|
on Regulation |
| By: | Michael G Pollitt; Daniel Duma; Andrei Covatariu; Paul Nillesen |
| Keywords: | Distribution System Operators, gas, electricity, energy transition |
| JEL: | L94 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:enp:wpaper:eprg2519 |
| By: | Natalia Fabra; Clément Leblanc; Mateus Souza |
| Abstract: | The 2021-2023 European energy crisis, triggered by the war in Ukraine, led to broad policy interventions in energy markets. In contrast to the retail-side measures and public transfers implemented elsewhere, Spain and Portugal targeted the wholesale electricity market through the so-called Iberian solution. We quantify the distributional implications of the crisis and this market intervention on Spanish electricity firms and across consumer groups. We find that the crisis shifted substantial wealth from consumers to generators, with regressive impacts among consumers. Conversely, the policy’s relief was progressive, delivering larger gains to lower-income groups. |
| Keywords: | energy crisis, electricity markets, distributional implications, machine learning |
| JEL: | L94 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12093 |
| By: | Lo Prete, Chiara; Palmer, Karen (Resources for the Future); Robertson, Molly (Resources for the Future) |
| Abstract: | Existing wholesale electricity market designs are poorly suited to address challenges associated with the evolving resource mix. For example, recent scarcity events in the United States show that reliability challenges in renewable- and gas-dominated electric power systems arise not from the lack of generation capacity to serve peak customer demand, but from the lack of available capacity to provide the requisite energy at times of need. We review 11 proposed electricity market designs for the clean energy transition and compare them based on 10 criteria. Enhancing reliability in electric power systems with a significant amount of variable renewable energy requires incentivizing resource flexibility, both in investment and in operation. Electricity market structures should allow resources needed for reliability to earn adequate revenues to recover their variable and fixed costs. Good market designs also enable low-cost financing to support investments in capital-intensive resources that are instrumental in meeting decarbonization objectives. An additional property of well-designed markets is promoting short-run efficiency by reducing incentives to exercise market power and supporting efficient renewable curtailment outcomes. Besides achieving reliability, long-run efficiency, and short-run efficiency, some proposals in our review seek to achieve energy affordability objectives and integration with clean energy goals. Our evaluation highlights several open questions and directions for future research: the determination of mandatory purchase obligations of load-serving entities and associated enforcement mechanisms; the interplay between long-term hedging requirements and incentives for demand participation in real time; and the compatibility between long-term contract design and efficient operations in short-term energy markets. |
| Date: | 2024–06–25 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-24-09 |
| By: | Francesco Ravazzolo; Luca Rossini; Andrea Viselli |
| Abstract: | This paper introduces a novel Bayesian reverse unrestricted mixed-frequency model applied to a panel of nine European electricity markets. Our model analyzes the impact of daily fossil fuel prices and hourly renewable energy generation on hourly electricity prices, employing a hierarchical structure to capture cross-country interdependencies and idiosyncratic factors. The inclusion of random effects demonstrates that electricity market integration both mitigates and amplifies shocks. Our results highlight that while renewable energy sources consistently reduce electricity prices across all countries, gas prices remain a dominant driver of cross-country electricity price disparities and instability. This finding underscores the critical importance of energy diversification, above all on renewable energy sources, and coordinated fossil fuel supply strategies for bolstering European energy security. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.23289 |
| By: | Ewan McGaughey |
| Abstract: | Is public ownership or privatisation better, and when? The 20th century was like a pendulum, swinging between narratives that we must abolish private ownership in the means of production, to saying there 'are virtually no limits on what can be privatised', and hovering as if ready to swing again. By contrast, this paper shows that outcomes improve and costs decrease when enterprises are publicly owned, if property is 'non-accessible'. Otherwise private ownership is better. Property is 'non-accessible' if an enterprise is a skill-based, natural, or network monopoly. Property is 'accessible' if people can buy land or capital, source materials or vehicles, or get skills or knowledge to start up a business. Then, competition channels private greed into the public good. This paper contends that data lets us move beyond ideological clash, and gives answers that practically assist policy, to fill the gaps in human rights and market failure frameworks. For example, water is 90% publicly owned in wealthy countries, with lower bills and better outcomes. For rail, fares are lower with greater electrification