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on Regulation |
| By: | Alice Lixuan Xu; Jorge S\'anchez Canales; Chiara Fusar Bassini; Lynn H. Kaack; Lion Hirth |
| Abstract: | In wholesale electricity markets, prices fluctuate widely from hour to hour and electricity generators price-hedge their output using longer-term contracts, such as monthly base futures. Consequently, the incentives they face to drive up the power prices by reducing supply has a high hourly specificity, and because of hedging, they regularly also face an incentive to depress prices by inflating supply. In this study, we explain the dynamics between hedging and market power abuse in wholesale electricity markets and use this framework to identify market power abuse in real markets. We estimate the hourly economic incentives to deviate from competitive behavior and examine the empirical association between such incentives and observed generation patterns. Exploiting hourly variation also controls for potential estimation bias that do not correlate with economic incentives at the hourly level, such as unobserved cost factors. Using data of individual generation units in Germany in a six-year period 2019-2024, we find that in hours where it is more profitable to inflate prices, companies indeed tend to withhold capacity. We find that the probability of a generation unit being withheld increases by about 1 % per euro increase in the net profit from withholding one megawatt of capacity. The opposite is also true for hours in which companies benefit financially from lower prices, where we find units being more likely to be pushed into the market by 0.3 % per euro increase in the net profit from capacity push-in. We interpret the result as empirical evidence of systematic market power abuse. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.03808 |
| By: | Lukas Franken; Andrew Lyden; Daniel Friedrich |
| Abstract: | More spatially granular electricity wholesale markets promise more efficient operation and better asset siting in highly renewable power systems. Great Britain is considering moving from its current single-price national wholesale market to a zonal design. Existing studies reach varying and difficult-to-reconcile conclusions about the desirability of a zonal market in GB, partly because they rely on models that vary in their transparency and assumptions about future power systems. Using a novel open-source electricity market model, calibrated to match observed network behaviour, this article quantifies consumer savings, unit-level producer surplus impacts, and broader socioeconomic benefits that would have arisen had a six-zone market operated in Great Britain during 2022-2024. In the absence of mitigating policies, it is estimated that during those three years GB consumers would save approximately {\pounds}9.4/MWh (equalling an average of more than {\pounds}2.3B per year), but generators in northern regions would experience revenue reductions of 30-40\%. Policy interventions can restore these units' national market revenues to up to 97\% while still preserving around {\pounds}3.1/MWh in consumer savings (about {\pounds}750M per year). It is further estimated that the current system could achieve approximately {\pounds}380-{\pounds}770 million in annual welfare gain during 2022-2024 through improved operational efficiency alone. The drivers behind these benefits, notably wind curtailment volumes, are expected to become more pronounced towards 2030, suggesting that purely operationally achieved annual benefits of around {\pounds}1-2 billion beyond 2029 are likely. It is found that the scale of these benefits would outweigh the potential downsides related to increases in the cost of capital that have been estimated elsewhere. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.04107 |
| By: | Goonj Mohan (Universitat de Barcelona) |
| Abstract: | This paper studies regulation of a social media platform (SMP). I consider a user network with data externalities and an SMP that earns revenue from data-based personalized advertising. The SMP offers a price for user data and users simultaneously accept or reject the offer. Under a microfounded model I show that sharing moderate amount of user data maximizes user welfare. However, externalities reduce price for data and all data is shared in equilibrium. A strict consent policy like GDPR overcorrects this imbalance, burdens users with complete data-control and decreases user welfare. Data minimization moderately shifts data-control to users and increases user welfare. |
| Keywords: | Bayesian signalling, data, social media platform, user welfare |
| JEL: | C11 D62 D83 H23 L51 L88 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ewp:wpaper:477web |
| By: | Patrice Bougette (Université Côte d'Azur; GREDEG CNRS); Oliver Budzinski (Technische Universität Ilmenau); Frédéric Marty (Université Côte d'Azur, France; GREDEG CNRS) |
| Abstract: | Digital platforms, ecosystems, and R&D-intensive sectors pose distinctive challenges for merger control. In these fast-evolving markets, shaped by technological change and shifting competitive dynamics, traditional ex-ante reviews often fall short in anticipating long-term outcomes. This paper proposes a multi-step merger control model that includes a mechanism for remedy revision, allowing authorities to adjust behavioral commitments during their implementation. By embedding structured flexibility into merger decisions, our approach enables remedies to evolve in response to market reconfigurations, strategic conduct, or regulatory insights. The framework aims to ensure that remedies remain proportionate, effective, and legally predictable. By bridging ex-ante assessment and ex-post adaptation, it offers a policy instrument better suited to the uncertainties of dynamic competition. |
