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on Regulation |
| By: | Christos Genakos; Themistoklis Kampouris |
| Abstract: | This paper examines the “right” geographic definition of relevant markets by analyzing how excise tax pass-through varies with local competition in the retail gasoline market of a large metropolitan city. Using a natural experiment from three unanticipated and exogenous fuel tax hikes and detailed station-level price data, we show that average pass-through is invariant to the number of nearby competitors across various geographic definitions. This contrasts with theoretical predictions and prior island-based evidence, suggesting that the entire metropolitan area functions as a single market. Our findings challenge standard isodistance- or isochrone- based market delineations used in academic research and competition policy. |
| Keywords: | Geographic market definition, gasoline market, competition, pass-through, market structure |
| JEL: | H22 L1 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2154 |
| By: | Paul Simshauser |
| Keywords: | Peaking duties, energy-only markets, dispatchable plant capacity, gas turbines |
| JEL: | D52 D53 G12 L94 Q40 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:enp:wpaper:eprg2601 |
| By: | Nathan Engelman Lado; Ahmed Alahmed; Audun Botterud; Saurabh Amin |
| Abstract: | We examine the joint investment and operational decisions of a prosumer, a customer who both consumes and generates electricity, under net energy metering (NEM) tariffs. Traditional NEM schemes provide temporally flat compensation at the retail price for net energy exports over a billing period. However, ongoing reforms in several U.S. states are introducing time-varying prices and asymmetric import/export compensation to better align incentives with grid costs. While prior studies treat PV capacity as exogenous and focus primarily on consumption behavior, this work endogenizes PV investment and derives the marginal value of solar capacity for a flexible prosumer under asymmetric NEM tariffs. We characterize optimal investment and show how optimal investment changes with prices and PV costs. Through this analysis, we identify a PV effect: changes in NEM pricing in one period can influence net demand and consumption in generating periods with unchanged prices through adjustments in optimal PV investment. The PV effect weakens the ability of higher import prices to increase prosumer payments, with direct implications for NEM reform. We validate our theoretical results in a case study using simulated household and tariff data derived from historical conditions in Massachusetts. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.02284 |
| By: | Martin Beraja; Francisco J. Buera |
| Abstract: | Are competition policies designed for static industries suitable for innovative industries where dynamic competition for the market is key? If not, how should policies differ? We develop a model of the life-cycle of an oligopolistic industry: a version of Jovanovic and MacDonald (1994) with a finite number of firms. The equilibrium features a period of intense entry, followed by a shakeout and eventual industry concentration as some firms scale through innovation while most exit. We analyze the second-best problem of a government subsidizing small firms to promote competition. Innovation and dynamic competition do not necessarily justify intervention, as the equilibrium can still be second best. In general, the optimal policy depends on the nature of competition. Firms primarily compete for the market when innovation leads to large differences in scale. The government can wait to intervene in this case; committing to do whatever it takes to promote competition if and when the industry concentrates excessively. Subsidies early in the life-cycle are unnecessary. These results contrast with calls for aggressive ex-ante regulation in highly innovative industries, suggesting a wait-and-see approach may be preferable. We apply these insights to digital and AI industries in the U.S. using data on venture-backed firms. |
| JEL: | E0 L0 O3 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34770 |
| By: | Jamasb, Tooraj (Department of Economics, Copenhagen Business School); Sikow-Magny, Catharina (Department of Economics, Copenhagen Business School) |
| Abstract: | Cross-border interconnection (IC) projects are central to achieving the European Union’s goals of energy market integration, system resilience, and security of supply. However, their implementation often encounters financial and policy challenges stemming from uneven distribution of costs and benefits across the countries and exacerbated jurisdictional differences and information asymmetry. This paper proposes an approach that reorients the current practice of CBCA policy to one that embeds economic theory that informs the project assessment and negotiation process. We present a conceptual framework that integrates bargaining theory and incentive design into the Cross-Border Cost Allocation (CBCA). It considers the joint interests of project promoters, National Regulatory Authorities (NRAs), and the European Commission (EC) when assessing investments and co-funding from the Connecting Europe Facility (CEF). A new role for CEF, not as an ex-post subsidy, but as a directed policy instrument enables elicitation of true values of benefits and incentive-compatible cost allocation that aligns national and EU objectives. We conclude with policy recommendations for enabling implementation of cross-border investments in the EU’s evolving energy grid policy. |