if tracks and operators are public. For electricity, bills are lower with more renewables if grids and a retail option are public. For telecom networks, public ownership tends to reduce bills and raise internet speed. Most wealthy countries hold non-accessible property in public hands, and do better for it. Three further principles are crucial if circumstances change. First, technology can change what is accessible property, such as renewables making electricity generation competitive, or big tech data creating new monopolies. So, law must respond to tech. Second, there may be good non-economic reasons, such as protecting democracy and the environment, to change the public/private balance. Third, good governance is distinct from wise ownership choices, and generally supports voice for workers, as well as investors, and service-users where competition fails. Together, good governance and wise ownership socialise the nature of all property, and internally transform the public-private divide. Policymakers should base decisions on the evidence of what works, and this theory helps make those decisions. |
| Keywords: | Privatisation, nationalisation, socialism, capitalism, water, health, electricity, rail, education, media, internet, market failure, property, production, non-accessible, monopoly, democracy, technology, governance |
| JEL: | I28 J10 K11 K22 K23 K32 L12 L21 L22 L32 L43 L51 L53 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:cbr:cbrwps:wp545 |
| By: | Kine Josefine Aurland-Bredesen; Rolf Golombek; Mads Greaker |
| Abstract: | Whereas hydrogen is currently a marginal energy carrier, the aim of the EU is to trigger low-carbon hydrogen production that covers around 10 percent of EU’s energy needs by 2050. If this comes true, it will be an energy revolution. We study competition between green and blue hydrogen by proposing a Salop model that encompasses the value chains for hydrogen and CCS. For blue hydrogen, we distinguish between central production—natural gas is transformed to hydrogen close to the extraction site and hydrogen is then transported over a long distance via terminals to the hydrogen consumers—and local production—natural gas is transformed to hydrogen at terminals located near the hydrogen consumers. We find that mark-ups are highest under central blue hydrogen production, which implies that total production of hydrogen, supply of blue hydrogen, and share of plants investing in carbon capture facilities are lower under central production than under local production of blue hydrogen. We provide numerical simulations of the alternative market outcomes and also the corresponding social outcomes, and calculate the magnitude of policy instruments that should be used in order to obtain the social outcomes under central and local blue hydrogen production. |
| Keywords: | blue hydrogen, green hydrogen, carbon capture and storage, Salop circle, carbon tax, market imperfections, network externalities |
| JEL: | H23 L13 Q35 Q38 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12130 |
| By: | Kohei Daido (Kwansei Gakuin University); Keizo Mizuno (Kwansei Gakuin University) |
| Abstract: | We examine duopolistic competition within a real options framework, where two firms provide horizontally differentiated core goods along with vertically differentiated add-on services. Focusing on consumer savviness regarding the quality of add-on services, we analyze its impact on prices, investment timing, and social welfare. Our analysis yields three main findings. First, the price of a core good with high-quality add-on services is lower (resp. higher) than that of a core good with low-quality add-on services when the proportion of non-savvy consumers in the population is high (resp. low). Second, both firms are incentivized to invest preemptively when the proportion of non-savvy consumers is high or the quality difference in add-on services is small; however, when the proportion of non-savvy consumers is low or the quality gap is significant, only the firm offering high-quality add-on services retains this incentive. Third, as the proportion of non-savvy consumers decreases, the flow of social surplus increases; nonetheless, the overall expected social welfare may decline due to a delay in the follower's investment and a prolonged monopoly duration. This suggests a need for a policy mix that combines consumer protection with the encouragement of market entry. |
| Keywords: | add-on service, consumer savviness, real options, investment timing, delay. |
| JEL: | D90 L22 L24 M21 O31 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:kgu:wpaper:298 |
| By: | Mertens, Matthias; Mottironi, Bernardo |
| Abstract: | Combining financial statements with firm-level product prices, we find that larger firms exhibit lower markups, although they are overcompensated by substantially higher wage markdowns. We explain our divergence from prior results by highlighting how labor market power affects markup estimates. |
| Keywords: | firm size; markdowns; market power; markups |
| JEL: | L11 L13 L25 J42 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128958 |
| By: | Matthew O. Jackson; Agathe Pernoud |
