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on Regulation |
| By: | Ambre Nicolle; Christos Genakos; Tobias Kretschmer (Cambridge Judge Business School, University of Cambridge) |
| Abstract: | Can entire markets strategically confuse consumers to raise market prices? Using a detailed dataset covering virtually all mobile phone tariffs and their handsets in the United Kingdom between January 2010 and September 2012, we study the evolution of quality-adjusted prices and find that they increased until December 2010, even though the industry was mature, technologically homogeneous, and competitive. Upon exploring the role of several salient factors, such as differentiation and product proliferation by firms that may have affected this evolution, we argue that the primary driver is the implementation of obfuscation strategies by firms. The observed price increase is significantly correlated with the rate at which operators implemented dominated tariffs (ie tariffs for which there is a cheaper alternative from the same operator), indicating that firms use obfuscation strategies to reduce product transparency, thereby elevating overall prices. Importantly, the presence of dominated tariffs raises not only the prices of these contracts but also those of efficient ones, distinguishing our findings from a behavioral price discrimination strategy that would only affect inattentive consumers. Our exploratory study is one of the first to offer suggestive evidence of obfuscation as an industry-wide supply-side phenomenon. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:jbs:wpaper:202503 |
| By: | Marc Ivaldi (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements 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); Nicolas Petit (EUI - European University Institute - Institut Universitaire Européen); Selçukhan Unekbas (EUI - European University Institute - Institut Universitaire Européen) |
| Abstract: | The killer acquisitions theory states that established firms buy new businesses to pre-empt future competition, particularly in the pharmaceutical and digital industries. The theory fuels demand to make merger policy more restrictive. But is the theory of killer acquisitions supported by empirical facts? Focusing on past investigations by the European Commission in information technology industries, this article studies whether acquisitions by large technology companies reduce competition by eliminating future rivalry. Despite the small sample size, the findings suggest that none of the reviewed transaction was followed by the disappearance of the target's products, a weakening of competing firms, and/or a post-merger lowering or absence of entry and innovation. |
| Keywords: | killer acquisitions, case study, dynamic competition, innovation, mergers and acquisitions, nascent competitors |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05308625 |
| By: | Duso, Tomaso; Harrington, Joseph E.; Kreuzberg, Carl; Sapi, Geza |
| 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:zbw:dicedp:329636 |
| By: | Kevin D. Tran; Leonardo Madio; Michelangelo Rossi; Mark J. Tremblay |
| Abstract: | We examine how greater price transparency affects pricing behavior in peer-to-peer markets. When Airbnb began displaying cleaning fee-inclusive prices to European users in response to EU regulation, hosts who had not charged fees raised their base prices by 67%, especially when competitors used cleaning fees. These adjustments arise because transparency changes how sellers perceive competitors’ prices: when fees are hidden, inattentive hosts benchmark only visible base prices; once fees are unshrouded, they realize competitors were effectively charging more. In contrast, hosts already charging cleaning fees reduce them by about 1.5%, particularly when serving more EU travelers. Transparency thus reduces price obfuscation for consumers but can increase prices for previously transparent sellers, revealing that regulatory efforts to enhance transparency may have unintended redistributive effects in decentralized markets. |
| Date: | 2025–04–02 |
| URL: | https://d.repec.org/n?u=RePEc:bri:uobdis:25/798 |
| By: | Öge, Kerem; Quintin, Manuel |
| Abstract: | Despite growing awareness, the global regulation of facial recognition technology (FRT) remains fragmented, much like the governance of Artificial Intelligence (AI). International initiatives from the United Nations (UN), Organisation for Economic Co-operation and Development (OECD), and World Economic Forum (WEF) provide guiding principles but fall short of enforceable standards. On 27 July 2025, UN tech chief Doreen Bogdan-Martin warned that the world urgently needs a global approach to AI regulation, as fragmented efforts risk deepening inequalities. This policy brief explores how FRT challenges existing governance frameworks due to its rapid development, complexity and ethical implications. Our research shows that delays in regulation are not only caused by the rapid pace of technological change but also by whose voices are included in the debate. In FRT debates, early warnings from civil society about privacy and rights were sidelined until echoed by governments and major tech firms. This lack of representation, as much as the rapid pace of innovation, helps explain why regulation so often lags behind public concerns. To better govern FRT, the policy brief proposes an adaptive and inclusive model that balances flexibility with democratic legitimacy. Adaptive governance, marked by decentralised decision-making, iterative policy learning, and responsiveness, helps address the uncertainties and evolving risks of narrow AI applications like FRT. Inclusivity is equally critical in legitimising FRT governance. We propose three policy recommendations to national regulators, multilateral bodies and regional policymakers for future AI governance: (1) require transparent labelling of AI systems, (2) reframe AI as a societal issue, not just a security tool, and (3) embed civil society in AI governance forums. Taken together, these actions would promote a more proactive, equitable and context-sensitive framework for regulating AI globally. These recommendations are particularly timely ahead of the AI Impact Summit, scheduled for February 2026 in Delhi, which will bring global policymakers together to shape an international vision for AI governance that includes FRT. |
