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on Regulation |
| By: | Jorge Ale-Chilet (UANDES - Universidad de los Andes [Santiago]); Cuicui Chen (SUNY - State University of New York); Jing Li (Tufts University [Medford]); Mathias Reynaert (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) |
| Abstract: | We study collusion among firms against imperfectly monitored environmental regulation. Firms increase variable profits by violating regulation and reduce expected noncompliance penalties by violating jointly. We consider a case of three German automakers colluding to reduce the effectiveness of emissions control technology. By estimating a structural model of the European automobile industry from 2007 to 2018, we find that collusion lowers expected noncompliance penalties substantially and increases buyer and producer surplus. Due to increased pollution, welfare decreases by €1.57–5.57 billion. We show how environmental policy design and antitrust play complementary roles in preventing noncompliance. |
| Keywords: | noncompliance, automobile market, pollution, regulation, collusion |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05492381 |
| By: | Stelzer, Jonathan; Esser, Katharina; Weiskopf, Thorsten; Ardone, Armin; Bertsch, Valentin; Fichtner, Wolf |
| Abstract: | The transition to a net-zero energy system requires large-scale integration of variable renewables, increasing demand for flexibility beyond short-term batteries and seasonal hydrogen. Emerging storage technologies feature cost structures that position them between these options, offering discharge durations of several hours to a few days, here referred to as mid-term storage. However, their economic feasibility depends strongly on their techno-economic parameters and evolving market dynamics. Identifying profitable and robust storage configurations under uncertain future market conditions is therefore crucial to bridge the perspectives of technology developers and investors. We employ the agent-based electricity market model PowerACE, which explicitly represents market participants as interacting decision-making agents. Using mean-reverting stochastic representations of fuel prices and renewable generation, we capture the impact of uncertainties on storage profitability from an individual investor's perspective. The analysis determines the maximum capital expenditure that still yields economically viable storage configurations across relevant combinations of techno-economic parameters. The results reveal that profitability is limited under current cost conditions, as the marginal contribution of storage capacity declines sharply with higher storage durations. At the same time, higher round-trip efficiency not only improves returns but also reduces market risk. Balancing efficiency, costs, and duration is essential for mid-term storage competitiveness, while risk-based assessments can guide robust technology and investment decisions. |
| Keywords: | Energy storage, Electricity markets, Investment risk, Capital expenditure, Storage technology design, Mean-reverting processes |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:kitiip:336783 |
| By: | Willem THORBECKE |
| Abstract: | Artificial intelligence (AI) use and its energy requirements are skyrocketing. This paper finds that the market capitalizations of Amazon, Google, Meta, and Microsoft have increased by more than $500 billion above predicted values since ChatGPT was launched in 2022. Nevertheless they negotiate aggressively to lower energy costs and transfer electricity expenses to other ratepayers. Their appetite for energy is also met by burning fossil fuels including coal. This paper considers how to incentivize Big Tech companies to internalize the externalities associated with data center electricity use. It also recommends innovations that can reduce AI energy demand. These include using AI itself to save energy at data centers and in the production of batteries, steel, glass, hydrogen, ammonia, and copper. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26013 |
| By: | Corentin Jacquier (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); Vincent Debusschere (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); Jean-Nicolas Louis (VTT - VTT Technical Research Centre of Finland); Silvana Mima (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes) |
| Abstract: | Medium and low voltage distribution grids are at the core of the energy transition as they are expected to host a large share of renewables and flexible resources. Their modeling within decarbonization pathways is then of great importance in providing realistic future energy scenarios. This paper investigates different scenarios at the French national scale up to 2050 while varying the electricity demand, renewables installed in both transmission and distribution grids, and the considered flexibility technologies. The methodology relies on coupling a longterm energy model ( POLES) and an open-source short-term optimization framework (Backbone). POLES produces long-term decarbonization scenarios, while Backbone enables the optimization of the power system. Technical and financial impacts are studied through ten scenarios regarding produced energy, installed capacities, and investment costs. The results highlight the importance of the load demand modeling assumptions, even raising the question of the feasibility of high-demand scenarios. Also, results show that demand-side flexibility can significantly reduce the requirements in conventional storage technologies (up to 98 %). Distributed flexibilities, such as electric vehicle smart charging, are especially effective. Considering multiple types of distribution grids allows, in the end, to show that installing renewable generation at the transmission or distribution level only moderately influences global costs, with a minor advantage for centralization to limit reverse flows on transformers. The paper concludes with a comparison with other scenarios (drawn from up-to-date literature) and a discussion of the environmental footprint of these scenarios, both in terms of mineral resource consumption (raw materials) and land footprint. |