| Abstract: | We examine optimal regulation of financial networks with debt interdependencies between financial firms. We first characterize when it is firms have an incentive to choose excessively risky portfolios and overly correlate their portfolios with those of their counterparties. We then characterize how optimal regulation depends on a firm's financial centrality and its available investment opportunities. In standard core-periphery networks, optimal regulation depends non-monotonically on the correlation of banks' investments, with maximal restrictions for intermediate levels of correlation. Moreover, it can be uniquely optimal to treat banks asymmetrically: restricting the investments of one core bank while allowing an otherwise identical core bank (in all aspects, including network centrality) to invest freely. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.16648 |
| By: | Philipp Strack; Kai Hao Yang |
| Abstract: | A monopolist offers personalized prices to consumers with unit demand, heterogeneous values, and idiosyncratic costs, who differ in a protected characteristic, such as race or gender. The seller is subject to a non-discrimination constraint: consumers with the same cost, but different characteristics must face identical prices. Such constraints arise in regulated markets like credit or insurance. The setting reduces to an optimal transport, and we characterize the optimal pricing rule. Under this rule, consumers may retain surplus, and either group may benefit. Strengthening the constraint to cover transaction prices redistributes surplus, harming the low-value group and benefiting the high-value group. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.20925 |
| By: | Anas Abuzayed; Michael G Pollitt; Mario Liebensteiner; Simone Hochgreb |
| Keywords: | Deep decarbonisation, low-carbon fuels, fuel-blending, combined-cycle gas turbines (CCGT) |
| JEL: | Q42 Q48 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:enp:wpaper:eprg2520 |
| By: | Rennert, Kevin (Resources for the Future); Palmer, Karen (Resources for the Future); Robertson, Molly (Resources for the Future) |
| Abstract: | The United States has a pressing need to rapidly enhance its energy infrastructure to address domestic and global priorities. The infrastructure needs are broad and varied, including clean electricity generation, pipelines, and electricity transmission. One of the clear drivers for the policy conversation is to meet decarbonization goals on a timescale of decades. Pathways to meet the decarbonization goals for the power sector suggest that US deployment of renewables would need to be well over the peak historical build rate immediately, and that deployment rate would need to be sustained or increased every year for the foreseeable future (Denholm et al. 2022). Success in building a single project, however, requires navigating a complex and interconnected series of hurdles. Bringing a single generation project online, for example, requires navigating not only the supply chain to source materials and finance the project but also processes related to siting, permitting, and interconnection. Any new transmission needed to support the project will require additional process steps. Along the way, the project may interact with government agencies at local, state, and federal levels; is likely to need to work with communities to build support; and may face potential litigation. Increasing the build rates of energy infrastructure to reach the necessary pace and scale to meet policy goals will require making all these contributors to construction timelines as efficient as possible. In light of these challenges and needs, a broad and bipartisan concern about obstacles to energy infrastructure deployment has emerged, along with a general agreement that processes should be improved and coordinated. Dozens of legislative proposals from both parties have been put forward to address different aspects of this problem, but consensus on which obstacles are most important overall, or on the effectiveness of potential policy interventions to address them, has been elusive. It is noteworthy that of the dozens of legislative proposals intended to reform the permitting process or address other obstacles to specific energy infrastructure, few have been supported by any type of analysis. In many cases, even basic questions about the obstacles are unanswered. This stands in contrast to recently enacted energy legislation such as the Inflation Reduction Act or Investment in Infrastructure and Jobs Act, which include many provisions based on analysis using energy system models and a broad academic literature.The relative absence of analysis of policies intended to address obstacles to energy infrastructure is due to multiple factors. In some cases, the obstacles are not well quantified, challenging efforts to design policy interventions. Even when obstacles are quantified, the effects of policy interventions on the obstacles may not be well understood or may be complicated through interactions with other factors not addressed by the intervention. For example, the interconnection queue is an oft-cited obstacle to generation investment that can be affected by inadequate transmission or long permitting timelines, which are obstacles in their own right. And finally, energy system models and other analytic tools are not well equipped to quantify the effects of many policy interventions.The result is bipartisan agreement on the need for more efficient processes to build energy infrastructure, leading the congressional and executive branches to focus on finding a solution. The policy conversation, however, is poorly