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on Regulation |
| By: | Nicholas Economides (Stern School of Business, New York University, New York, NY, USA); Ioannis Lianos (Faculty of Laws, University College London, London, United Kingdom); Christos Makridis (Arizona State University) |
| Abstract: | We examine when interoperability should serve as a structural response to market concentration produced by scaling laws, network effects, and data driven complementarities and capabilities in the digital economy. Digital infrastructures such as operating systems, cloud platforms, payments, and AI systems exhibit superlinear returns to scale that interact with multi-sided feedback loops to generate dominant positions and persistent bottlenecks. However, interoperability can also dilute beneficial complementarities, create security and privacy risks, and in some cases weaken incentives to invest. The paper makes two contributions. First, we develop a conceptual framework that treats digital ecosystems as lattices of complementarities linking users, developers, data, and infrastructure. Scaling laws are empirical signatures of supermodular relationships. Interoperability becomes a lattice restructuring tool that selectively weakens complementarities that entrench market (economic) power while preserving those that support quality, safety, and innovation. Second, we pair this economic account with a comparative analysis of legal and institutional approaches to interoperability. Examples include telecom interconnection, the Microsoft antitrust cases, the EU Digital Markets Act and Data Act, digital health regulation in the EU and the US, and emerging sector specific regimes in blockchain and AI. This comparison clarifies how horizontal and vertical interoperability obligations distribute network (complex systems) complementarities across layers and how ex ante and ex post tools differ in their ability to reshape digital ecosystems. We also argue that interoperability has emerged in the EU as a broader legal principle enshrined across multiple areas of law, including competition law and digital regulation. In sum, we provide a unified view of interoperability as a family of interventions that determine which complementarities are internalized by a single platform and which are shared across rivals and customers. Effective policy requires aligning the locus of interoperability with the structure of complementarities and the risks of fragmentation. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:2511 |
| By: | Armstrong, Mark; Vickers, John |
| Abstract: | We study a market in which firms each might supply a number of variants, or "brands", of fundamentally the same product. Consumers differ in the sets of brands they consider, and firms compete using (multi-dimensional) mixed pricing strategies. We show when firms apply uniform pricing across their brands, and when they use segmented pricing so that one "discount" brand is priced below another "premium" brand. We study the case of symmetric brands in particular, and discuss the impact of a firm introducing a new brand, of imposing a requirement to set uniform prices across brands, and of mergers between firms. |
| Keywords: | Price dispersion, price discrimination, multiproduct firms, mixed strategies, oligopoly, multibranding, multi-channel selling. |
| JEL: | C72 D43 D83 L13 M31 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127017 |
| By: | Jon Frost; Carlos Madeira; Serafin Martinez-Jaramillo |
| Abstract: | In many countries around the world, water scarcity could become a macroeconomically relevant concern. As a key input into production processes (agriculture, power generation and industrial use) and a common good, water resources risk being overexploited. Regressions with panel data for 169 countries between 1990 and 2020 show that, while water use is positively correlated with output, higher water scarcity is associated with lower gross domestic product growth and investment, and higher inflation. In contrast, water use efficiency is associated with higher gross domestic product growth and lower inflation. Climate scenarios show risks of much more severe water shortages in the future, threatening its sustainable use. This could impose higher costs on individual sectors and on the economy, reducing output and pushing up prices. Water availability and use could thus become an area for economists and central banks to monitor in the context of climate change, economic forecasting and monetary policy. |
| Keywords: | water scarcity, efficiency, tragedy of the commons, climate change, natural resources |
| JEL: | L95 Q25 Q50 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1314 |
| By: | Stefano Carattini; Wade Davis; Béla Figge; Anton Heimerdinger |
