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on Regulation |
| By: | Christos Genakos; Lorien Sabatino; Tommaso Valletti |
| Abstract: | Why book publishing contradicts conventional wisdom about competition. |
| Keywords: | competition, fixed book price, prices, regulation, cultural goods, resale price maintenance, book market |
| Date: | 2025–10–21 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepcnp:718 |
| By: | Moura, B.; Pollitt, M. G. |
| Abstract: | This article investigates spatial-neighbour effects in the deployment of small-scale solar photovoltaic (PV) systems, examining whether the installation rate in a given area is affected by the quantity of nearby solar PV systems. We study 1.4 million solar PV systems in England and Wales, analysing installations over the period 2010 – 2024. The results from 2010–2015 reveal that an additional solar PV system in a local authority is associated with an additional 0.128 installations 3 months later, suggesting a positive role of peer effects and observational learning. In contrast, from 2016–2024, spatial-neighbour effects are instead found to be negative, indicating saturation amongst the households likely to adopt solar PV. We further show that, by contrast, heat pumps do not exhibit any spatial-neighbour effects and that the collective buying scheme Solar Together did not appear to increase installations in the period 2015–2020. |
| Keywords: | Solar PV, Spatial-Neighbour Effect, Energy Policy |
| JEL: | L94 |
| Date: | 2025–10–15 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2566 |
| By: | Natalia Fabra (CEMFI, Centro de Estudios Monetarios y Financieros); Gerard Llobet (CEMFI, Centro de Estudios Monetarios y Financieros) |
| Abstract: | This paper examines the limitations of spot markets in providing adequate investment incentives to support zero-carbon investments in electricity markets. In contrast, properly designed long-term contracts have the potential to mitigate price volatility and facilitate the funding of the investments. A theoretical model is developed to analyze contract design under conditions of moral hazard and adverse selection, emphasizing the trade-offs that arise when exposing firms to price and quantity risk. The findings inform optimal contract design for nuclear and renewable energy projects, offering policy recommendations to enhance investment incentives while minimizing productive inefficiencies and excessive rents. |
| Keywords: | Contract design, adverse selection, moral hazard, risk aversion, renewable energies, nuclear power plants. |
| JEL: | L13 L94 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:cmf:wpaper:wp2025_2521 |
| By: | David Andrés-Cerezo (Universitat Autònoma de Barcelona and BSE); Natalia Fabra (CEMFI, Centro de Estudios Monetarios y Financieros) |
| Abstract: | Decarbonizing the power sector requires major investments in renewables and storage. Though often seen as complementary, these technologies can act as substitutes from an economic perspective. When renewable output correlates positively with demand and capacity is low, storage may lower renewable profits, and viceversa, especially with strategic thermal producers. In markets with negatively correlated renewable availabilities, like solar and wind, storage can benefit one while disadvantaging the other. These findings inform policies on the timing and effectiveness of mandates or subsidies, suggesting that solar investments may need an initial push before supporting storage. Simulations of the Spanish market show that, at high solar penetration, storage boosts solar but reduces wind profits. |
| Keywords: | Energy storage, renewable energy, mandates, market power, transmission constraints, electricity markets. |
| JEL: | L94 Q40 Q42 Q48 Q50 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:cmf:wpaper:wp2025_2522 |
| By: | Amady Léchenet |
| Abstract: | This paper investigates the impact of extending Flow-Based Market Coupling (FBMC) on electricity price convergence in Europe. Market coupling mechanisms, particularly FBMC, play a crucial role in harmonizing electricity prices between bidding zones by optimizing cross-border capacity allocation. We analyze the transition from the Available Transfer Capacity (ATC) approach to FBMC, highlighting its advantages for improving price con- vergence. Using daily day-ahead electricity prices from 12 member countries of the Core Capacity Calculation Region (CCR), we construct a price dispersion indicator. Our results show a temporary reduction in price spreads in the region Core Europe following the market coupling reform. The short-term effect is significant but transitory, whereas structural deter- minants such as gas prices remain dominant. Comparing countries that adopted Flow-Based (FB) mechanism in 2015 with those that joined in 2022, we find evidence of a permanent and significant reduction in price spreads for the late adopters. |
| Keywords: | Electricity wholesale markets, market coupling, price convergence |
| JEL: | Q41 Q42 Q48 L94 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:drm:wpaper:2025-41 |
| By: | Natalia Fabra (CEMFI, Centro de Estudios Monetarios y Financieros); Gerard Llobet (CEMFI, Centro de Estudios Monetarios y Financieros) |
