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on Regulation |
| By: | Bento, Antonio M.; Koch, Nicolas; Marmarelis, Zissis E. |
| Abstract: | Recent natural gas price surges prompted the adoption of various policies, such as a natural gas price cap, aimed at preserving climate goals and preventing increases in wholesale electricity prices. However, it is unclear whether such policies are effective. Here, we take advantage of the unexpected spike in natural gas prices around the time of the Russian invasion into Ukraine to estimate the effects of such a spike on coal generation, carbon emissions, and wholesale electricity prices, highlighting its heterogeneous impacts in 13 EU countries that still rely on both coal and gas for electricity production. We use these estimates to show that the effectiveness of the gas price cap is limited, and instead propose an emergency response mechanism that would simultaneously safeguard the EU's climate policy and protect households from excessive fluctuation in natural gas prices. The proposed mechanism introduces an emergency auction reserve price within the existing EU Emissions Trading System, triggered automatically under predefined rules whenever gas prices reach unusually high levels. Revenues generated by the reserve price would be used to provide relief to consumers. Our results demonstrate that a modest emergency reserve price could serve as an effective response mechanism and that this approach overcomes key shortcomings of the widely used natural gas price cap. |
| Keywords: | European energy crisis, excessive natural gas prices, wholesale electricity prices, emission trading, decarbonization |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:337665 |
| By: | Haruvy, Ernan; Heinrich, Timo; Walker, Matthew J. |
| Abstract: | This paper studies hold-ups in markets where sellers may impose undisclosed surcharges. While prior work has examined price transparency’s role in market outcomes, the distinct effect of a transparency norm—separate from a fairness norm—remains unestablished. We formulate a simple model that separates these norms and characterizes their equilibrium implications across different market settings. The model shows that price competition yields higher buyer surplus than ultimatum bargaining and that this surplus increases with transparency concerns but decreases with fairness concerns because of softened competition. Compulsory surcharges cannot be higher in bargaining, as sellers prefer a higher price to a higher surcharge as long as it does not change the buyer’s probability of acceptance. Experimental results confirm the transparency norm’s influence: Total prices are lower with price competition, and surcharges are lower with ultimatum bargaining. Additionally, surcharges rise when pricing is outside of the seller’s control. Estimates of the behavioral parameters reveal that sellers weigh transparency at least as heavily as fairness. The results imply that firms fearing hold-ups should still procure goods and services in competitive market structures. |
| Keywords: | surcharge, transparent pricing, fairness, social norm, hold-up, procurement |
| JEL: | C91 D47 D82 L14 M55 |
| Date: | 2026–01–05 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127601 |
| By: | Sauvé, Edwige |
| Abstract: | This paper develops a framework in which a multiproduct ecosystem competes with multiple single-product firms in both price and innovation. The ecosystem can use data from one product to improve the quality of its other products. We use the framework to study three regulatory policies aimed at leveling the playing field. Restricting the ecosystem’s cross-product data usage, or forcing it to share data with single-product firms, benefits those firms and induces them to innovate more. However, these policies also dampen the ecosystem’s incentive to collect data and innovate, potentially raising prices. Consumers are better off only when single-product firms are sufficiently good at innovating. Facilitating data exchange between single-product firms via a data cooperative can backfire and harm them, because it induces the ecosystem to price more aggressively. For both the data-sharing and data-cooperative policies, there exist data-compensation schemes such that consumers are better off compared to no regulation. |
| Keywords: | Digital ecosystems; innovation; data regulation; data cooperative |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131492 |
| By: | Martinez Cillero Maria (European Commission - JRC); Napolitano Lorenzo (European Commission - JRC); Rentocchini Francesco (European Commission - JRC); Seri Cecilia; Zaurino Elena (European Commission - JRC) |
| Abstract: | HIGHLIGHTS ‣ Technological mergers and acquisitions (M&As) increase investors' market power by around 2% beyond standard M&As, with stronger effects concentrated among top R&D investors, US-based investors, and high-tech manufacturing investors. ‣ The increase in market power seems primarily driven by the consolidation of control over existing patents, limiting knowledge diffusion and making it harder for competitors to catch up. ‣ These findings support ongoing policy discussions on updating merger review regulations, as traditional concentration metrics may not fully capture competition risks posed by large technology firms. ‣ Technological assets and innovations are often embedded and masked within larger M&A deals. Separating the technology component of patents would allow regulators to assess competition concerns related to innovation while still allowing the acquisition to proceed. ‣ The analysis draws on a newly constructed firm-level dataset to provide a more systematic picture of technological M&As and market power. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc145729 |