| Keywords: | Merger control, merger remedies, dynamic competition, competition policy uncertainties, innovation, digital markets, mergers & acquisitions, merger waves |
| JEL: | K21 L12 L13 L41 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:gre:wpaper:2025-22 |
| By: | Zonta, Enrico |
| JEL: | J1 |
| Date: | 2025–05–23 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128079 |
| By: | Amal Ben Khaled (University of Carthage, Tunisia Polytechnic School, LEGI, Tunisia; Université Côte d'Azur, CNRS, GREDEG, France); Rami Haj Kacem (University of Carthage, Tunisia Polytechnic School, LEGI, Tunisia); Nathalie Lazaric (Université Côte d'Azur, CNRS, GREDEG, France; University of Gothenburg, Sweden) |
| Abstract: | Digital platforms, ecosystems, and R&D-intensive sectors pose distinctive challenges for merger control. In these fast-evolving markets, shaped by technological change and shifting competitive dynamics, traditional ex-ante reviews often fall short in anticipating long-term outcomes. This paper proposes a multi-step merger control model that includes a mechanism for remedy revision, allowing authorities to adjust behavioral commitments during their implementation. By embedding structured flexibility into merger decisions, our approach enables remedies to evolve in response to market reconfigurations, strategic conduct, or regulatory insights. The framework aims to ensure that remedies remain proportionate, effective, and legally predictable. By bridging ex-ante assessment and ex-post adaptation, it offers a policy instrument better suited to the uncertainties of dynamic competition. |
| Keywords: | Energy transition index, governance, environmental taxes, Vector Error Correction Model, K-means |
| JEL: | Q58 Q48 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:gre:wpaper:2025-23 |
| By: | Luiza Ribeiro; Alexandre Street; Jose Manuel Arroyo; Rodrigo Moreno |
| Abstract: | The increasing vulnerability of power systems has heightened the need for operating reserves to manage contingencies such as generator outages, line failures, and sudden load variations. Unlike energy costs, driven by consumer demand, operating reserve costs arise from addressing the most critical credible contingencies - prompting the question: how should these costs be allocated through efficient pricing mechanisms? As an alternative to previously reported schemes, this paper presents a new causation-based pricing framework for electricity markets based on contingency-constrained energy and reserve scheduling models. Major salient features include a novel security charge mechanism along with the explicit definition of prices for up-spinning reserves, down-spinning reserves, and transmission services. These features ensure more comprehensive and efficient cost-reflective market operations. Moreover, the proposed nodal pricing scheme yields revenue adequacy and neutrality while promoting reliability incentives for generators based on the cost-causation principle. An additional salient aspect of the proposed framework is the economic incentive for transmission assets, which are remunerated based on their use to deliver energy and reserves across all contingency states. Numerical results from two case studies illustrate the performance of the proposed pricing scheme. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.24159 |
| By: | Yaroslav Melekh (UCL Institute of Sustainable Resources); James Dixon (UCL Institute of Sustainable Resources); Katrina Salmon (UCL Institute of Sustainable Resources); Michael Grubb (UCL Institute of Sustainable Resources) |
| Abstract: | The European gas system has entered a structurally volatile phase defined by post energy crisis overbuild, dislocated demand trajectories, and a decoupling mandate under REPowerEU. This paper interrogates the contradictions between fossil lock-in through LNG import capacity and overcontracting, and policy-driven demand reduction. The EU’s pivot to flexible LNG procurement exposes pricing to global volatility, while decarbonisation hinges on electrification, demand-side retrofits and hydrogen feasibility—each encumbered by cost, infrastructure lag, and political friction. We assess Europe's gas outlook through the decade's residual volatility, policy ambivalence, and the emerging global LNG oversupply regime — a clash with geopolitical energy security imperatives, domestic backlashes against capital-intensive green technologies and market inertia. We argue that Europe’s energy system now operates in a zone of structural ambiguity—where security, sovereignty, economy and climate ambition remain deeply entangled, but as yet far from operationally aligned. |
| Keywords: | Natural gas trade; LNG; European energy scenarios; European energy security; RePowerEU |
| JEL: | D40 D47 F15 F21 F50 F51 G13 H12 L60 L95 O25 O38 O52 Q34 Q35 Q41 Q47 Q48 Q54 |
| Date: | 2025–05–13 |
| URL: | https://d.repec.org/n?u=RePEc:thk:wpaper:inetwp233 |
| By: | Ryo Masuyama (Graduate School of Economics and Junior Research Fellow, Research Institute for Economics & Business Administration (RIEB), Kobe University, JAPAN) |
| Abstract: | Targeted pricing is an aggressive strategy to steal demand from rivals. Therefore, it is believed that firms should employ it. However, targeted pricing has rarely been observed. There is a gap between our perceptions in the literature on targeted pricing and reality. This study demonstrates the negative aspects of targeted pricing by considering supply chain competition. When a rival supply chain is vertically separated, targeted pricing lowers the rival’s input price and intensifies competition. Conversely, when the rival firm is vertically integrated, this effect does not occur. Therefore, a firm should confirm its rival's vertical structure when deciding whether to employ targeted pricing. |
| Keywords: | Targeted pricing; Uniform pricing; Vertical structure; Supply chain management; Hotelling model |