| Abstract: | This paper investigates the implications of counterparty risk - stemming from potential defaults or renegotiations by buyers - on long-term contract markets. It develops a theoretical model highlighting how opportunistic buyer behavior leads to higher contract prices and underinvestment, potentially leading to the collapse of the contract market. The paper also evaluates public-policy interventions, including public subsidies, financial guarantees, regulator-backed contracts, and collateral requirements. While these measures can reduce price-related inefficiencies and promote investment, they involve trade-offs such as moral hazard or the reliance on costly public funds. These findings are particularly relevant for sectors with capital-intensive, long-lived assets exposed to price volatility, especially electricity markets, where underinvestment in renewable energy could delay the energy transition and hinder carbon-abatement goals. Simulations using data for the Spanish electricity market are used to quantify the theoretical predictions of the model. |
| Keywords: | Imperfect contract enforcement, counterparty risk, renewable investments, bilateral contracts, vertical integration, dynamic incentives. |
| JEL: | L13 L94 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:cmf:wpaper:wp2025_2523 |
| By: | Ferreira, Daniel |
| Abstract: | Research Question/Issue Blockchain technology promises to revolutionize governance through strong commitments, trustlessness, and transparency. This paper examines how these promises have failed to materialize in practice. Research Findings/Insights Drawing on case evidence from major blockchains, including Bitcoin and Ethereum, I argue that blockchains have evolved into technocracies where developers, foundations, and companies exercise disproportionate control. Rather than being exceptional, blockchain governance suffers from the same coordination problems, collective action failures, and centralization tendencies that plague traditional governance systems. Theoretical/Academic Implications The paper concludes that while blockchains offer valuable experiments in governance design, their alleged advantages over traditional institutions remain largely mythical. Practitioner/Policy Implications Blockchain organizations should acknowledge their reliance on off-chain coordination and informal authority. Investors must understand that blockchain governance depends on trusting technical elites, while regulators should recognize that decentralization claims often mask concentrated power structures requiring traditional oversight. |
| Keywords: | blockchain |
| JEL: | F3 G3 |
| Date: | 2025–10–28 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129788 |
| By: | Amir Ashour Novirdoust (EWI); Pia Hoffmann-Willers (EWI); Julian Keutz (EWI) |
| Abstract: | This paper develops an analytical model of sequential electricity markets in which renewable and conventional producers compete in two stages. Building on previous work, we introduce risk-averse renewable producers and distinguish between competitive and oligopolistic renewable producers. The model captures strategic bidding behavior under uncertainty in renewable production and limited flexibility of conventional producers in the second stage. Our results show that risk aversion amplifies strategic withholding in oligopolistic settings, thereby increasing the forward premium. This effect intensifies when conventional producers are less flexible. While risk aversion has no impact on welfare under perfect competition or when conventional producers are fully flexible, its interaction with market power and supply-side inflexibility generates welfare losses. In a heterogeneous market structure of renewable producers, competitive producers benefit from higher prices caused by the withholding of oligopolistic producers, particularly when those producers are risk-averse. |
| Keywords: | Sequential Markets; Strategic Bidding; Risk Aversion; Market Power; Renewable Energy |
| JEL: | D43 D81 L13 L94 Q21 |
| Date: | 2025–11–05 |
| URL: | https://d.repec.org/n?u=RePEc:ris:ewikln:021748 |
| By: | Salvatore Ciucci (Dipartimento di Economia, Università degli Studi della Campania “Luigi Vanvitelli”) |
| Abstract: | There are many evidences which prove that cartels’ price leads to an economic inefficiency, due to the reduced consumers welfare. Antitrust authorities have set up different ways to defeat and prevent collusive agreements, but as widely showed by the literature, deterring collusion may have adverse effects, like higher price in surviving cartels, reduced turnover of firms’ employees, and disincentive for competing firms to cooperate, in the sense that if firms exchange information about the evolution of demand or costs, then they may adopt better choices; moreover, deterring collusion may have even a pro-collusion effect. The paper suggests an additional anti-cartel tool which does not have side effects, and supporting no cost, it can get worse collusion stability. Analysing a supergame of collusion, in a Bertrand duopoly framework in which is run a two-stage lottery, we show that deviation strategy becomes more attractive, even if lottery jackpot tends to zero. |
| Keywords: | Competition policy, Antitrust, Cartel, Collusion, Lottery |
| JEL: | L40 L41 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:fem:femwpa:2025.21 |