| Keywords: | Energy system modeling, Long-term scenarios, Flexibility, Distribution grids, Critical raw materials, Land footprint |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05507434 |
| By: | Teichmann, Fabian |
| Abstract: | The EU Artificial Intelligence Act (AI Act) establishes a novel risk-based regulatory model for AI systems, categorising uses into four tiers: unacceptable (prohibited), high-risk (tightly regulated), limited-risk (transparency obligations), and minimal-risk (largely unregulated). This article develops a rigorous conceptual framework to analyse the Act’s logic of risk, reasonableness, and residual harm. It explains how the principles of precaution and proportionality shape the AI Act’s ex ante controls, requiring providers to anticipate reasonably foreseeable misuse and apply measures that reflect the state of the art. 1 We propose criteria for calibrating key requirements (data governance, transparency, human oversight, robustness or cybersecurity) to the severity and uncertainty of risks, drawing on risk-regulation theory (e.g., Baldwin and Black’s responsive regulation and Sunstein’s cost-benefit rationality). The analysis also situates the EU approach within a comparative context, noting alignments and divergences with US and OECD AI frameworks – for example, the EU’s precautionary bans on biometric mass surveillance contrast with the US reliance on voluntary risk management guidelines. Specific high-impact use cases (biometric identification in public spaces, AI in critical infrastructure) illustrate how risk severity triggers stricter controls. The article concludes by discussing policy implications for implementation, including the role of harmonised standards and presumptions of conformity, the interface with parallel cybersecurity regimes (NIS2, DORA) as “risk multipliers, ” and the need for further guidance and delegated acts to ensure that the AI Act’s proportional safeguards remain effective in the face of technological change. |
| Keywords: | EU artificial intelligence act; harmonised standards; residual risk management; proportionality principle; risk-based regulation |
| JEL: | G32 |
| Date: | 2026–01–20 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:130944 |
| By: | Ryan Singleton; Qazi Haque; Firmin Doko Tchatoka |
| Abstract: | The global transition to low-carbon energy has led many countries to adopt national hydrogen strategies, yet their policy impacts and adoption drivers remain poorly understood. This paper investigates these issues using panel data for 49 countries from 2010 to 2023. Policy impacts are assessed via a staggered difference-in-differences framework, while the determinants of adoption are analysed using a fixed-effects linear probability model. We find that adoption is associated with a sustained and economically significant increase in public hydrogen R&D spending, signalling credible government commitment, and a smaller rise in carbon capture, utilisation, and storage (CCUS) R&D, reflecting continued support for fossil-fuel-linked technologies. No short-run reduction in industrial process emissions is observed, suggesting that decarbonisation effects materialise gradually. Turning to the determinants of adoption, within-country growth in renewable electricity generation emerges as the strongest predictor of adoption, highlighting the interdependence between renewable expansion and hydrogen policy formation, while macroeconomic and political factors appear largely insignificant. These results shed light on the effectiveness and determinants of national hydrogen strategies in the global energy transition. |
| Keywords: | hydrogen policy, national hydrogen strategies, difference-in-differences, event study, policy adoption, energy transition |
| JEL: | C21 C23 O13 Q42 Q48 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2026-14 |
| By: | Cass, Leanne; Sato, Misato; Saussay, Aurelien |
| Abstract: | Steep declines in solar PV costs raise questions about whether, and how, to continue support. This paper analyses Scotland’s interest-free Home Energy Scotland (HES) Loan, which encourages household PV adoption by lowering borrowing costs and extending repayment periods, reducing upfront capital barriers. This type of instrument has a low fiscal cost but has been relatively under-examined in previous research on solar subsidies. Using a database of more than one million household PV installations in the UK over the period 2010–2021, the authors compare Scottish localities that have access to loans with similar English localities that are ineligible, before and after 2017, when the HES Loan was introduced. The results show clearly that the HES Loan increased household adoption of rooftop solar panels in Scotland, even though the country has relatively low solar potential, and shifted take-up towards smaller systems suitable for smaller properties. In terms of the distributional impacts across wealth groups, unlike previously examined policies including upfront rebates and Feed-in-Tariffs (FiTs), there were broad gains and relatively larger effects in lower-wealth areas and across urban and accessible-rural locations, yielding a less skewed wealth and geographical distribution of installations. The paper also examines the value-for-money for the government. The results consistently indicate positive welfare gains from the loan at modest fiscal cost. Overall, the paper provides robust evidence that interest-free loans can cost-effectively expand the uptake of household solar PV while promoting equitable access, complementing (and in some contexts outperforming) production-based support policies (i.e. those that subsidise households per unit of electricity produced by their solar panels). |