| By: | Wolfe, Brooke; Hwang, Roland; Lipman, Timothy |
| Abstract: | California utilities and policymakers must ensure that the distribution grid is prepared for this new load, while maintaining reliable electricity service and keeping costs low for ratepayers. As the EV market evolves, the distribution grid must rapidly grow into a smarter, more flexible, and more agile system. With well-designed charging programs and new technologies, additional EV charging capacity holds the promise of creating downward pressure on electricity rates. Advances in technology can support this promise through greater vehicle-to-grid integration (VGI) (i.e., strategies for altering EV charging time, power level, or location of charging (or discharging) to benefit the grid), managed charging programs, and other tools to further merge EVs into California’s grid. VGI turns EVs into interactive grid resources, enabling not only new methods to manage consumer demand but also bi-directional charging (known as vehicle-to-grid (V2G)) that can enhance grid flexibility and reliability. Investing now to modernize the grid and adopting new demand management programs can pay dividends in the future, supporting California’s ambitious EV deployment goals while keeping electricityrates affordable. |
| Keywords: | Engineering |
| Date: | 2026–03–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:itsrrp:qt78b122p1 |
| By: | Schuurmans, Jitse; De Brabandere, Laura; Castelli, Michele; Wimmer, Sarbina; Denis, Jean-Louis |
| Abstract: | Private investment in residential long-term care has surged around the world. Growing evidence shows that this is changing the institutional logic and the inner workings of the sector, prioritising the financial interests of asset holders above those of other stakeholders (eg. clients, care professionals and regulators). We know little about how policy makers and regulators are responding to private investment and profit-making in the long-term care sector. This paper addresses that gap by analysing policies prompting the growth of private investment and profit-making in residential long-term care, the emerging power struggles in some cases between asset holders and other stakeholders in long-term care, the controversies that have arisen and the concomitant responses of regulators and policy makers in Ontario (Canada), Lombardy (Italy), the Netherlands and England (United Kingdom). We show that the institutional context (eg. legal frameworks, policies and regulations) shapes controversies concerning quality, accessibility and affordability of care, and argue that regulators and policymakers in the constituencies we studied are responding reactively to such controversies rather than proactively anticipating and preventing unwanted effects. Our analysis provides policymakers with valuable insights regarding the regulation and governance of private investment and profit-making in the residential long-term care sector. |
| Keywords: | controversies; policy comparison; residential long-term care; financialisation; regulation |
| JEL: | F3 G3 |
| Date: | 2026–03–03 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137554 |
| By: | Scavino Alfaro, Vicenzo |
| Abstract: | This paper develops a DSGE model with heterogeneous households (HANK) to study how automation shocks psi_t affect the functional distribution of income and inequality when (i) substitution between effective labor and automated capital and (ii) aggregate market power, captured by markups disciplined by antitrust enforcement with real resource costs, coexist. Households face idiosyncratic risk, liquidity constraints, and mobility frictions, and dynamically choose an occupational/sectoral path j; automation can also affect effective productivity heterogeneously across paths. On the policy side, a Citizen Sovereign Wealth Fund partially captures rents associated with automation and market power and finances an in-kind floor and a citizen dividend under explicit operational rules (non-negativity, feasibility, and an institutional cap on public equity ownership). The main contribution is a fully closed framework in terms of timing, detrending, and ex-dividend flow-of-funds, delivering transparent theoretical predictions for the labor share, inequality, and the transmission of technological shocks under heterogeneity, along with a methodological appendix to guide future empirical implementations. |
| Keywords: | automation, artificial intelligence, HANK, market power, markups, antitrust, sovereign wealth fund, citizen dividend, occupational mobility |
| JEL: | D43 D63 E24 E61 L41 O33 |
| Date: | 2025–12–29 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127515 |
