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on Regulation |
| By: | Bailey, Megan (University of Calgary); Brown, David P. (University of Alberta, Department of Economics); Shaffer, Blake (University of Calgary); Wolak, Frank A. (Stanford University) |
| Abstract: | As electricity systems transition toward more variable renewable energy, flexible demand has emerged as a critical tool for grid management. Yet a fundamental question remains: are emerging smart technologies sufficient to unlock demand response, or does human behavior remain the critical barrier? Our field experiment examines this question through a novel approach that individually randomizes peak event timing for each participating household, allowing us to leverage both within-subject and between-subject variation. We compare the response to “peak events” on electricity consumption for households equipped with three distinct demand response programs: a fully automated system requiring no action; app-enabled smart devices requiring minimal effort; and traditional manual adjustments. The results are striking—households with passive, automated responses reduced consumption five times more than those required to take any action at all, even when the burden is greatly reduced via smart technology. The provision of enabling technologies alone made no difference in households’ responsiveness, as compared to a fully manual setting, when active participation was still required. These findings reveal that the opportunity cost of time and effort —not technology limitations—may be the fundamental obstacle to unlocking electricity demand flexibility. To achieve its full potential, “smart home” technologies need to incorporate these behavioral realities as barriers to responsiveness. |
| Keywords: | electricity |
| JEL: | A00 |
| Date: | 2025–05–27 |
| URL: | https://d.repec.org/n?u=RePEc:ris:albaec:2025_004 |
| By: | Kim Kaivanto |
| Abstract: | In policy debates concerning the governance and regulation of Artificial Intelligence (AI), both the Precautionary Principle (PP) and the Innovation Principle (IP) are advocated by their respective interest groups. Do these principles offer wholly incompatible and contradictory guidance? Does one necessarily negate the other? I argue here that provided attention is restricted to weak-form PP and IP, the answer to both of these questions is "No." The essence of these weak formulations is the requirement to fully account for type-I error costs arising from erroneously preventing the innovation's diffusion through society (i.e. mistaken regulatory red-lighting) as well as the type-II error costs arising from erroneously allowing the innovation to diffuse through society (i.e. mistaken regulatory green-lighting). Within the Signal Detection Theory (SDT) model developed here, weak-PP red-light (weak-IP green-light) determinations are optimal for sufficiently small (large) ratios of expected type-I to type-II error costs. For intermediate expected cost ratios, an amber-light 'wait-and-monitor' policy is optimal. Regulatory sandbox instruments allow AI testing and experimentation to take place within a structured environment of limited duration and societal scale, whereby the expected cost ratio falls within the 'wait-and-monitor' range. Through sandboxing regulators and innovating firms learn more about the expected cost ratio, and what respective adaptations -- of regulation, of technical solution, of business model, or combination thereof, if any -- are needed to keep the ratio out of the weak-PP red-light zone. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.02846 |
| By: | Hey, Florian; Zombek, Max |
| Abstract: | The automotive industry is undergoing a fundamental transformation driven by digitization, enabling original equipment manufacturers (OEMs) to exert increasing control over vehicle functions, data, and - consequently - aftersales markets. Despite high relevance for consumers, regulatory scrutiny remains limited. This paper examines whether these developments constitute digital gatekeeping in a functional sense, and whether they justify increased regulatory attention. We show that OEMs' digital strategiesreinforce their dominance in secondary markets, particularly repair and maintenance. We assess the current European regulatory framework, focusing on the European Motor Vehicle Block Exemption Regulation (MVBER), and argue that it has not kept pace with the realities of software-defined vehicles. The planned MVBER review provides an opportunity to reassess legacy privileges and adapt competition rules to the digital age. We discuss potential reforms, including improved data access, stronger interoperability standards, and a broader definition of aftermarket components. We also examine supplementary measures such as a Right to Repair regime and self-regulation. Our analysis concludes that OEMs increasingly act as digital gatekeepers and that existing frameworks inadequately address the resulting risks. Regulatory recalibration is needed to safeguard innovation, consumer welfare, and long-term market openness. |
| Keywords: | aftermarket, antitrust, car data, competition policy, connected car, data governance, digital ecosystems, Digital Markets Act (DMA), extended vehicle, gatekeeping, interoperability, Motor Vehicle Block Exemption Regulation (MVBER), non-discriminatory terms, Original Equipment Manufacturer (OEM), rent seeking, Right to Repair, software defined vehicle |
| JEL: | D72 K21 L40 L42 L50 L51 L62 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:formwp:318332 |
| By: | Fabianek, Paul (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Atasoy, Ayse Tugba (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)) |
