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on Regulation |
| By: | Tojal Ramos Dos Santos, Carolina; Morais Guidetti, Bruna |
| Abstract: | This paper investigates strategies to expand piped water and sewer through private providers. Using billing data from a major provider in Brazil and a structural model of consumer sanitation demand and service expansion, we assess the viability of connection targets and the welfare effects of connection subsidies and price incentives. We find that universal connection targets are largely unfeasible due to low sewer take-up. Combining connection subsidies with higher sewer prices boosts expansion and adoption but requires government funding. Charging consumers upon sewer availability is self-sustaining and promotes adoption and expansion, but it shifts costs to households. |
| JEL: | L95 Q25 L51 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14191 |
| By: | Frédéric Marty; Thierry Warin |
| Abstract: | This article examines the competitive implications of algorithmic pricing in digital markets. While algorithmic pricing can enhance market efficiency through real-time adjustments, personalized offers, and inventory optimization, it also raises substantial risks, including tacit collusion, discriminatory pricing, market segmentation, and exploitative consumer manipulation. Drawing on theoretical models, simulations, and emerging empirical evidence, the brief explores how algorithmic strategies may lead to supra-competitive prices without explicit coordination, particularly in oligopolistic or data-rich environments. It also highlights how common algorithm providers, shared data sources, and learning dynamics can undermine competition. Special attention is given to the challenges posed by loyalty penalties, ecosystem lock-in, and granular predatory pricing. The paper concludes with a set of policy recommendations emphasizing updated enforcement tools, transparency mechanisms, ex ante regulation for dominant platforms, and a coordinated approach to digital market oversight that balances innovation with consumer protection. Cet article examine les implications concurrentielles de la tarification algorithmique sur les marchés numériques. Si la tarification algorithmique peut améliorer l'efficacité du marché grâce à des ajustements en temps réel, des offres personnalisées et une optimisation des stocks, elle présente également des risques importants, notamment la collusion tacite, la tarification discriminatoire, la segmentation du marché et la manipulation abusive des consommateurs. S'appuyant sur des modèles théoriques, des simulations et des données empiriques émergentes, cet article explore comment les stratégies algorithmiques peuvent conduire à des prix supraconcurrentiels sans coordination explicite, en particulier dans les environnements oligopolistiques ou riches en données. Il souligne également comment les fournisseurs d'algorithmes communs, les sources de données partagées et la dynamique d'apprentissage peuvent nuire à la concurrence. Une attention particulière est accordée aux défis posés par les pénalités de fidélité, le verrouillage de l'écosystème et les prix prédateurs granulaires. L'article conclut par un ensemble de recommandations politiques mettant l'accent sur la mise à jour des outils d'application, les mécanismes de transparence, la réglementation ex ante des plateformes dominantes et une approche coordonnée de la surveillance du marché numérique qui concilie innovation et protection des consommateurs. |
| JEL: | L41 D43 L13 K21 G18 |
| Date: | 2025–08–04 |
| URL: | https://d.repec.org/n?u=RePEc:cir:circah:2025pr-09 |
| By: | Franziska Klaucke; Karsten Neuhoff; Alexander Roth; Wolf-Peter Schill; Leon Stolle |
| Abstract: | To ensure security of supply in the power sector, many countries are already using or discussing the introduction of capacity mechanisms. Two main types of such mechanisms include capacity markets and capacity reserves. Simultaneously, the expansion of variable renewable energy sources increases the need for power sector flexibility, for which there are promising yet often under-utilized options on the demand side. In this paper, we analyze how a centralized capacity market and an advanced reliability reserve with a moder- ately high activation price affect investments in demand-side flexibility technologies. We do so for a German case study of 2030, using an open-source capacity expansion model and incorporating detailed demand-side flexibility potentials across industry, process heat, and district heating. We show that a centralized capacity market effectively caps peak prices in the wholesale electricity market and thus reduces incentives for investments in demand-side flexibility options. The advanced reliability reserve induces substantially higher flexibility investments while leading to similar overall electricity supply costs and ensuring a similar level of security of supply. The advanced reliability reserve could thus create a learning environment for flexibility technologies to support the transition to climate neutral energy systems. Additionally, an advanced reliability reserve could be introduced faster and is more flexible than a centralized capacity market. While concrete design parameters are yet to be specified, we argue that policymakers should consider the reliability reserve concept in upcoming decision on capacity mechanisms in Germany and beyond. |