| By: | Ashfaq, M.; Toxvaerd, F.; Wei, Y. |
| Abstract: | We study collusive agreements in an infinite-horizon model in which firms invest in inventories of intermediate goods and compete in quantities of final goods. Stocks of inventories act as capacity constraints at the time of production but can be replenished for future use through investment. Input stocks simultaneously impact firms' ability to deviate from collusive agreements and their ability to punish such deviations and therefore have ambiguous effects on the sustainability of collusion. We characterize subgame perfect equilibria in grim trigger strategies in which firms potentially hold asymmetric excess inventories on the collusive path. We show that the sustainability of collusive agreements is non-monotone in inventory stocks. While holding excess capacity is costly and unproductive, the practice can improve firms' ability to sustain anticompetitive agreements. |
| Keywords: | Collusion, Cartels, Inventories, Capacity Constraints |
| JEL: | L13 L41 D25 |
| Date: | 2026–02–27 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2612 |
| By: | Di Corato, Luca; Moretto, Michele |
| Abstract: | This paper studies a continuous-time regulatory problem in which a firm holds persistent private information about demand and is subject to a flow limited-liability constraint. The regulator regulates prices through a dynamic mechanism that ensures truthful reporting of the evolving type. Limited liability imposes a state-dependent lower bound on the firm’s instantaneous utility, inducing a reflecting boundary in continuation utility and giving rise to a tractable singular-control representation. We derive closed-form expressions for the optimal pricing rule and the associated continuation-utility function, and we characterize the optimal up-front transfer required to induce truthful revelation of the firm’s initial type. The resulting contract is fully explicit and highlights how limited liability shapes information rents and regulatory distortions over time. |
| Keywords: | Environmental Economics and Policy, Financial Economics |
| Date: | 2026–03–06 |
| URL: | https://d.repec.org/n?u=RePEc:ags:feemwp:396239 |
| By: | Yixuan Liu; Hua Zhang; Eric Zou |
| Abstract: | Prepaid consumption is a common feature of modern consumer markets and is often presented as a mutually beneficial arrangement: consumers receive upfront discounts, and firms secure future sales. We analyze a large-scale Pay Now, Buy Later (PNBL) program in which consumers prepay for restaurant credit with bonuses, and spend the balance later. Using detailed transaction data from over 4 million consumers, we document widespread balance breakage: approximately 40% of prepaid value is never used. Because many consumers underutilize their balances, merchants recover significantly more than the bonus cost. The median firm earns roughly $5.5 in breakage profit for every $1 of bonus credit issued. While PNBL participation does lead to modest increases in consumer spending over time, firms gain substantially more from breakage than from any loyalty-driven revenue. These findings challenge the prevailing win–win narrative: PNBL schemes often result in a significant transfer from consumers to firms. We develop a stylized contract model to illustrate the misaligned incentives firms face, and show through counterfactual analysis that a simple escrow policy with an appropriately chosen deposit requirement can realign firm incentives and generate more consumer-serving outcomes. |
| JEL: | D12 D90 G23 G41 K20 L14 L81 M31 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34918 |
| By: | Luca Bellodi; Massimo Morelli; Jörg L. Spenkuch; Edoardo Teso; Matia Vannoni; Guo Xu |
| Abstract: | We combine comprehensive data on the rulemaking activities of the U.S. federal government with individual-level personnel and voter registration records to study delegation and principal-agent frictions in the development of new regulations. We present three main results. First, even important pieces of new regulation are frequently delegated to career bureaucrats who are politically misaligned with the president. Second, rules that are overseen by misaligned regulators take systematically longer to complete, are more verbose, generate more negative feedback from the public, and are more likely to be challenged in court. Third, in assigning regulators to rules, agency leaders often face a sharp trade-off between political alignment and expertise. Agency frictions notwithstanding, they tend to resolve this trade-off in favor of expertise. |
| JEL: | D73 H1 K2 L5 M5 P0 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34932 |
| By: | Isaak Mengesha |
| Abstract: | Frontier AI Safety Policies concentrate on prevention -- capability evaluations, deployment gates, and usage constraints -- while neglecting institutional capacity to coordinate responses when prevention fails. We argue that this coordination gap is structural: investments in ecosystem robustness yield diffuse benefits but concentrated costs, generating systematic underinvestment. Drawing on risk regimes in nuclear safety, pandemic preparedness, and critical infrastructure, we propose that similar mechanisms -- precommitment, shared protocols, and standing coordination venues -- could be adapted to frontier AI governance. Without such architecture, institutions cannot learn from failures at the pace of relevance. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.10015 |