| Keywords: | artifical intelligence, facial recognition technology, adaptive governance, inclusion |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:idospb:329923 |
| By: | Sergio A. Correia; Stephan Luck; Emil Verner |
| Abstract: | This paper studies the role of banking supervision in anticipating, monitoring, and disciplining failing banks. We document that supervisors anticipate most bank failures with a high degree of accuracy. Supervisors play an important role in requiring troubled banks to recognize losses, taking enforcement actions, and ultimately closing failing banks. To establish causality, we exploit exogenous variation in supervisory strictness during the Global Financial Crisis. Stricter supervision leads to more loss recognition, reduced dividend payouts, and an increase in the likelihood and speed of closure. Increased strictness entails a trade-off between a lower resolution cost to the FDIC and reduced credit. |
| Keywords: | banking supervision; financial stability; financial regulation |
| JEL: | G01 G21 N20 N24 |
| Date: | 2025–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednsr:101954 |
| By: | Charles Hodgson; Shilong Sun |
| Abstract: | How do vertically integrated firms' pricing and product provision decisions change with upstream and downstream competition? We answer this question in the context of the Chinese film industry. Theaters allocate significantly fewer showings to non-integrated films. This foreclosure effect is particularly pronounced in two scenarios: when an integrated theater faces limited spatial competition, and when an integrated film is similar to competing films. To measure welfare effects, we estimate a model of consumer preferences and theater showings choice using a novel method that combines standard demand data with film ratings data. Our results show that integrated theaters internalize a substantial portion of their upstream profits, driving foreclosure behavior that distorts showings. Counterfactual simulations show that vertical integration increases consumer welfare by 2.4% in the median market, but reduces consumer welfare in 7% of markets. The welfare effects of foreclosure vary with upstream competition between films and downstream competition between theaters, and we show that targeted antitrust policy that removes of integration based on measures of market competition can substantially increase welfare. |
| JEL: | L0 L13 L40 L42 L82 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34390 |
| By: | Dirk Lauinger; Deepjyoti Deka; Sungho Shin |
| Abstract: | Electricity distribution companies deploy battery storage to defer grid upgrades by reducing peak demand. In deregulated jurisdictions, such storage often sits idle because regulatory constraints bar participation in electricity markets. Here, we develop an optimization framework that, to our knowledge, provides the first formal model of market participation constraints within storage investment and operation planning. Applying the framework to a Massachusetts case study, we find that market participation could deliver similar savings as peak demand reduction. Under current conditions, market participation does not increase storage investment, but at very low storage costs, could incentivize deployment beyond local distribution needs. This might run contrary to the separation of distribution from generation in deregulated markets. Our framework can identify investment levels appropriate for local distribution needs. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.12435 |
| By: | Michael R. Baye (Indiana University); Dan Kovenock (Economic Science Institute, Chapman University); Casper G. de Vries (Erasmus University) |
| Abstract: | We show that MRPM can increase manufacturer profits and total output even in the ab- sence of traditional justifications based on point-of-sale services, retailer effort, or free-riding. The key insight is that MRPM mitigates channel conflict by altering how retailers balance extracting surplus from loyal customers and competing for price-sensitive shoppers. When a manufacturer optimally chooses a wholesale price and MRPM policy, this can intensify com- petition and create systematic distributional effects: prices fall for loyal consumers but rise for shoppers, and the profits of smaller, shopper-dependent retailers decline. We characterize the conditions under which MRPM raises output, benefits a majority of consumers, and reallocates surplus among the manufacturer, retailers, and different consumer segments. The model helps explain why the political economy of MRPM varies across jurisdictions: even when it increases output, it creates predictable winners and losers, and there is no guarantee that the median consumer or retailer -- or the median voter -- benefits when minimum resale prices are imposed. These results suggest that the welfare and distributional effects of MRPM are inherently context-dependent and that its legal evaluation is best approached through a rule-of-reason framework that accounts for demand structure, retailer asymmetries, and the composition of consumer types. |
| Keywords: | Resale Price Maintenance, Vertical Restraints, Price Competition |
| JEL: | D4 D8 M3 L13 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:chu:wpaper:25-10 |
| By: | Mangave, Darshan |