| Keywords: | Capacity mechanisms, strategic reserve, capacity market, power sector modeling, demand-side flexibility, demand response, security of supply |
| JEL: | C61 D47 Q41 Q48 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2127 |
| By: | Andrew Burlinson (School of Economics, University of Sheffield, Sheffield S10 2TU, UK); Monica Giulietti (Nottingham University Business School, University of Nottingham and UK Energy Research Centre, UK); Michael Waterson (Department of Economics, University of Warwick, UK); Victor Ajayi (Energy Policy Research Centre, University of Cambridge, UK) |
| Abstract: | Two exogenous events, coupled with substantial data on household electricity and gas usage, enable us to examine detailed consumption effects of recent rises in energy prices in Britain resulting from the Russia-Ukraine conflict. We isolate two groups of consumers with similar characteristics, all initially on fixed price tariffs. One group, forcibly moved to variable price tariffs, suffered the price shock, the others remained on fixed price tariffs. Our difference-in-differences framework captures the impacts on the former group, finding significant negative consumption effects, particularly regarding gas usage. Differing effects across richer and poorer households are revealed, the poorest greatly reducing consumption. |
| Keywords: | Energy consumption, difference-in-differences, energy crisis, smart meters |
| JEL: | L94 E31 D12 I19 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:shf:wpaper:2025008 |
| By: | Axel Anlauf; Lucas Erlbacher; Catalina Enrica Renč; Stefan Schmalz; Oliver Prausmüller; Mathias Grandosek |
| URL: | https://d.repec.org/n?u=RePEc:clr:mwugar:265 |
| By: | Tomaso Duso; Joseph E. Harrington Jr.; Carl Kreuzberg; Geza Sapi |
| Abstract: | Competition authorities increasingly rely on economic screening tools to identify markets where firms deviate from competitive norms. Traditional screening methods assume that collusion occurs through secret agreements. However, recent research highlights that firms can use public announcements to coordinate decisions, reducing competition while avoiding detection. We propose a novel approach to screening for collusion in public corporate statements. Using natural language processing, we analyze more than 300, 000 earnings call transcripts issued worldwide between 2004 and 2022. By identifying expressions commonly associated with collusion, our method provides competition authorities with a tool to detect potentially anticompetitive behavior in public communications. Our approach can extend beyond earnings calls to other sources, such as news articles, trade press, and industry reports. Our method informed the European Commission’s 2024 unannounced inspections in the car tire sector, prompted by concerns over price coordination through public communication. |
| Keywords: | Communication, Collusion, NLP, Screening, Text Analysis |
| JEL: | C23 D22 L1 L4 L64 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2131 |
| By: | Zack Cooper; Stuart V. Craig; Aristotelis Epanomeritakis; Matthew Grennan; Joseph R. Martinez; Fiona Scott Morton; Ashley T. Swanson |
| Abstract: | This paper empirically analyzes the effects of mergers between complementary firms on competition and pricing. As these non-horizontal mergers have become more common, there is increasing interest in evaluating both potential efficiencies such as eliminating double marginalization and potential anticompetitive effects such as foreclosure and recapture. The mergers we study – hospital acquisitions of physician practices – have reshaped the $1 trillion US physician industry, nearly doubling the share of physicians working for hospitals between 2008 and 2016. We combine novel data and machine learning algorithms to identify a large number of integration events, spanning a wide range of markets with different competitive circumstances. We merge the integration events with claims data from a large national insurer to study their effects on prices. Focusing on childbirths, the most ubiquitous admission among the privately insured, we find that, on average, these mergers led to price increases for hospitals and physicians of 3.3% and 15.1%, respectively, with no discernible effects on quality measures. Using demand estimation to characterize substitution patterns for both physicians and hospitals, we construct tests that demonstrate price increases are larger among transactions with greater scope for foreclosure and recapture. Our estimates suggest that the costs of these mergers of hospitals and physicians have been substantial, and our mechanism tests offer guidance in predicting where the anticompetitive effects of non-horizontal mergers are likely to be strongest. |