| Keywords: | Electricity grid; Cross-border investment; Cost allocation; Information asymmetry; Energy policy |
| JEL: | C70 D00 L94 Q40 |
| Date: | 2026–02–06 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:cbsnow:2026_004 |
| By: | Patrice Bougette (Université Côte d'Azur, CNRS, GREDEG, France); Frédéric Marty (CNRS, GREDEG, Université Côte d'Azur, France) |
| Abstract: | This article examines the Structure-Conduct-Performance (SCP) paradigm that dominated U.S. antitrust policy until the 1970s, before being displaced by the Chicago School and, from the 1980s onwards, by Post-Chicago analysis, i.e., modern industrial organization. Long portrayed as indifferent to firms' conduct and to economic efficiency, structuralism has been subject to a persistent "black legend." This contribution reassesses that critique by examining: (i) the evolution of structuralism between the 1940s and the 1970s; (ii) the influence of a deconcentrationist perspective embedded in a particular legal interpretation of U.S. antitrust rules; (iii) the implications of the digital economy for contemporary analyses of market structures; and (iv) the SCP paradigm's legacy in Neo-Brandeisian and conservative antitrust thought. |
| Keywords: | Structure-Conduct-Performance (SCP) paradigm; Structuralism; U.S. antitrust; Chicago School; Post-Chicago industrial organization; Merger control; Digital markets; Neo-Brandeisian antitrust; Market structure; Structural remedies |
| JEL: | L10 L12 L13 L41 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:gre:wpaper:2026-03 |
| By: | Greenhill, Simon; Walker, Brant J; Shapiro, Joseph S |
| Abstract: | Projecting the effects of proposed policy reforms is challenging because no outcome data exist for regulations that governments have not yet implemented. We propose an ex ante deep learning framework that can project effects of proposed reforms by mapping outcomes observed under past regulations onto the legal criteria of proposed future policies (i.e., by “relabeling”). We apply this framework to study changes in jurisdiction of the US Clean Water Act (CWA). We compare our ex ante deep learning projection of jurisdiction under the Supreme Court’s Sackett decision against widely used projections from domain experts. Ex ante machine learning generates exceptional performance improvements over the leading domain expert model that the US Environmental Protection Agency currently uses, with 65 times more accurate identification of jurisdictional sites. We also develop an ex post deep learning model trained with data after policy implementation. Ex post deep learning performs best. Sackett deregulates one-third of all previously regulated US waters, particularly floodplains and pristine fish habitats, totaling 700, 000 deregulated stream miles and 17 million deregulated wetland acres. Deep learning can effectively project consequences of far-reaching regulatory reforms before they are implemented, when projections are both most uncertain and most useful. |
| Keywords: | Social and Behavioral Sciences, Environmental policy, Clean Water Act, machine learning |
| Date: | 2026–02–09 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:agrebk:qt6tx6m2fn |
| By: | Schmal, W. Benedikt |
| Abstract: | Can monopoly rents fuel innovation or do they entrench dominance? This paper explores the tension between two competing visions of antitrust: the US model, which rewards entrepreneurial disruption through monopoly rents, and the EU model, which aims to prevent gatekeeping by preserving structural competition. At the heart of this debate lies the distinction between circumvention innovation, where challengers bypass incumbents with radical new paradigms, and gatekeeper regulation, which enforces contestability within existing markets. While the US approach has produced breakthrough innovations, it depends on open access to capital, talent, and markets, i.e., conditions increasingly threatened by geopolitical fragmentation and economic decoupling. In contrast, the EU's more restrained model may lack raw disruptive power, but appears more resilient in the face of shocks. This paper argues that antitrust must evolve: resilient innovation requires not just market incentives, but institutional frameworks capable of withstanding a more fractured global economy. |