| Abstract: | Congestion at charging stations during peak hours limits their optimal utilization hindering the adoption of e vehicles by restricting user mobility. This study examines how dynamic pricing schemes can incentivize users to modify their charging behavior and alleviate charging station congestion. Through a survey-based experiment, we quantified users’ willingness to pay across different pricing schemes with variations in time, location, and duration. Results demonstrate that average price reductions required for demand shifting were: 23.9% to change charging time (day to night), 24.1% to change location (by 1 km), and 29.7% to accept a prolongation of charging duration (by 100%). Responsiveness to dynamic pricing varied based on e-vehicle driving experience, mobility patterns, and socio-demographic characteristics. Our findings indicate that sufficient financial incentives can effectively reduce charging station congestion. We recommend policymakers to establish regulatory frameworks for dynamic pricing for electric vehicle charging and further investigate the effectiveness of various pricing schemes. |
| Keywords: | Dynamic Electricity Pricing; Demand Response; Charging Infrastructure; Flexible Charging; Consumer Preferences; Sustainable Mobility; Germany |
| JEL: | C99 D12 |
| Date: | 2025–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:ris:fcnwpa:2025_001 |
| By: | Frost, Jon; Rochet, Jean-Charles; Shin, Huyn Song; Verdier, Marianne |
| Abstract: | We compare three competing digital payment instruments: bank deposits, private stablecoins and central bank digital currencies (CBDCs). A simple theoretical model integrates the theory of two-sided markets and payment economics to assess the benefits of interoperability through a retail fast payment system organised by the central bank. We show an equivalence result between such a fast payment system and a retail CBDC. We find that both can improve financial integration and increase trade volume, but also tend to reduce the market shares of incumbent intermediaries. |
| Keywords: | payments; CBDC; big tech; banks; stablecoins |
| JEL: | E42 E58 G21 L51 O31 |
| Date: | 2025–05–22 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:130555 |
| By: | Anton Korinek (University of Virginia and Centre for the Governance of AI); Jai Vipra (University of Virginia and Centre for the Governance of AI) |
| Abstract: | This paper examines the evolving structure and competition dynamics of the rapidly growing market for foundation models, focusing on large language models (LLMs). We describe the technological characteristics that shape the industry and have given rise to fierce competition among the leading players. The paper analyzes the cost structure of foundation models, emphasizing the importance of key inputs such as computational resources, data, and talent, and identifies significant economies of scale and scope that may create a tendency towards greater market concentration in the future. We explore two concerns for competition, the risk of market tipping and the implications of vertical integration, and use our analysis to inform policy remedies to maintain a competitive landscape. |
| Keywords: | Artificial Intelligence, economic concentration, vertical integration, AI regulation. |
| JEL: | D43 O33 L86 L40 L41 K21 |
| Date: | 2024–10–02 |
| URL: | https://d.repec.org/n?u=RePEc:thk:wpaper:inetwp228 |
| By: | Bjørndal, Endre (Dept. of Business and Management Science, Norwegian School of Economics); Bjørndal, Mette (Dept. of Business and Management Science, Norwegian School of Economics); Hovdahl, Isabel (Dept. of Business and Management Science, Norwegian School of Economics); Tselika, Kyriaki (Dept. of Business and Management Science, Norwegian School of Economics) |
| Abstract: | The European Union aims to strengthen electricity market integration as part of its transition to a low-carbon energy system, with substantial investments in cross-border transmission infrastructure. This paper presents the first empirical analysis of a new interconnector, NordLink, on price convergence between southern Norway (NO2) and Germany. Using a novel panel quantile regression model, we estimate the impact of NordLink on the full distribution of hourly electricity prices in both markets. We find that the cable raised average prices in NO2 and lowered them in Germany, but with substantial heterogeneity across the price quantiles. In NO2, lower-quantile prices fell while upper-quantile prices rose. In Germany, the largest reductions occurred in the upper price quantiles. Regarding volatility, NordLink increased price fluctuations in NO2 and reduced them in Germany. We also find that the interconnector has altered the relationship between electricity prices and key fundamentals. Notably, electricity prices in NO2 have become substantially more exposed to gas prices post-NordLink, while Germany has become less exposed. Our findings highlight that market integration influences not only average prices, but also the dynamics and structure of electricity prices, with important implications for policymakers and market participants navigating the future of cross-border transmission in Europe. |
| Keywords: | Electricity prices; econometric analysis; interconnector; price volatility; renewables |
| JEL: | C31 C33 Q21 Q41 |
| Date: | 2025–05–23 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:nhhfms:2025_019 |
| By: | Enache, Andreea; Rhodes, Andrew |
| Abstract: | We consider a setting in which a platform matches buyers and sellers, who then wish to transact with each other multiple times. The platform charges fees for hosting transactions, but also offers convenience benefits. We consider two scenarios. In one scenario, all transactions must occur on the platform; in the other scenario, buyers and sellers can disintermediate the platform after the first transaction, and do subsequent transactions offline. We find that the platform reacts to disintermediation by using a “front-loaded” pricing scheme, whereby it charges more for earlier transactions. We also show that sometimes the platform is better off when disintermediation is possible—because it can use disintermediation to screen users’ private information about their convenience benefits. Buyers are not necessarily better off when they can disintermediate, due to the way in which the platform adjusts its fees. |