| Abstract: | Rooftop solar photovoltaic mandates are becoming a popular policy across Europe and the United States. In this paper, we leverage the frontrunner experience of California to examine their economics. First, we evaluate the private payoffs of solar adoption for residential new construction. To do so, we assemble a rich dataset of new construction building projects and parameterize an engineering model to provide estimates of private payoffs across our sample. Second, we evaluate the hypothesis of what we call a "solar gap'' by comparing the cost-effectiveness estimates from the engineering model to observed builder decisions. We find substantial variation in the cost-effectiveness of solar across building locations and characteristics, though the estimated private payoffs are generally positive across a robust variety of model parameterizations and financial assumptions. We observe that the majority of buildings in our data do not adopt solar despite engineering estimates suggesting opportunities for positive payoffs. Relatedly, we find that payoffs explain little of the variation in solar adoption decisions. Lastly, we estimate the effectiveness of both San Francisco's citywide solar mandate and California's statewide mandate. Across a variety of empirical approaches, we find that both the citywide and statewide mandates increased solar adoption. However, new construction solar adoption remains below 100 percent. We discuss compliance accordingly. |
| Keywords: | solar photovoltaic, building codes, regulation, engineering models |
| JEL: | H70 Q42 Q48 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12359 |
| By: | Vitaly M. Bord; Agnes Kovacs; Patrick Moran |
| Abstract: | In the United States, credit card companies frequently use machine learning algorithms to proactively raise credit limits for borrowers. In contrast, an increasing number of countries have begun to prohibit credit limit increases initiated by banks rather than consumers. In this paper, we exploit detailed regulatory micro data to examine the extent to which bank-initiated credit limit increases are directed towards individuals with revolving debt. We then develop a model that captures the costs and benefits of regulating proactive credit limit increases, which we use to quantify their importance and evaluate the implications for household well-being. |
| Keywords: | Algorithmic lending; Behavioral finance; Consumer protection; Credit cards; Credit limit increases; Financial regulation |
| JEL: | D14 D18 D91 G21 G28 G51 L51 |
| Date: | 2025–09–24 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2025-88 |
| By: | Deshpande, Advait |
| Abstract: | The aim of this paper is to investigate broadband speed trends across the UK's top and bottom performing local authorities. The paper examines how the gap between the digital 'hotspots' (i.e., areas with fastest speeds) and 'notspots' (i.e., areas with slowest speeds) evolved in two distinct time periods: pre-pandemic (2014-2019) and post-pandemic (2020-2024). Based on the UK Office of Communications Connected Nations dataset from 2014 to 2024, the paper draws on descriptive temporal trend analysis and regression discontinuity analysis to produce three main findings on UK broadband connectivity from 2014 to 2024: • Quantification of the broadband speed trajectories. • Understanding of the digital divide between UK broadband hotspots and notspots over time before and after the Covid-19 pandemic; and • The impact of USO for broadband on performance and coverage of UK broadband infrastructure. The findings show that broadband quality in the UK improved substantially from 2014 to 2024 across all authority areas. Despite this, the digital divide widened in absolute terms i.e., the speed gap between hotspots and notspots increased almost three-fold. The findings highlight that island communities and remote rural regions in the UK need extra support beyond the universal service obligation. The paper argues that to fully understand the impact of USO for broadband policy (and other similar government interventions) the role of baseline connectivity and commercial investment priorities in long-term changes to broadband performance and coverage needs to be examined in conjunction with quantitative analysis of long-term data sets, and qualitative evidence to provide the necessary context on geographic constraints and local demand. These findings are expected to be of interest to academic researchers, communications industry stakeholders, and broadband policymakers. |
| Keywords: | Broadband policy, Broadband speed trajectory, UK hotspots and notspots, Universal Service Obligation for Broadband |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:itse25:334160 |
| By: | David Rapson; Blake Shaffer |