| Abstract: | Können Monopolrenten Innovation fördern oder zementieren sie lediglich Marktmacht? Dieser Beitrag untersucht die Spannungen zwischen zwei konkurrierenden wettbewerbspolitischen Modellen: dem US-amerikanischen Ansatz, der unternehmerische Disruption durch Monopolgewinne belohnt, und dem europäischen Modell, das durch strukturelle Wettbewerbssicherung gezielt Gatekeeping verhindern will. Im Zentrum steht der Gegensatz zwischen Umgehungsinnovation, bei der Herausforderer etablierte Firmen mit radikal neuen Ansätzen umgehen, und Gatekeeper-Regulierung, die Wettbewerb innerhalb bestehender Märkte durchsetzt. Während der US-Ansatz disruptive Innovationen hervorgebracht hat, beruht er auf offenen Kapital-, Personal- und Absatzmärkten, also Voraussetzungen, die zunehmend durch geopolitische Fragmentierung und wirtschaftliche Entkopplung bedroht sind. Demgegenüber mag das europäische Modell weniger auf Durchbruchsinnovationen ausgerichtet sein, scheint jedoch widerstandsfähiger gegenüber externen Schocks. Der Beitrag argumentiert, dass sich die Wettbewerbspolitik weiterentwickeln muss: Resiliente Innovation benötigt nicht nur Marktanreize, sondern auch institutionelle Rahmenbedingungen, die in einer fragmentierten Weltwirtschaft tragfähig bleiben. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:lefpps:336634 |
| By: | Dirk Bergemann (Yale University); Marina Bertolini (University of Padova, Levi Cases Centre and CRIEP); Marta Castellini (University of Padova and FEEM); Michele Moretto (University of Padova); Sergio Vergalli (University of Brescia and FEEM) |
| Abstract: | A municipality (social planner) is seeking to establish a renewable energy community paying the initial investment costs, while also identifying the optimal management framework. In this context, two distinct modes of governance are analyzed: the private and the public one. In the first case, a private (or profit) aggregator oversees the energy community with a monopolistic behavior, while in the other the aggregator is a public owned, or controlled, company following the social approach advocated by the promoter, i.e the municipality. In both scenarios, the effective functioning of the community requires the collection of private data on members’ energy consumption. This process allows for optimal management of the community, but also results in a loss of privacy for members. The model incorporates this as a dis-utility, assuming that the members address the portion of their energy needs not covered by the community’s production by purchasing energy from the manager at a price determined on the basis of the information collected. In addition, the aggregator is allowed to sell the collected data to third parties for financial gain. By integrating the members’ energy valuation and incorporating uncertainty regarding the investment cost, we examine policy recommendations aimed at establishing a community size closer to the social optimum. |
| Keywords: | : Renewable Energy, Renewable Energy Communities, Digitalization, Information, Privacy. |
| URL: | https://d.repec.org/n?u=RePEc:pad:wpaper:0325 |
| By: | Gillian K. Hadfield |
| Abstract: | Most of our AI governance efforts focus on substance: what rules do we want in place? What limits or checks do we want to impose on AI development and deployment? But a key role for law is not only to establish substantive rules but also to establish legal and regulatory infrastructure to generate and implement rules. The transformative nature of AI calls especially for attention to building legal and regulatory frameworks. In this PNAS Perspective piece I review three examples I have proposed: the creation of registration regimes for frontier models; the creation of registration and identification regimes for autonomous agents; and the design of regulatory markets to facilitate a role for private companies to innovate and deliver AI regulatory services. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.01474 |
| By: | Giulia Ajmone Marsan (Economic Research Institute for ASEAN and East Asia (ERIA)); Adelia Rahmawati (Economic Research Institute for ASEAN and East Asia (ERIA)) |
| Abstract: | Fintech is emerging as a key driver of financial inclusion and innovation across emerging and developing economies. Its rapid growth is underpinned by large unbanked and underbanked populations, rising internet penetration, a shift towards mobile-first consumer behaviour, younger demographic profiles, and the digital acceleration catalysed by the COVID-19 pandemic. This paper examines how different fintech ecosystem models evolve under varying institutional, regulatory, and technological conditions. Drawing on illustrative cases from Latin America, ASEAN, Africa, and South Asia, it highlights how enabling regulatory frameworks, digital public infrastructure, startup ecosystems, and mobile-first solutions have shaped fintech development. These models are not mutually exclusive and often coexist within the same ecosystem, generating shared challenges such as fragmented markets, uneven regulatory capacity, persistent digital divides, and weaknesses in digital infrastructure. Realising fintech’s transformative potential therefore requires deliberate policy choices that promote equitable digital participation, foster competition, and support responsible innovation. For ASEAN, regional initiatives such as the ASEAN Regional Payment Connectivity and the Digital Economy Framework Agreement present timely opportunities to deepen integration, expand cross-border fintech services, and support sustained growth. Aligning fintech development with financial inclusion objectives will be critical to ensuring that digital finance contributes to sustainable and equitable development across the region. |