| Abstract: | This paper observes at Adam Smith’s idea of the “invisible hand” and ask how it works in today’s world of algorithms and digital platforms. In the Wealth of Nations, Smith explained that when people act in their self-interest then markets balance themselves and society benefits. But now, in this century many economic choices are not made only by people. They are guided by algorithms. For examples, this can be seen in Amazon’s product rankings, Uber’s surge pricing, Google’s search results, Netflix’s recommendations, and AI trading in stock markets. These algorithmic systems connect buyers and sellers quickly, but they also create new problems like reduced competition, unfair pricing, manipulation of consumer choices, and market instability. The paper argues that the invisible hand has not disappeared, but it now takes the form of an “algorithmic hand.” For this hand to truly serve society, there must be careful attention to ethics and policy. |
| Keywords: | Adam Smith, Invisible Hand, Wealth of Nations, Algorithms, Digital Economy, Market Competition, Consumer Behaviour, Algorithmic Pricing, Platform Capitalism, Economic Policy. |
| JEL: | B12 D47 K23 L17 L86 O33 |
| Date: | 2025–09–14 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126154 |
| By: | Tarufelli, Brittany; Gibson, James; Barrows, Sarah; Somani, Abhishek; Boff, Daniel |
| Abstract: | Grid-scale energy storage enhances power system performance by shifting loads and supporting capacity, reliability, and transmission. However, as storage penetration increases, arbitrage opportunities—and associated profits—decline (Sioshansi et al., 2009; Li et al., 2024). In ERCOT, for example, 2024 saw reduced arbitrage due to moderate weather and expanded storage. This trend contrasts with findings that long-duration storage is essential for reliability and affordability (Blair et al., 2022), suggesting the need for new business models to capture storage’s full value. Despite growing deployment in energy storage, empirical research on storage’s value remains limited. To address this gap, we develop a commodity-market-based framework and apply it to hydropower as a grid-scale storage resource. Using exogenous variation in reservoir storage volume as a proxy for energy storage, we estimate its causal effect on risk premiums—measured by the day-ahead to real-time price spread—in the Northwestern United States between May 2022 and November 2024. Employing fixed effects and lagged dependent variable models, we control for time-invariant heterogeneity across balancing authorities and account for dynamic price behavior. We find that a 10% increase in reservoir storage volume reduces risk premiums by 5%, indicating that hydropower reservoir storage mitigates short-term supply-demand imbalances. Our results are robust to dynamic pricing effects and suggest that storage is especially valuable during grid stress events, with pronounced impacts at the upper end of the price distribution. This result indicates that reservoir storage may be more valuable during grid stress events. As most markets lack compensation mechanisms for stored energy, our findings offer empirical support for designing future models that better reflect the risk-reducing benefits of grid-scale storage. |
| Date: | 2025–10–17 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:bm5jf_v1 |
| By: | Michael McRae (Department of Economics, Trinity College Dublin) |
| Abstract: | This paper provides the first causal evidence that upstream infrastructure providers can reshape social media discourse by enforcing content moderation through access-based leverage. I exploit a 2022 update to Google's Play Store policy requiring stricter removal of violent threats and misinformation, along with variation in platform exposure across three similar 'Alt-Tech' social media platforms, within a triple-differences design. Using a novel panel of over 28 million posts from 62, 000 users, I find that threatening content declined sharply and persistently on the exposed platforms, particularly among high-risk users. These effects are not explained by user self-censorship, public awareness, contemporaneous events, or selective data loss. I also document significant reductions in lawful but politically sensitive narratives, including election denial and January 6 insurrection commentary. The findings show how infrastructure-level enforcement can durably alter the boundaries of permissible speech across platforms, contributing to literatures on platform governance, vertical restraints in digital markets, and the institutional foundations of online discourse. |
| Keywords: | platform governance; content moderation; digital infrastructure |
| JEL: | D83 L86 L82 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:tcd:tcduee:tep1325 |
| By: | Michael McRae (Department of Economics, Trinity College Dublin) |
| Abstract: | This paper provides the first causal evidence that upstream infrastructure providers can reshape social media discourse by enforcing content moderation through access-based leverage. I exploit a 2022 update to Google's Play Store policy requiring stricter removal of violent threats and misinformation, along with variation in platform exposure across three similar 'Alt-Tech' social media platforms, within a triple-differences design. Using a novel panel of over 28 million posts from 62, 000 users, I find that threatening content declined sharply and persistently on the exposed platforms, particularly among high-risk users. These effects are not explained by user self-censorship, public awareness, contemporaneous events, or selective data loss. I also document significant reductions in lawful but politically sensitive narratives, including election denial and January 6 insurrection commentary. The findings show how infrastructure-level enforcement can durably alter the boundaries of permissible speech across platforms, contributing to literatures on platform governance, vertical restraints in digital markets, and the institutional foundations of online discourse. |
| Keywords: | platform governance; content moderation; digital infrastructure |
| JEL: | D83 L86 L82 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:tcd:tcduee:tep1425 |