| JEL: | D4 I11 L1 L4 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34039 |
| By: | Karamik, Yasemin; Reif, Simon |
| Abstract: | Maternity unit closures are increasingly common in areas with low birth rates, resulting in diminished competition between units. We examine how competition affects the quality and amenities of the remaining maternity units in Germany. To address potential endogeneity in the level of competition, we exploit the unpopularity of maternity unit closures and instrument competition with the tightness of past regional elections. Our findings indicate that while low competition does not significantly affect the quality of care, it leads to reduced availability of additional services potentially used to attract patients in the higher competitive market. |
| Keywords: | Maternity unis, hospital competition, healthcare quality, non-price amenities |
| JEL: | I11 I18 L13 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:319895 |
| By: | Casady, Carter B; Suárez-Alemán, Ancor |
| Abstract: | This paper investigates the impact of public-private partnership (PPP)-enabling conditions on infrastructure development in Latin America and the Caribbean (LAC). Using a unique longitudinal dataset, this study analyzes how institutional conditions in 26 LAC countries influenced PPP investment activity between 2009 and 2022. The findings indicate political and social will, along with institutional capacity, are significant predictors of PPP investment, while market reliability, transparency, governance mechanisms, and regulatory regimes, although important, are less impactful. These findings highlight the critical importance of political stability and strong institutional frameworks in driving PPP investment activity in the region. |
| Keywords: | Infrastructure Development;Public-private Partnerships;Latin America and the Caribbean;institutional capacity;Political and social will |
| JEL: | H54 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14199 |
| By: | Césaire Meh; Kevin Moran |
| Abstract: | We develop a framework to quantitatively assess the links between traditional and shadow banks and how these links are modified by regulatory reforms in the traditional banking sector. In the model, banks screen projects and originate loans, and then sell some of these loans (securitize them) to shadow banks, in order to redeploy capital and invest in alternative productive investment opportunities. This capital redeployment towards profitable investment implies a potentially socially beneficial role for shadow banks. However, the availability of securitization might also lead banks to screen projects less intensively and increase risk-taking. We explore the quantitative implication of this tradeoff and how it is affected by regulation of the traditional bank sector. Nous développons un modèle macroéconomique permettant d’analyser les liens entre le secteur bancaire traditionnel et le secteur parallèle ("shadow banking") et comment ces liens sont affectés par la réglementation bancaire imposée au secteur bancaire traditionnel. Dans le modèle, les banques traditionnelles font la sélection initiale des projets et émettent des prêts, mais peuvent ensuite une partie de ces prêts (en les titrisant) à leur contreparties du secteur parallèle, afin de réallouer leur capital à d’autres opportunités d’investissement productives. Cette réallocation de capital vers des investissements rentables confère aux shadow banks un rôle potentiellement bénéfique sur le plan social. Toutefois, la possibilité de titrisation des prêts peut également inciter les banques à réduire leurs efforts initiaux dans les sélection des projets et à prendre davantage de risques. Nous examinons les implications quantitatives de cette tension et la manière dont celles-ci sont influencées par la réglementation du secteur bancaire traditionnel. |
| Keywords: | Banks, Shadow banks, Moral hazard, Bank regulation, secteur bancaire traditionnel, secteur bancaire parallèle (shadow banking), réglementation bancaire, aléa moral |
| JEL: | E44 E52 G21 |
| Date: | 2025–07–28 |
| URL: | https://d.repec.org/n?u=RePEc:cir:cirwor:2025s-22 |
| By: | Rowan Hinkle-Johnson (RWTH Aachen University, Templergraben 55, 52056 Aachen, Germany); Reinhard Madlener (1- Institute for Future Energy Consumer Needs and Behavior (FCN), School of Business and Economics / E.ON Energy Research Center, RWTH Aachen University, Mathieustrasse 10, 52074 Aachen, Germany; 2- Department of Industrial Economics and Technology Management, Norwegian University of Science and Technology (NTNU), Sentralbygg 1, Gløshaugen, 7491 Trondheim, Norway. November 2023) |