| Keywords: | Fintech; Innovation; Emerging Market; ASEAN |
| JEL: | L26 O14 O3 P52 |
| Date: | 2026–01–29 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:dp-2025-11 |
| By: | Kahn-Lang, Jenya (Resources for the Future); Robertson, Molly (Resources for the Future) |
| Abstract: | Electric power is an essential resource for households, businesses, and economies, from keeping lights and life support machines on to powering water conveyance and transportation networks. When there is not enough electricity, the resulting outages can be expensive and even deadly, impacting business activity, comfort, and health.One prime example is the electricity shortage event that occurred in Texas in February 2021. Winter storm Uri caused 246 deaths according to official counts (DSHS 2021), primarily due to power outages, with one estimate putting the death toll over 800 (Weber and Buchele 2022; FERC/NERC 2023). The Federal Reserve Bank of Dallas estimated the total economic cost of the outages at $4.3 billion (Golding et al. 2021).Power outages resulting from extreme events, like the ones in Texas, are becoming more frequent and severe. The traditional methods for ensuring sufficient power supply and incentivizing new investment were not designed for the range of innovation in electric resources that has emerged or the speed of projected demand growth. In addition, it now takes longer to site, build, and interconnect new resources to the power grid. Beyond threatening reliability, current practices can exacerbate affordability concerns and slow decarbonization.This issue brief offers a primer for policymakers considering reforms to ensure sufficient power supply (“resource adequacy”). While resource adequacy is only one dimension of electric reliability, we focus on it because the complex economic fundamentals that have driven existing resource adequacy market designs are not always fully appreciated. |
| Date: | 2026–02–13 |
| URL: | https://d.repec.org/n?u=RePEc:rff:ibrief:ib-26-01 |
| By: | Robin Fischer; Anton Pichler |
| Abstract: | Mobilising private capital is a critical bottleneck of the energy transition, yet recent crisis-driven windfall profits for fossil power firms suggest that market signals may still favour carbon-intensive assets. Here we analyse a panel of 900 European power firms (2001-2023) to resolve whether these profits reflect a durable profitability advantage or a crisis-driven anomaly. Using machine-learning clustering and Bayesian model averaging, we identify a structural divergence: wind and solar portfolios exhibit rising profitability, with return on assets among wind-dominated firms increasing by over 6% between 2014 and 2023. Conversely, higher fossil portfolio shares are increasingly associated with lower profitability, with marginal effects reaching -4% by 2023, while renewable-dominated firms match or outperform their fossil-heavy counterparts across most European regions. These findings suggest that the record profits of fossil incumbents were distinct outliers, masking an ongoing decline in the profitability of carbon-intensive business models. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.22167 |
| By: | Berha, Andu; Khemani, Stuti |
| Abstract: | Unreliable electricity supply in developing countries is a persistent problem with significant adverse consequences for economic growth. This paper uses a novel database on utilities, which provides systematic data on reliability, and links it to available data on country-level institutions to provide new evidence on variation in reliability across countries. The data reveal that utilities located in countries with weak institutions for controlling corruption perform significantly worse at delivering reliable electricity. The data also show that privately owned utilities perform better than publicly owned ones, consistent with standard reforms of privatization that are pursued to overcome governance problems. However, private ownership is less likely in countries with higher control of corruption, where public utilities perform better than their counterparts in countries with weaker institutions. Regardless of ownership, the estimates suggest that any given utility is likely to perform worse over time when the country in which it is located has weaker institutions. The paper forges links with available case studies to discuss potential mechanisms that may account for the correlations revealed in the data, yielding forward-looking ideas for how to turn around utility performance in weak institutional contexts. |
| Date: | 2026–01–09 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11290 |
| By: | Scharlach, Rebecca; Reynolds, CJ; Kuznetsova, Vasilisa; Hallinan, Blake; Katzenbach, Christian |