| By: | Gabriel D. Patr\'on; Di Zhang; Lavinia M. P. Ghilardi; Evelin Blom; Maldon Goodridge; Erik Solis; Hamidreza Jahangir; Jorge Angarita; Nandhini Ganesan; Kevin West; Nilay Shah; Calvin Tsay |
| Abstract: | Energy storage can promote the integration of renewables by operating with charge and discharge policies that balance an intermittent power supply. This study investigates the scheduling of energy storage assets under energy price uncertainty, with a focus on electricity markets. A two-stage stochastic risk-constrained approach is employed, whereby electricity price trajectories or specific power markets are observed, allowing for recourse in the schedule. Conditional value-at-risk is used to quantify tail risk in the optimization problems; this allows for the explicit specification of a probabilistic risk limit. The proposed approach is tested in an integrated hydrogen system (IHS) and a battery energy storage system (BESS). In the joint design and operation context for the IHS, the risk constraint results in larger installed unit capacities, increasing capital cost but enabling more energy inventory to buffer price uncertainty. As shown in both case studies, there is an operational trade-off between risk and expected reward; this is reflected in higher expected costs (or lower expected profits) with increasing levels of risk aversion. Despite the decrease in expected reward, both systems exhibit substantial benefits of increasing risk aversion. This work provides a general method to address uncertainties in energy storage scheduling, allowing operators to input their level of risk tolerance on asset decisions. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.27528 |
| By: | Varela Varela, Ana; Shawhan, Daniel; Funke, Christoph; Domeshek, Maya; Robson, Sally; Witkin, Steven; Burtraw, Dallas; Ünel, Burçin |
| Abstract: | While some see carbon capture, utilization, and storage (CCUS) as crucial for cost-effective decarbonization, it faces opposition based on air pollution and equity concerns. To understand this cost–air pollution trade-off, we simulate the potential impacts of allowing CCUS deployment in the US power sector under plausible climate policies. We show that the existence of this trade-off critically depends on the underlying policy, which affects the type of generation CCUS could displace: under a policy that incentivizes coal generation, CCUS might improve health outcomes and reduce costs. When we disaggregate our results, we find that the air pollution (PM2.5) effects of allowing CCUS, positive or negative, are largest for Black and low-income populations. We show that allowing CCUS can yield energy-cost savings, particularly benefiting lower-income communities. Our sensitivity analyses highlight the effects of uncertainties on costs and benefits. Overall, this study contributes to our understanding of broader distributional consequences of allowing CCUS. |
| Keywords: | air pollution; and storage; electric power; energy justice; environmental justice; incidence; utilization; carbon capture |
| JEL: | D63 H23 Q20 Q52 Q58 |
| Date: | 2024–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126047 |
| By: | Joerg Bibow |
| Abstract: | For the past hundred years or more, payments have been primarily associated with banking, and banking as we know it today--being the result of many centuries of evolution--features a bundling of (at least) three main lines of business: lending, deposit-taking, and payment services. In the past 15 years or so, banks have come under severe competition as providers of payment services. Will "banking on payments" become outmoded and payments untethered from banking, or will payments still have a place in the future of banking? This paper sets out to explore this question and to address the following two related issues. First, what are the likely consequences (especially for the financing of growth and the provision of liquidity in the form of bank deposits) of the apparent "unbundling" of the traditional connections in banking between lending, deposit-taking, and payment services? Second, what are the implications of the evolution (or revolution) of money, payments, and banking for public policy, monetary theory, and the theory of monetary policy? |
| Keywords: | banking; money; payments; financial intermediation; bank regulation; monetary policy |
| JEL: | B22 E12 E42 E58 G21 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:lev:wrkpap:wp_1091 |
| By: | Kishore, Prabhat; Roy, Devesh; Birthal, Pratap S.; Srivastava, Shivendra Kumar |
| Keywords: | Crop Production/Industries, Sustainability |
| Date: | 2024–04–01 |
| URL: | https://d.repec.org/n?u=RePEc:ags:icarpp:345044 |
| By: | Ventsislavova Georgieva, Daniela; Tsakova, Irina |
| Abstract: | This report analyses the potential of regulatory sandboxes as an instrument to stimulate innovation in the Bulgarian furniture industry, with a focus on testing smart furniture. Through the use of SWOT analysis, the strengths, weaknesses, opportunities, and threats associated with introducing regulatory laboratories in the furniture sector are identified. Through a case study analysis, regions in Bulgaria with different levels of potential for the pilot implementation of regulatory sandboxes are suggested. |
| Keywords: | smart furniture, regulatory sandboxes, furniture industry, innovation |
| JEL: | O30 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126239 |