| JEL: | D43 L10 L13 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:kob:dpaper:dp2025-13 |
| By: | Mark Glick (University of Utah); Gabriel A. Lozada (University of Utah); Darren Bush (University of Houston Law Center) |
| Abstract: | Antitrust has adopted a normative economic theory based on maximizing economic surplus. The theory originates with Marshall but was introduced into antitrust as the Consumer Welfare Standard by Judge Robert Bork, and survives today in virtually every industrial organization textbook. This persistence is unwarranted. Welfare economists abandoned it several decades ago because the theory is inconsistent, and we review those inconsistencies. Moreover, welfare economists and moral philosophers have shown that the theory is biased in favor of wealthy individuals and corporations—the very powers the antitrust law is supposed to regulate. Finally, behavioral economists and psychologists have shown that the model of human behavior behind the economic surplus theory is simplistic and often in conflict with actual human behavior. We argue that antitrust should be brought into alignment with modern welfare economics. We also discuss how the New Brandeis Movement's proposal to replace the consumer welfare standard with the protecting competition standard could be developed to accomplish this goal. |
| Keywords: | Antitrust; consumer surplus; equivalent variation; compensating variation; cost-benefit analysis; Kaldor criterion and Hicks criterion; altruism; income inequality; rationality assumption; well-being; antitrust standards. |
| JEL: | K21 L40 D60 D61 D63 D90 |
| Date: | 2024–12–09 |
| URL: | https://d.repec.org/n?u=RePEc:thk:wpaper:inetwp231 |
| By: | Leonardo Bursztyn; Matthew Gentzkow; Rafael Jiménez-Durán; Aaron Leonard; Filip Milojević; Christopher Roth |
| Abstract: | Market definition is essential for antitrust analysis, but challenging in settings with network effects, where substitution patterns depend on changes in network size. To address this challenge, we conduct an incentivized experiment to measure substitution patterns for TikTok, a popular social media platform. Our experiment, conducted during a time of high uncertainty about a potential U.S. TikTok ban, compares changes in the valuation of other social apps under individual and collective TikTok deactivations. Consistent with a simple framework, the valuations of alternative social apps increase more in response to a collective TikTok ban than to an individual TikTok deactivation. Our framework and estimates highlight that individual and collective treatments can even lead to qualitatively different conclusions about which alternative goods are substitutes. |
| JEL: | D85 L0 L40 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33901 |
| By: | Pineda, Jesus; Núñez-Mujica, Guido; Wang, Seaver; Sen, Drishti |
| Abstract: | Atomausstieg is Germany’s policy of moving away from nuclear power. A total of 17 nuclear power plants (NPPs) have been phased out since 2011. In this work we analyze the environmental and public health costs of Atomausstieg using hourly electricity generation data. The costs are quantified in two ways: estimated avoidable $CO_{2}$ emissions and estimated number of avoidable deaths and illness from air pollution. We find that the shutdown of NPPs led to an increase in avoidable carbon emissions and an increase in avoidable deaths and illnesses from air pollution derived from additional coal use. Without Atomausstieg, Germany could have avoided 230 million tons of $CO_{2}eq$ emissions, 5, 800 deaths, nearly 55, 900 severe illnesses and 3.29 million minor illnesses linked to air pollution. We also find that without the shutdowns, the average carbon intensity of the German grid would have decreased 48\%{} relative to current levels, and the share of electricity from fossil fuels would have been 26.6\%{} instead of the 46.92\%{} reported for 2023. Our study highlights the unintended effects of misguided energy and environmental policies that prioritized nuclear power plant decommissioning, with valuable insights for other countries considering shutting down their nuclear energy programs. |
| Date: | 2025–05–12 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:r6djg_v1 |
| By: | Sulis Patrizia (European Commission - JRC) |
| Abstract: | Access to broadband networks is increasingly an essential enabler to drive the economic and social development of territories, improving access to essential services such as education and contributing to the number of workplaces. The improvement of digital connectivity and Internet network performance is a long-standing policy priority for the European Commission to strengthen regional development and resilience and overcome spatial disparities in access to opportunities across different European regions. In this sense, mapping and understanding the spatial patterns of broadband network access and performance across regions in the EU27 is critical to adequately address the possible disparities and needs of different places and territories. Results presented in this report show that, over the last years, there has been a generalised improvement in broadband performance across all EU Member States, both for the fixed and mobile broadband networks. Whereas performance differences between cities and rural areas are still significant, contributing to a well-known âdigital divideâ, results also illustrate how, for several countries, the best performance improvements in network performance occurred in rural areas in recent years. These findings represent a promising signal for the current efforts to bridge the digital gap across territories in many European countries, envisioned by the Commission and sustained through dedicating policies. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc141281 |