| Abstract: | Value-driven governance is a prominent topic in AI regulation, with both state actors and tech companies professing a commitment to values like fairness and safety. Despite this seeming agreement, we know little how normative principles are interpreted, operationalized, and assigned responsibilities within particular contexts. This study compares the values invoked within the European Union’s AI Act with policy documents of five major AI companies—OpenAI, Anthropic, Google AI, Meta AI, and Mistral AI. Through a combination of frequency analysis and inductive keyword-in-context analysis, we identify prioritized values and map how they are specified in public legislation and corporate policies. Both public and private actors largely invoke the same values (accuracy, authenticity, control, improvement, privacy, safety, and security) but sometimes differ in their specification. While values like privacy, security, and safety typically mean the same thing in policy discourses, we found stark differences in the understanding of improvement, tensions between technical and normative operationalizations of values, and shifts of responsibilities for upholding values from one stakeholder to another. Value specifications surface the politics of values in AI regulations, exposing how private actors employ polysemy to claim alignment with the public interest while avoiding substantial accountability. When it comes to value-driven governance, the devil is in the details. |
| Date: | 2026–01–19 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:s26va_v1 |
| By: | Krishna Sharma; Khemraj Bhatt; Indra Giri |
| Abstract: | This paper examines whether a major U.S. regulatory clarification coincided with cross-border spillovers in crypto-asset entrepreneurial finance. We study the Securities and Exchange Commission's July 2017 DAO Report, which clarified the application of U.S. securities law to many initial coin offerings, and analyze how global issuance activity adjusted across regions. Using a comprehensive global dataset of ICOs from 2014 to 2021, we construct a region-month panel and evaluate issuance dynamics around the announcement. We document a substantial and persistent reallocation of ICO activity toward Europe following the DAO Report. In panel regressions with region and month fixed effects, Europe experiences an average post-2017 increase of approximately 14 additional ICOs per region-month relative to other regions, net of global market cycles. The results are consistent with cross-border regulatory spillovers in highly mobile digital-asset markets. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.00138 |
| By: | Borchers Arriagada, Nicolas; Conte Grand, Mariana; Reyes, Daniel; Rojas, Diego; Yoong, Pui Shen |
| Abstract: | This paper examines Paraguay’s vulnerability to the European Union’s Regulation on Deforestation-Free Products. Drawing on trade data, customs firm-level data, and high-resolution geospatial analysis, it assesses exposure at the country, firm, and geographic levels. The results show that Paraguay’s direct export exposure to the European Union’s Regulation on Deforestation-Free Products is modest, but indirect exposure through Argentina’s soy value chain could affect up to 13 percent of Paraguay’s exports. Firm-level evidence indicates that soy and rubber exports are concentrated among a few large firms, whereas the emerging wood and forestry sector is fragmented across small and medium-sized enterprises with limited capacity to absorb compliance costs. Geospatial analysis suggests that only 0.4 to 2 percent of soybean areas may be at risk of noncompliance, concentrated in Itapúa, San Pedro, and Alto Paraná. Overall, Paraguay’s vulnerability stems primarily from indirect value-chain linkages, underscoring the need for targeted support and regional coordination within MERCOSUR to strengthen environmental governance. |
| Date: | 2026–01–12 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11291 |
| By: | Brian C. Albrecht; Alex Tabarrok; Mark Whitmeyer |
| Abstract: | Price controls kill the incentive for arbitrage. We prove a Chaos Theorem: under a binding price ceiling, suppliers are indifferent across destinations, so arbitrarily small cost differences can determine the entire allocation. The economy tips to corner outcomes in which some markets are fully served while others are starved; small parameter changes flip the identity of the corners, generating discontinuous welfare jumps. These corner allocations create a distinct source of cross-market misallocation, separate from the aggregate quantity loss (the Harberger triangle) and from within-market misallocation emphasized in prior work. They also create an identification problem: welfare depends on demand far from the observed equilibrium. We derive sharp bounds on misallocation that require no parametric assumptions. In an efficient allocation, shadow prices are equalized across markets; combined with the adding-up constraint, this collapses the infinite-dimensional welfare problem to a one-dimensional search over a common shadow price, with extremal losses achieved by piecewise-linear demand schedules. Calibrating the bounds to station-level AAA survey data from the 1973-74 U.S. gasoline crisis, misallocation losses range from roughly 1 to 9 times the Harberger triangle. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.12066 |