| Keywords: | renewable support policies; interest-free loans; residential PV; distributional impact; MVPF |
| JEL: | H22 H23 H81 Q42 Q48 Q58 |
| Date: | 2026–01–10 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137107 |
| By: | Claire Greene; Oz Shy; Joanna Stavins |
| Abstract: | This paper investigates the degree to which merchants influence consumers' choice of how they pay for transactions. Using data from the Survey and Diary of Consumer Payments Choice, we examine consumers' adherence to their preferred payment method when making in-person transactions. We also investigate whether merchants are able to steer consumers away from their preferred payment method. We characterize preferences for paying with cash or cards according to consumers' income, level of education, and employment status. We find that consumers make most payments with their preferred method. When consumers pay with a nonpreferred method, it is due only in small part to merchants' refusal to accept that payment method. If a merchant accepts card payments, consumers who prefer paying with cards are not likely to pay with cash for large-value transactions or for gas or groceries. Discounts on cash purchases do not affect the probability of consumers deviating from using cards and paying with cash. Finally, the paper identifies “inertia” effects, which lead consumers to use the same payment method for consecutive purchases. |
| Keywords: | consumer payments; consumer payment preferences; merchant steering; discounts; surcharges |
| JEL: | E42 |
| Date: | 2026–02–17 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedawp:102535 |
| By: | Pietro Dall'Ara; Elia Sartori |
| Abstract: | A defining feature of digital goods is that replication and degradation are costless: once a high-quality good is produced, low-quality versions can be created and distributed at no additional cost. This paper studies quality-based screening in markets for digital goods, exploring how the insights of the canonical model of Mussa and Rosen (1978) change when production costs are nonseparable and, instead, depend only on the highest quality developed. The monopolist allocation exhibits two interdependent inefficiencies. First, a productive inefficiency arises: the monopolist underinvests in the highest quality relative to the efficiency benchmark. Second, due to a distributional inefficiency, certain buyers receive degraded versions of the produced good. Competition exacerbates productive inefficiency, but improves distributional efficiency relative to monopoly. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.13014 |
| By: | Johannes Loh (VU - Vrije Universiteit Amsterdam [Amsterdam]); Ambre Elsas-Nicolle (CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique, Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres) |
| Abstract: | We study how the entry of a rival platform affects the strategies of the incumbent's complementors. The latter face a trade-off: While the entry threatens their benefits from indirect network effects, it also allows them to escape intense within-platform competition. Studying Epic Games' entry into the PC video game market - until then dominated by Steam - we show that this trade-off does not resolve uniformly, driving heterogeneity in strategic reactions. Complementors with weaker strategic resources (independent developers) were more likely to multihome and became less responsive to the incumbent's attempts to orchestrate collective action through platform-wide sales promotions. In contrast, complementors more reliant on indirect network effects (multiplayer developers) were less likely to multihome and became more responsive to orchestration attempts. |
| Keywords: | Platform competition, Complementors, Multihoming, Ecosystem orchestration, Market entry |
| Date: | 2026–02–07 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05358065 |
| By: | Daeyoung Jeong (Yonsei University); Jeong Yeol Kim (KDI School of Public Policy and Management) |
| Abstract: | We study cartel detection when two public authorities operate separate leniency programs within the same jurisdiction, as in Korea. We develop a simple repeated-game model to compare single-agency enforcement with dual-agency enforcement, to distinguish independent operation from cooperation, and to examine how the structure of leniency relief affects reporting incentives. When the two programs operate independently and do not recognize each other's leniency status, firms may have weaker incentives to self-report, and reporting can become concentrated in only one program. Cooperation that recognizes leniency rank across authorities restores a race to report and can make self-reporting attractive under a broader range of enforcement environments. The analysis also shows that cooperation is most reliable when early applicants receive comparable treatment across authorities: when second-in-line relief is available only in the administrative program, stronger criminal exposure can reduce the effectiveness of cooperation by raising the residual risk borne by non-first applicants. The policy implication is that effective dual-agency leniency can be achieved through a narrow form of coordination that verifies marker status and aligns the relief structure across authorities while preserving confidentiality. |
| Keywords: | Antitrust, Cartel Detection, Collusion, Dual-agency Enforcement, Leniency Program |
| JEL: | K21 K42 L41 L44 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:yon:wpaper:2026rwp-276 |