| By: | Costa Filho, João Ricardo |
| Abstract: | What was the impact of the Marco Civil da Internet (MCI), Brazil's Digital Bill of Rights enacted in 2014, on the landscape of tech-related lawsuits in the country? Utilizing a synthetic control methodology, we construct a counterfactual scenario to estimate the number of lawsuits that would have occurred in the absence of the MCI. Our findings indicate a statistically significant decrease in the judicialization of internet-related disputes following the law's implementation. This suggests that while the MCI aimed to establish a robust legal framework for internet governance, it concurrently fostered a lesser litigious environment, particularly concerning intermediary liability and content moderation. |
| Keywords: | Brazilian Digital Bill of Rights; Marco Civil da Internet; Synthetic Control |
| JEL: | K19 K20 |
| Date: | 2026–01–19 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127781 |
| By: | Manning, Alan; Petrongolo, Barbara |
| Abstract: | We investigate employer monopsony power in local labour markets in the UK. We propose a model in which market power stems from idiosyncratic worker preferences over non-wage attributes of jobs, including the commuting distance. This set-up delivers point-specific, overlapping local labour markets. The resulting concentration index reflects the intensity of commuting flows between local areas, and is lower than the conventional index based on self-contained, non-overlapping areas because commuting across local areas expand workers’ outside options. We estimate that employment concentration in local labour markets was slightly falling over the past 2 decades. The model-based concentration index is negatively correlated to local wages and performs better than other purely local concentration measures. However, in quantitative terms, the observed fall in concentration can predict only a negligible increase in wages. |
| Keywords: | job search; reference dependence; reservation wages; wage cyclicality |
| JEL: | R14 J01 L81 J1 |
| Date: | 2024–07–17 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137500 |
| By: | Lee, Daniel Chaein; Kim, Jungkeun; Jhang, Jihoon; Park, Jooyoung; Cho, Areum; Lee, Jaehoon |
| Abstract: | Service firms increasingly use surcharges on complimentary items, yet little is known about how consumers respond to these charges. Across five studies in the restaurant context, we show that even nominal surcharges elicit negative consumer responses. Specifically, adding surcharges to complimentary items lowers engagement with advertisements. Furthermore, even a one-cent surcharge reduces perceived fairness and revisit intention. These effects arise because such surcharges violate communal norms, a type of relationship norm emphasizing genuine concern for others and acts of goodwill. By contrast, the negative effect disappears when exchange norms are activated, while it persists under communal norm activation. Together, these findings advance research on consumer responses to small surcharges on complimentary items and offer practical guidance on how service firms can communicate surcharges to mitigate negative reactions. |
| Keywords: | complimentary items; partitioned pricing; price fairness; relationship norms; surcharge |
| JEL: | L81 R14 J01 |
| Date: | 2026–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137507 |
| By: | TOLEDO, RALPH RENDELL (Government Procurement Policy Board-Technical Support Office) |
| Abstract: | (This manuscript is a preprint and has not been peer reviewed.) The increasing use of artificial intelligence (AI) in government decision-making has raised important questions about accountability in public administration. While AI technologies offer opportunities to improve efficiency, data analysis, and public service delivery, the integration of algorithmic systems into administrative processes also introduces new governance challenges related to transparency, responsibility, and democratic oversight. This study examines how algorithmic accountability is addressed in the existing literature on artificial intelligence in the public sector. Using a systematic literature review guided by the PRISMA framework, the study analyzes 45 peer-reviewed publications drawn from major academic databases. The findings identify five key governance dimensions discussed in the literature: transparency in algorithmic decision-making, explainability of AI systems, human oversight and administrative responsibility, ethical governance of artificial intelligence, and public trust in digital government. Based on these findings, the study proposes a conceptual framework that explains how these governance mechanisms interact to support accountable algorithmic decision systems in public administration. The framework extends traditional public administration theories of accountability to the emerging governance challenges created by algorithmic decision systems. |
| Date: | 2026–03–06 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:j495x_v1 |