| Abstract: | Electricity distribution network constraints may ultimately limit the pace of transportation electrification. This paper examines the underappreciated challenges that electric vehicle (EV) adoption poses for the distribution grid. While prior research has focused on bulk power and private service upgrades, we emphasize how local distribution capacity is strained by reduced load diversity at small aggregations. We highlight two alternatives to costly infrastructure expansion: (1) demand-based tariffs that allocate scarce distribution capacity more efficiently, and (2) managed charging programs that coordinate EV loads within local limits. While managed charging reduces transformer overloads and smooths load profiles, consumer participation remains a barrier. Economists can play a key role by designing rate structures that align user incentives with local network constraints and by evaluating consumer acceptance of these solutions as electrification advances. |
| Keywords: | energy transition; electrification; electricity distribution network |
| JEL: | L94 Q40 Q50 |
| Date: | 2025–12–22 |
| URL: | https://d.repec.org/n?u=RePEc:fip:feddwp:102283 |
| By: | Jakub Bandurski (University of Warsaw, Faculty of Economic Sciences); Eliza Hałatek (University of Warsaw, Faculty of Economic Sciences); Adam Łaziński (University of Warsaw, Faculty of Economic Sciences); Michał Künstler (University of Warsaw, Faculty of Economic Sciences) |
| Abstract: | The Energiewende is a deep-rooted notion in the German economy. The main goal is to achieve climate neutrality by transitioning to renewable energy sources. However, the feasibility of this transition is partially hindered by power grid congestion, which undermines system efficiency and leads to both economic and environmental costs. We address this issue by making a prediction of the likelihood of congestion occurrence within the German TenneT DE electricity network in the years 2020-2023. We propose a twofold approach offering a combination of advanced econometric models and state-of-the-art machine learning methods. We offer separate solutions for up congestion when additional energy needs to be pushed to the network as well as down congestion when energy needs to be pulled away from the network. Analyzing the CatBoost with XAI, we identify factors that play a significant role in driving redispatch events within the German electricity network. |
| Keywords: | energiewende, econometrics, machine learning, climate policy, catboost |
| JEL: | Q47 Q48 Q54 C01 C53 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:war:wpaper:2025-30 |
| By: | Kinda Hachem |
| Abstract: | Why does the banking industry remain prone to large and costly disruptions despite being so heavily regulated? Is there a need for more regulation, less regulation, or simply different regulation? Our recent Staff Report combines insights from academic research in economics, finance, and accounting to provide a deeper understanding of the challenges involved in designing and implementing bank regulation, as well as opportunities for future exploration. This post focuses on the regulation of bank capital, but the ideas are applicable more broadly. |
| Keywords: | bank regulation; accounting discretion; shadow banking; regulatory arbitrage; financial stability; optimal policy |
| JEL: | D62 E44 G21 G28 M41 |
| Date: | 2025–12–15 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednls:102211 |
| By: | Dang, Ruirui |
| Keywords: | Resource/Energy Economics and Policy, Environmental Economics and Policy, Community/Rural/Urban Development |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea24:343840 |
| By: | Kala, Namrata (MIT Sloan School of Management; BREAD; CEPR; J-PAL; NBER); Haseeb, Muhammad (University of Bristol); Fenske, James (University of Warwick) |
| Abstract: | Effective regulatory design requires an understanding of how regulatory burden affects regulated entities. Using novel data on all applications for environmental permits in five Indian states and a natural experiment, we estimate how regulatory burden of environmental permitting affects firms. Difference-in-difference estimates show that deregulation induces smaller firms to enter and increases entry. Standard data sources would miss these substantial effects, underscoring the importance of collecting data across the firm size distribution. We also use full texts of permit certificates to create novel measures of regulatory burden. Firms in industries with reduced regulations face fewer, less stringent, permit conditions. |
| Keywords: | JEL Classification: |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:cge:wacage:784 |
| By: | Bartsch, Sebastian Clemens; Düwell, Marcus; Schmidt, Jan-Hendrik; Benlian, Alexander |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:dar:wpaper:158869 |
| By: | Sukjin Han; Kyungho Lee |