| Keywords: | Platforms; disintermediation; convenience benefits; repeat transactions |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:130557 |
| By: | Michela Limardi (Université de Lille); Jordan Loper (CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne); Alexandre Volle (TREE - Transitions Energétiques et Environnementales - UPPA - Université de Pau et des Pays de l'Adour - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This paper investigates how public climate regulation influences NGO activism against firms, offering novel insights into the interaction between formal regulation and civil society. Using a unique dataset combining firm-level NGO targeting with cross-country variation in regulation, we show that regulation significantly boosts NGO activity, even after controlling for visibility shocks like climate disasters. We identify two mechanisms: a salience mechanism, where regulation increases public attention, and a complementarity mechanism, where it enhances NGOs' monitoring capacity. Our findings highlight the complementary roles of regulation and civil society in shaping corporate behavior, offering new perspectives on climate governance and policy design. |
| Keywords: | Civil Society, Climate Regulation, Environmental Governance, NGO activism |
| Date: | 2025–04–25 |
| URL: | https://d.repec.org/n?u=RePEc:hal:cdiwps:hal-05047276 |
| By: | Farmer, J. Doyne; Baumgärtner, Lennart |
| Abstract: | Since the 1980s, the global average of solar photovoltaic (PV) cost has decreased by about two orders of magnitude while the global average onshore wind cost has decreased by about one order of magnitude. But global averages are only part of the story: For both solar and wind, costs vary between countries by about an order of magnitude. We curate a comprehensive database of national costs and build predictive models for future costs by decomposing the levelized cost of electricity (LCOE) into its components and modeling them separately. For solar PV we find that since 1990 the module cost and the balance of system cost (BOS) have both declined roughly exponentially at rates of 12% per year. In contrast, wind turbine cost has declined roughly exponentially by 4% per year, while BOS cost has not declined at all. This suggests that total global wind cost will slowly approach a floor cost of about 35 USD/MWh, reaching about 43 USD/MWh in 2050, whereas global solar cost will continue to decline exponentially, reaching about 3-15 USD/MWh in 2050 and continuing to drop thereafter. For solar, around half of the cross-sectional variations in national LCOE costs is due to variations in capacity factors, though capital costs also play an important role. For wind, the cross-sectional variations are split approximately equally between capacity factor, capital costs, and investment costs. National BOS costs revert to global costs with a timescale of about 5-7 years, while variations in other factors are more persistent. We develop a simple model for predicting the deviations from global costs and show that it makes reasonable predictions with predictable errors. Finally, we compare our predictions to recent projections of integrated assessment models. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:amz:wpaper:2025-12 |
| By: | Schmal, W. Benedikt; Zombek, Max |
| Abstract: | The EU Commission is planning an annual general inspection for cars over ten years old in order to increase road safety. This Policy Impulse analyzes the measure from an economic perspective and shows: The planned regulation hardly achieves any safety-relevant effects, but causes considerable economic damage. A cascade effect makes younger used cars more expensive, which places a particular burden on low-income households. Anticipation effects also shorten the useful life of existing cars - with negative consequences for the climate and resource efficiency. The measure also conflicts with the subsidiarity principle and is likely to primarily serve industrial policy purposes. From an economic perspective, the proposal is highly questionable from a German perspective. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:formoe:318375 |
| By: | Benavides (Dir. proy.), Juan (FEDESARROLLO); Cabrales, Sergio (FEDESARROLLO) |
| Abstract: | Por una combinación de políticas públicas pasadas y actuales, que han introducido costos de transacción a la exploración y a la explotación del gas natural doméstico convencional y no convencional, indecisiones sobre uso, tamaño, localización y remuneración de nuevas facilidades de importación, inflexibilidades en contratación y cobro por distancia del sistema de transporte, Colombia se enfrenta a un déficit y posible desabastecimiento de gas natural en el corto plazo. Fedesarrollo presenta cinco notas técnicas sobre los impactos del déficit de gas natural debidos a la reducción de la oferta doméstica, las dificultades de ampliar las capacidades de importación en el corto plazo, y al aumento de precios para los usuarios finales por necesidades de importación. Estas notas tienen como objetivo dar elementos de juicio para la toma de decisiones dentro del Estado e informar a la opinión con datos públicos y argumentos orientados por el interés general. Los títulos de las notas técnicas son los siguientes: Nota 1. Incremento del precio del gas natural residencial en escenarios de mayor importación. Nota 2. Costo fiscal por mayores subsidios ante el aumento del precio del gas natural. Nota 3. Costos macroeconómicos de la reducción de la oferta de gas natural. Nota 4. Pobreza energética por reducción de la oferta y aumento del precio en gas natural. Nota 5. Política pública y regulación de corto y mediano plazo. |
| Keywords: | Gas; Gas Natural; Regulación; Exploración; Colombia |
| JEL: | L72 L95 O13 Q41 |
| Date: | 2025–05–02 |
| URL: | https://d.repec.org/n?u=RePEc:col:000124:021068 |