| By: | Braithwaite, Jo |
| Abstract: | The law’s allocation of responsibility for disputed bank payments is important not only for banks and customers, but also, given the volume and value of payments, for the economy more broadly. This article examines loss allocation under common law, EU–UK regulation and the UK’s ‘world-first’ scheme for ‘authorised push payment’ frauds, showing that the gross negligence standard of customer conduct is a common feature. Indeed, this ‘slippery concept’ sits at critical junctures, providing, in practice, the most relevant limitation to a bank’s liability to refund payments. The article analyses what this standard means in English common law and in its regulatory contexts, and highlights the important connection between the two. It then draws upon decisions by the UK’s Financial Ombudsman Service, amongst other sources, to explore how evaluating bank customer conduct works in practice, concluding that it is time for regulators to rethink the status quo. |
| Keywords: | banks; payment; gross negligence; payment services; fraud; Financial Ombudsman Service |
| JEL: | K23 G21 G28 |
| Date: | 2026–02–02 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:130757 |
| By: | Bothner, Jonathan; Lopez-Garcia, Paloma; Momferatou, Daphne; Setzer, Ralph |
| Abstract: | This paper investigates the relationship between institutional and regulatory quality, and high-tech sector investment. Using data from 25 European Union (EU) countries from 2004 to 2019 (extended to 2023 for artificial intelligence-specific analyses), the study examines how institutional governance, labour market regulations, and business regulations influence investments in innovative, high-tech, and artificial intelligence-intensive sectors. The findings reveal that better institutional quality and less burdensome regulations are associated with higher investment shares in innovative, high-tech, and artificial intelligence industries. Raising EU countries’ institutional and regulatory quality to the level of the current EU frontier could raise the share of investment in high-technology sectors by as much as 50%, hence notably narrowing the existent EU-US investment gap. These results highlight the importance of effective governance and efficient regulations in fostering investment, innovation, and therefore long-term productivity growth. JEL Classification: C23, E02, L51, O38 |
| Keywords: | artificial intelligence, innovation, institutional quality, investment, regulatory frameworks, risky technology |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20263185 |
| By: | Shiva Kanwar (Indian Council for Research on International Economic Relations (ICRIER)) |
| Abstract: | This synthesis report examines critical dimensions of artificial intelligence (AI) governance, drawing on insights from a four-part webinar series convened by The ICRIER Prosus Centre for Internet and Digital Economy (IPCIDE) from October 2025 to January 2026. Each webinar featured leading international experts and Indian discussants, creating structured dialogue between global regulatory innovations and India's institutional contexts. The webinars explored the regulation of AI value chains; environmental and social sustainability throughout AI lifecycles; perspectives of AI researchers on AI, public engagement, and responsibility; and the evolution from digital to AI sovereignty in BRICS countries. |
| Keywords: | Artificial Intelligence, Governance, AI, IPCIDE, icrier |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:bdc:report:26-r-05 |
| By: | van Hamond, Johannes Maria |
| Abstract: | European public authorities and regulated sectors increasingly rely on cloud services offered by US-based hyperscalers operating within the European Union. These services are often presented as “sovereign” through claims related to data residency, regional service isolation, and compliance with European regulatory frameworks. This study examines whether such sovereignty claims hold under legal scrutiny when assessed against enforceable jurisdictional control rather than formal compliance statements. The research analyses the interaction between European legal obligations and extraterritorial US legislation, including the CLOUD Act and FISA 702. Using a qualitative audit-based approach, the paper evaluates legal enforceability, technical control mechanisms, and corporate governance structures underpinning sovereign cloud offerings. Specific attention is given to administrative access models, encryption and key custody arrangements, incident response authority, subcontractor involvement, and audit transparency. The findings show a recurring gap between declared sovereignty features and operational reality. Physical data localisation alone does not establish effective jurisdictional isolation when centralised management planes, remote administrative access, or parent-level governance structures remain subject to foreign legal compulsion. Certification schemes and contractual assurances provide limited protection where independent verification and technical enforcement are absent. The paper concludes with recommendations aimed at European policymakers, regulators, and public-sector procurers. These include enforceable requirements for exclusive EU-based administrative control, verifiable isolation of management layers, customer-held encryption keys, and audit regimes aligned with legal jurisdiction rather than geographic storage location. The study contributes to legal and policy debates on digital sovereignty by offering a structured framework for assessing sovereign cloud claims beyond marketing narratives and formal compliance assertions. |
| Date: | 2025–07–27 |
| URL: | https://d.repec.org/n?u=RePEc:osf:lawarc:953fb_v1 |