informed, lacking both basic information and appropriate tools for analyzing policy solutions. The current debate about the relative effects on emissions of the proposed Energy Permitting Reform Act of 2024 exemplifies this issue, with estimates of the effects of specific provisions ranging by an order of magnitude, and in some cases there is even uncertainty about their overall sign. This situation represents a critical opportunity for the research community to inform policymakers’ efforts by working at each of these levels to improve the characterization of obstacles, understanding of the effects of policy proposals, and representation within models. For this purpose, RFF has initiated a project to identify and fill information gaps. The goals of the project are to expand data and analysis on key obstacles to energy infrastructure, develop an improved understanding of current legislative proposals, and improve modeling capabilities to evaluate the impacts of legislative proposals. In the first phase of the project, RFF convened experts on various aspects of deployment of energy infrastructure, including energy system modeling and permitting, for a series of three workshops on obstacles related to energy infrastructure deployment. The objectives of the workshops were to identify the most relevant barriers to deployment of energy infrastructure, determine the best metrics for understanding the impact of those obstacles, and inform the development of a coherent research strategy. The first workshop positioned the project within the current policy context through a discussion with key congressional and administration staff and was intended to refine key research questions and identify the topics for subsequent workshops. The second centered on obstacles to building transmission, improving its representation in models, and identifying analytic approaches to answer key policy questions. The third was on the obstacles to building new generation resources and how to represent them in energy models. Ancillary conversations focused on the challenges associated with analyzing obstacles to industrial decarbonization in models. This report summarizes the key takeaways from the discussions in the RFF workshop series. Insights from policymakers, subject matter experts, and energy modelers are discussed in each section and inform a research agenda to guide a series of commissioned research papers to be completed in 2025. The report is structured as follows: Section 2 provides a summary of existing research. Section 3 assesses challenges representing obstacles in energy models. Section 4 discusses recent policy developments and legislative activity, and Section 5 looks at the role of energy modeling. Section 6 considers takeaways and research priorities, and Section 7 is a concluding discussion of the near-term research agenda. |
| Date: | 2024–09–05 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-24-16 |
| By: | Timko, Christina; Ostrode, Nicholas; Roos, Michael W. M. |
| Abstract: | Smartphone apps deliberately apply behavioral design, including algorithms sensing human behavior and personalized design elements affecting it. Untransparent behavioral design exploits an information asymmetry between app vendors and consumers and can lead to negative effects on consumers such as diminished user autonomy or smartphone addiction. We address this topic through two main contributions. First, we present guidelines for a more consumer-friendly handling of behavioral design elements, deriving a sixstep approach for the design process of smartphone apps and its documentation that we call responsible interactive behavioral design. Second, we analyze the effects of behavioral design and of measures protecting consumers from unwanted behavioral design in a field experiment with a newsfeed reader app used by three study groups, showcasing the described design approach. In the group with behavioral design but no protection measures, participants used the app twice as long as in the group with the baseline version. Participants in the group with protection measures were most aware of being 'object' to behavioral design. Their usage time was between that of the other two groups. If it becomes adopted, the approach of responsible interactive behavioral design may contribute to viable market solutions, addressing some of the major consumer protection needs. |
| Abstract: | Smartphone-Apps setzen gezielt Behavioral Design ein, einschließlich Algorithmen, die menschliches Verhalten erkennen sowie personalisierter Designelemente, die dieses beeinflussen. Intransparentes Behavioral Design nutzt Informationsasymmetrie zwischen App-Anbietern und Konsumenten aus und kann bei Letzteren negative Effekte wie verringerte Nutzerautonomie oder Smartphone-Sucht hervorrufen. Wir adressieren dieses Thema durch zwei zentrale Beiträge. Erstens präsentieren wir Richtlinien für die nutzerfreundlichere Verwendung von Behavioral Design-Elementen und leiten einen sechsschrittigen Ansatz für das Design von Smartphone-Apps und dessen Dokumentation ab, bezeichnet als Responsible Interactive Behavioral Design. Zweitens analysieren wir die Auswirkungen von Behavioral Design und Schutzmaßnahmen für Konsumenten gegen unerwünschtes Behavioral Design in einem Feldexperiment mit einer durch drei Gruppen genutzten Newsfeed-Reader-App und führen den beschrieben Designansatz vor. In der Gruppe mit Behavioral Design, aber ohne Schutzmaßnahmen, nutzten Teilnehmende die App doppelt so lange wie in der Gruppe mit der Baseline-Version. Teilnehmende in der Gruppe mit Schutzmaßnahmen waren sich am stärksten darüber bewusst, Behavioral Design ausgesetzt zu sein. Ihre Nutzungszeit lag zwischen jener der beiden anderen Gruppen. In die Praxis aufgenommen, könnte der Ansatz des Responsible Interactive Behavioral Design zu marktfähigen Lösungen beitragen, um zentrale Verbraucherschutz-Aspekte zu adressieren. |