| Abstract: | We study the competitive and welfare effects of copyright in creative industries in the face of cost-reducing technologies such as generative artificial intelligence. Creative products often feature unstructured attributes (e.g., images and text) that are complex and high-dimensional. To address this challenge, we study a stylized design product—fonts—using data from the world’s largest font marketplace. We construct neural network embeddings to quantify unstructured attributes and measure visual similarity in a manner consistent with human perception. Spatial regression and event-study analyses demonstrate that competition is local in the visual characteristics space. Building on this evidence, we develop a structural model of supply and demand that incorporates embeddings and captures product positioning under copyright-based similarity constraints. Our estimates reveal consumers’ heterogeneous design preferences and producers’ cost-effective mimicry advantages. Counterfactual analyses show that copyright protection can raise consumer welfare by encouraging product relocation, and that the optimal policy depends on the interaction between copyright and cost-reducing technologies. |
| Date: | 2025–04–02 |
| URL: | https://d.repec.org/n?u=RePEc:bri:uobdis:25/816 |
| By: | Kang, Saesol; Sears, Molly |
| Keywords: | Environmental Economics and Policy, Health Economics and Policy |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea24:343966 |
| By: | Judd, Rachel; Rouhi Rad, Mani |
| Keywords: | Resource/Energy Economics and Policy |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea24:343614 |
| By: | Rennert, Kevin (Resources for the Future); Ho, Mun (Resources for the Future); Nehrkorn, Katarina (Resources for the Future); Elkerbout, Milan (Resources for the Future) |
| Abstract: | The Clean Competition Act (CCA) of 2025, updated and introduced to the 119th Congress by Senator Sheldon Whitehouse (D-RI), would establish a domestic performance standard and a symmetric carbon border adjustment mechanism (CBAM) for certain energy-intensive, trade-exposed goods. US manufacturers of goods covered by the legislation would pay a fee for carbon emissions above a benchmark specified for those goods. Imported, covered goods would face an analogous tariff based on how much more carbon-intensive that good was compared to the benchmark. The benchmark for each good would initially be set at the average level of emissions for its manufacture in the United States, becoming more stringent over time. The carbon emissions fee and tariff rates would also increase over time, providing an ongoing set of symmetric incentives to reduce the emissions intensity of both US manufacturing and imported goods.Here, we use the Global Economic Model (GEM) to assess the effects of a CBAM stylized after the CCA.We find that the CCA would have the following effects:Shift US imports toward countries with less carbon-intensive manufacturing: Imports for covered products are reduced from countries facing the carbon tariffs (e.g., China, Mexico, and India) and increased from countries exempt from the tariffs (e.g., the European Union, United Kingdom, and Japan) due to their lower carbon intensity of manufacturing for those products.Reduce emissions globally, led by the United States: Emissions are projected to decrease globally by 81 million metric tonnes (MMt) in the first year of the policy, with US emissions reductions of 63 MMt leading all other countries. The increasing fee and tightening standards lead to greater reductions over time, with 140 MMT of global and 119 MMt of US emission reductions in the tenth year after enactment. US emissions reductions result from decreased energy and emissions intensity of manufacturing driven by the CCA’s domestic performance standard, as well as reductions in overall demand for energy intensive goods.Raise revenue: Annual revenues from the policy are projected to be $7.2 billion (in 2024 US$) for the covered refining and manufacturing sectors in the first year and total $101 billion over the first ten years of the policy. Roughly 75 percent of the revenues derive from the domestic performance standard.Reduce US outputs in covered sectors and downstream industries: The tariffs have a protective effect for US manufacturers, whilst the performance standard increases costs for higher-intensity producers. The balance of effects is slightly negative for US production of covered products: cement (–0.02 percent), aluminum (–1.9 percent), iron and steel (–0.6 percent), and pulp and paper (–0.3 percent). Output in industries such as construction and transportation equipment manufacturing falls slightly (0.04–0.5 percent) in response to higher prices for covered inputs. |
| Date: | 2025–12–17 |
| URL: | https://d.repec.org/n?u=RePEc:rff:report:rp-25-19 |