und Subventionen die Bereitschaft, für effiziente Geräte zu zahlen, mäßig erhöhen, während Kredite unwirksam sind. Die Auswirkungen solcher Maßnahmen auf die Marktanteile und die damit verbundenen Rebound-Effekte auf den Energieverbrauch beim Kauf energieeffizienter Geräte bleiben angesichts der begrenzten Evidenz unklar. Die Schließung dieser Lücke sollte eine Priorität sein, um ein besseres Verständnis der Rolle solcher Interventionen in der Klima- und Energiepolitik zu ermöglichen. Aufgrund von Einschränkungen beim Studiendesign und möglichen Verzerrungen bei der Berichterstattung sind die Auswirkungen in der Realität wahrscheinlich geringer als berichtet. Insgesamt sprechen die vorliegenden Erkenntnisse nicht eindeutig für die Wirksamkeit dieser Maßnahmen, wenn es darum geht, die für die Dekarbonisierung erforderlichen groß angelegten Energieeffizienzsteigerungen zu erreichen. |
| Keywords: | Energy efficiency, meta-analysis, energy conservation, behavioral interventions, economic incentives, policy instruments |
| JEL: | Q58 Q48 D11 D83 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:rwirep:315481 |
| By: | Markus Dertwinkel-Kalt; Max R. P. Grossmann |
| Abstract: | When environmental regulations are unpopular, policymakers often attribute resistance to information frictions and poor communication. We test this idea in the context of a major climate policy: Germany’s Heating Law of 2023, which mandates the phase-out of fossil fuel heating. Through a survey experiment with property owners, we examine whether providing comprehensive information about the regulation’s costs, requirements, and timeline affects adoption decisions and policy support. Despite successfully increasing factual knowledge, information provision has no significant effect on intended technology adoption, policy support, or incentivized measures of climate preferences. Instead, pre-existing environmental preferences and demographic characteristics emerge as the key predictors of responses to the regulation. A feeling that existing systems still work well and cost considerations dominate fossil fuel users’ stated reasons for non-adoption, while independence from fossil fuels and perceived contributions to the common good drive adoption among switchers. Our findings suggest that opposition to climate policy stems from fundamental preference heterogeneity rather than information frictions. This has important implications for optimal policy design, highlighting potential limits of information provision in overcoming resistance to environmental regulation. The results also speak to broader questions in political economy about the relationship between knowledge, preferences, and support for policy reform. |
| Keywords: | environmental regulation, technology adoption, information provision, political economy, climate policy |
| JEL: | D83 H31 Q48 Q58 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11759 |
| By: | Frondel, Manuel; Helmers, Viola; Sommer, Stephan |
| Abstract: | Although there is ample empirical evidence that congestion charges can effectively reduce traffic congestion and its detrimental effects, this instrument has only been implemented in a handful European cities. On the basis of a randomized information experiment that was embedded in a survey across seven European countries, this paper empirically investigates whether information on their (i) effectiveness and (ii) a-posteriori acceptance may increase the public support for congestion charges. Relative to the control group, the results indicate that, on average, this information can raise acceptance by 9.3% and 7.1%, respectively. Moreover, while there is substantial heterogeneity in the acceptance across countries, attributing a concrete price level to the charge uniformly raises acceptance at low charge levels, but lowers it at high levels. Based on these results, we conclude that information campaigns on congestion charges and their benefits for commuters and city-dwellers are essential for fostering public support for this rarely employed transport policy instrument. |
| Abstract: | Trotz zahlreicher Studien die belegen, dass eine Städtemaut die urbane Verkehrsüberlastung und ihre negativen Auswirkungen wirksam verringern kann, wurde dieses Instrument bisher nur in einer Handvoll europäischer Städte eingeführt. Auf Grundlage eines randomisierten Informationsexperiments, das in eine Umfrage in sieben europäischen Ländern eingebettet war, wird in dieser Studie empirisch untersucht, ob Informationen (i) über die Wirksamkeit und (ii) über a-posteriori Akzeptanz von bereits eingeführten Städtemauten die Unterstützung für eine solche Maßnahme beeinflussen können. Die Ergebnisse zeigen, dass die gegebenen Informationen die Akzeptanz unter den Befragten im Durchschnitt um 9, 3 % bzw. 7, 1 % erhöhen. Darüber hinaus ist die Akzeptanz in den einzelnen Ländern zwar unterschiedlich, aber die Zuweisung eines konkreten Preisniveaus für die Gebühr erhöht die Akzeptanz in allen Ländern bei niedrigen Gebühren und senkt sie bei hohen Gebühren. Auf der Grundlage dieser Ergebnisse kommen wir zu dem Schluss, dass Informationskampagnen über Staugebühren und ihre Vorteile für Pendler und Stadtbewohner wesentlich sind, um die öffentliche Unterstützung für dieses selten eingesetzte aber effektive verkehrspolitische Instrument zu fördern. |
| Keywords: | Acceptability, congestion charge, public support, road pricing |
| JEL: | R48 C25 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:rwirep:315484 |
| By: | De Monte, Enrico; Koebel, Bertrand M. |
| Abstract: | This paper characterizes the short- and long-run Cournot equilibrium with heterogeneous firms and stochastic technological change. In our model, firms have different technologies with heterogeneous fixed and variable costs and various degrees of markups. In a framework with homogeneous firms, Mankiw and Whinston (1986) show that the long-run Cournot equilibrium may be inefficient due to too many entries. We extend their result to the case of heterogeneous firms and show that higher industrial concentration of production is welfare improving. Using administrative data for French manufacturing firms, we estimate a wide degree of unobserved heterogeneity in both fixed and variable costs, and find a negative correlation between both. Our simulation results show that markups surprisingly only induce slight inefficiencies in the allocation of output, implying that it is almost compatible with welfare maximisation. Instead, firms' choice to employ heterogeneous and often inefficient technologies turns out to harm more substantially welfare and aggregate output. |
| Keywords: | cost function, fixed cost, marginal cost, returns to scale, technological change, misallocation, markups, nonlinear least squares, panel data |
| JEL: | C33 L11 L60 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:312579 |
| By: | World Bank |
| Keywords: | Energy-Energy Finance Energy-Renewable Energy Environment-Climate Change Mitigation and Green House Gases Finance and Financial Sector Development-Access to Finance |
| Date: | 2023–04 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:39689 |
| By: | World Bank Group |
| Keywords: | Environment-Adaptation to Climate Change Environment-Climate Change Impacts |
| Date: | 2023–05 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:40023 |
| By: | World Bank Group |
| Keywords: | Public Sector Development-Climate Change Policy and Regulation Private Sector Development-Private Sector Economics Environment-Adaptation to Climate Change |
| Date: | 2023–05 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:40006 |
| By: | World Bank Group |
| Keywords: | Infrastructure Economics and Finance-Infrastructure Finance |
| Date: | 2023–03 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:39579 |
| By: | World Bank Group |
| Keywords: | Environment-Adaptation to Climate Change |
| Date: | 2023–05 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:40024 |
| By: | World Bank Group |
| Keywords: | Information and Communication Technologies-ICT Economics Information and Communication Technologies-ICT Policy and Strategies |
| Date: | 2023–05 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:40007 |