| Keywords: | Behavioral economics, consumer protection, field study, smartphone app, behavioral design |
| JEL: | C93 D82 D91 L86 O33 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:rwirep:325495 |
| By: | Engelbert Stockhammer; José Tomás Labarca |
| Abstract: | Political economists highlight power relations in the economy and the coconstitution of state and economy, but often implicitly retain the conception of the state as a site of political practices and power struggles rather than as an economic actor and site of production. This paper contributes to a political economy framework that recognizes that political and economic practices take place in the market economy, the household, and the state. We categorize the dimensions of wide-ranging state economic practices. Defining productive activities as those that impact the volume of social production, we argue that some state activities are productive and highlight those providing social and physical infrastructures that are inputs in production processes. The state is not only an important economic player; it is also productive. |
| Keywords: | political economy; economic sociology; state; production; social infrastructure; physical infrastructure |
| JEL: | B50 H00 H11 Z13 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2521 |
| By: | Brühl, Volker |
| Abstract: | The European Green Deal (EGD) has the intention to transform the EU into a sustainable, resource efficient and competitive economy, ensuring zero net emissions of greenhouse gases (GHG) by 2050. This article illustrates the complex regulatory architecture of the EGD, which is often overlooked. While each of the initiatives is reasonable, their combined impact - often reinforcing each other - could impede Europe's global competitiveness, especially in a fragile economic environment. There are some fields where a thoughtful discussion about implementation deadlines and reporting requirements could help to resolve trade-offs between environmental objectives and competitiveness. |
| JEL: | A10 K20 L50 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cfswop:325833 |
| By: | Martin, Ralf; Solorzano Mosquera, Jenniffer; Thomas, Catherine; Verhoeven, Dennis |
| Abstract: | We examine the relationship between firms' markups and the economic value of their innovation, including both the private value captured by the innovating firm and the knowledge spillovers that benefit other firms. Using a sample of over 14, 500 EU firms and 2, 400 US firms granted patents between 2005 and 2014, we find that innovation by high-markup firms is more valuable privately and also creates more external value. These associations are robust to controlling for the stock of past innovation and to estimating innovation value in various ways. |
| JEL: | D24 L11 O31 O33 |
| Date: | 2025–09–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129003 |
| By: | Gimenez Perales, Victor; Mulyukova, Alina |
| Abstract: | We study how liberalization and competition affect firms' output and product scope depending on management practices. In a model of multi-product firms, we show that firms with better management practices specialize in fewer products with lower marginal costs. The model predicts that, under increased competition, firms with better management practices are less adversely affected by competition, especially in heterogeneous sectors. Evidence from India's de-reservation policy supports these predictions. Our simulations estimate a 0.29% welfare gain in India from the policy. The same policy could increase welfare by 0.39% in an environment with better management practices, such as the US, highlighting the management practices' role in liberalization outcomes. |
| Keywords: | management practices, multi-product firms, de-reservation policy |
| JEL: | F61 D24 L25 O12 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkwp:325492 |
| By: | Alejandro Saavedra-Nieves; M. Gloria Fiestras-Janeiro |
| Abstract: | An important operational aspect in airport management is the allocation of fees to aircraft movements on a runway, whether operated by separate operators or under code-sharing agreements. This paper analyses the problem of determining fees under code-sharing of the movements at an airport from a game theoretic perspective. In particular, we propose the configuration value for games with coalition configuration as the mechanism for allocating operating costs. We provide the exact expression of this game-theoretic solution for airport games, which depends only on the parameters of the associated airport problem. For this purpose, we consider a new and natural game-theoretic characterization of the configuration value. Finally, for the specific context of airport games, we apply it to a real case as a mechanism to determine the aircraft fees at a Spanish airport in a code-sharing scenario. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2507.02894 |