| Abstract: | This work aims to explore financial mechanisms and their potential to maximize co-benefits for the mid-term rollout of transmission grid infrastructure. The research focuses on Germany and the U.S., examining options for mid-term capital injection into transmission development. The methodology includes case study identification and analysis, development of strategic criteria, criteria weighting and validation through expert interviews and formulation of a Multi-Criteria Decision Analysis framework. The work aims to qualitatively explore the potential of innovative financial mechanisms to accelerate transmission grid infrastructure development in the face of increasing energy demands and the sustainable energy transition to renewables. |
| Keywords: | Transmission grid infrastructure; financial mechanism; United States; Germany |
| JEL: | G Z |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:ris:fcnwpa:021428 |
| By: | Kenneth R. Ahern |
| Abstract: | Multinational firms play a pivotal role in the global economy, yet economic and finance research has largely examined them in isolation. Economic theory focuses on trade and multinational activity but gives relatively little attention to cross-border mergers, while finance research emphasizes empirical studies of mergers but rarely integrates broader economic theories. This chapter aims to synthesize these two literatures into a unified framework for understanding multinational firms and cross-border mergers. The discussion is organized around the decision-making process of multinational firms, from choosing to operate internationally to selecting between greenfield investment and mergers. This framework reveals the theoretical and empirical evidence on the drivers of multinational production, including productivity gains, knowledge transfers, and market frictions. The findings highlight the commonality between the two literatures, but also suggests that greater integration between economic theory and finance research will generate a deeper understanding of the role of multinational firms in the global economy. |
| JEL: | F10 F12 F14 F23 G34 G41 L41 L44 O32 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34067 |
| By: | Jaeger, William K; Bruno, Ellen M; Fisher-Vanden, Karen; Harter, Thomas |
| Abstract: | To promote better groundwater policymaking, hydrologists and economists need to work together. The importance of hydrology is self-evident, but we posit that questions about the causes of and potential solutions for groundwater problems, and pathways to better policymaking, are fundamentally economics questions in that they rely on understanding people’s preferences, incentives, and responses to laws and other institutions that guide people’s actions. Not surprisingly then, most hydrologic research questions implicitly arise in response to economic demands and constraints. Hydrology and economics both rely on positive science involving theory, empirical methods, calibration, and validation. Indeed, their models can be linked to characterize and understand their interdependent dynamics. While other natural and social sciences also have important roles to play, this paper focuses primarily on how economics connects (ground)water to policymaking. Economics is a broad discipline with a primary role in understanding how people live in a landscape. Analogous to hydrology’s primary role in describing how water flows, recedes, seeps, evaporates, or recharges aquifers, economics describes people’s endeavors including their use of water, land, and other resources to produce, consume, trade, invest, conserve, and degrade the systems where they live. Policymaking is normative: it involves value judgments when assessing tradeoffs, setting priorities, or choosing among policy options. Economics is unique among disciplines in that it also comprises ‘normative analysis’ frameworks for measuring people’s values as a guide toward satisfying those preferences to the greatest extent possible (e.g. using benefit-cost analysis). But when natural science research is conducted without recognizing the economic considerations relevant to policymakers and managers, it may overlook critical ways that human system structures, dynamics, and people’s values inform the most promising ways to turn science into policy. By collaborating with economists, interdisciplinary research can bring natural sciences together with positive and normative economics to promote better groundwater policy. |
| Keywords: | Hydrology, Economics, Applied Economics, Earth Sciences, Generic health relevance, Life on Land, interdisciplinary, human-natural systems, positive economics, normative economics, first-order disciplines, groundwater, Meteorology & Atmospheric Sciences |
| Date: | 2025–08–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:agrebk:qt0m28s1xq |