| By: | Younas, Aaqib; Ahmed, Jawad; Audi, Marc |
| Abstract: | The rapid expansion of mobile wallets and digital transaction platforms has transformed financial systems worldwide, reshaping the way consumers interact with money and manage spending. In Pakistan, services such as Easypaisa, JazzCash, and Raast have accelerated financial inclusion and improved efficiency, yet their behavioural consequences remain underexplored. This study aims to examine how the adoption of digital transaction platforms influences consumer spending behaviour, with a particular focus on psychological factors such as impulsivity, budgeting discipline, and mental accounting. To test the determinants of adoption and spending outcomes, was performed using multiple regression and the generalised method of moments was used. The findings reveal that income, education, digital literacy, mobile penetration, and financial inclusion positively influence digital payment adoption, whereas age and cultural orientation act as constraints. Behavioural analysis further indicates that frequent users of digital platforms experience a reduced “pain of paying, ” which encourages impulsive purchases, weaker adherence to budgeting, and diminished financial control, particularly among younger consumers. These results highlight the dual nature of digital finance: while it enhances inclusion and economic activity, it also increases risks of overspending and financial vulnerability. The study recommends integrating financial literacy into education systems, encouraging fintech providers to embed budgeting and savings tools, and strengthening regulatory oversight to ensure that the benefits of digital transaction platforms are maximised while their behavioural risks are mitigated. |
| Keywords: | Digital Finance, Consumer Behaviour, Mobile Wallets, Financial Inclusion |
| JEL: | G2 O3 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126075 |
| By: | Julien Allard (UMONS - Université de Mons = University of Mons); María Victoria Gasca (G2Elab-SYREL - G2Elab-SYstèmes et Réseaux ELectriques - G2ELab - Laboratoire de Génie Electrique de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes); Rémy Rigo-Mariani (G2Elab-SYREL - G2Elab-SYstèmes et Réseaux ELectriques - G2ELab - Laboratoire de Génie Electrique de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes, G2ELab - Laboratoire de Génie Electrique de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes); François Vallée (UMONS - Université de Mons = University of Mons); Zacharie de Grève (UMONS - Université de Mons = University of Mons); Vincent Debusschere (Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes, G2Elab-SYREL - G2Elab-SYstèmes et Réseaux ELectriques - G2ELab - Laboratoire de Génie Electrique de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes) |
| Abstract: | The potential of Energy Communities (ECs) to foster local private investment in renewable energy production has been highlighted in various recent studies. Almost all these works assume that all investment decisions are taken at year 1, as well as static EC memberships throughout its lifetime. However, as part of a wider energy system, ECs may see their composition evolve with time as founding members may leave or other end-users may join. This uncertainty on the EC's dynamic composition induces uncertainty on the real cost savings of its members. From this perspective, this work aims at quantifying the impact of newcomers on the profits from investments decided by founding members. To this end, an initial optimal sizing problem is solved before processing a Monte-Carlo analysis on the ECs composition's evolution. Results collected on a test case composed of 92 end-users show that founding members can lose up to 25% of their expected savings by welcoming new members if no recourse actions are taken on top of the initial optimal investment |
| Date: | 2025–06–29 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05310549 |
| By: | Fasheng Xu; Xiaoyu Wang; Wei Chen; Karen Xie |
| Abstract: | The strategic choice of model "openness" has become a defining issue for the foundation model (FM) ecosystem. While this choice is intensely debated, its underlying economic drivers remain underexplored. We construct a two-period game-theoretic model to analyze how openness shapes competition in an AI value chain, featuring an incumbent developer, a downstream deployer, and an entrant developer. Openness exerts a dual effect: it amplifies knowledge spillovers to the entrant, but it also enhances the incumbent's advantage through a "data flywheel effect, " whereby greater user engagement today further lowers the deployer's future fine-tuning cost. Our analysis reveals that the incumbent's optimal first-period openness is surprisingly non-monotonic in the strength of the data flywheel effect. When the data flywheel effect is either weak or very strong, the incumbent prefers a higher level of openness; however, for an intermediate range, it strategically restricts openness to impair the entrant's learning. This dynamic gives rise to an "openness trap, " a critical policy paradox where transparency mandates can backfire by removing firms' strategic flexibility, reducing investment, and lowering welfare. We extend the model to show that other common interventions can be similarly ineffective. Vertical integration, for instance, only benefits the ecosystem when the data flywheel effect is strong enough to overcome the loss of a potentially more efficient competitor. Likewise, government subsidies intended to spur adoption can be captured entirely by the incumbent through strategic price and openness adjustments, leaving the rest of the value chain worse off. By modeling the developer's strategic response to competitive and regulatory pressures, we provide a robust framework for analyzing competition and designing effective policy in the complex and rapidly evolving FM ecosystem. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.15200 |