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on Regulation |
| By: | Inderst, Roman; Valletti, Tommaso M.; Wentzien, Christoph |
| Abstract: | A decade after the EU Interchange Fee Regulation, the central competition problem in European card payments has not disappeared. Fee caps regulate one important price component, but they do not by themselves create a credible merchant-side outside option at the point of sale. Merchants remain exposed to payment methods that are, in practice, difficult to refuse and difficult to steer away from. This Policy Letter argues that the next step in European payments policy should therefore be structural rather than merely pricebased. Building on the German experience with electronic direct debit and its migration into the SEPA direct debit framework, we propose a European right for merchants to initiate direct debit transactions from debit-card credentials. Such a right would discipline card-scheme fees, reduce dependence on non-European payment infrastructures, and strengthen contestability in European retail payments. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safepl:341990 |
| By: | Mountain, B. |
| Abstract: | This paper examines whether negotiated settlement has a larger role to play in the economic regulation of Australian energy networks. The argument does not suggest that monopoly has disappeared, or that regulation can sensibly be wished away. The question is more modest: where the assets are sunk, the relationship is repeated and the regulator is necessarily imperfectly informed, is it always best for the regulator to determine every material term? Settlement is best understood as a form of regulatory contracting, not as deregulation. It is valuable only where the gains from revealing customer preferences, trading across interdependent issues, securing commitment and adapting over time exceed the costs of representation, negotiation, verification and public -interest approval. Experience at FERC, in Florida, in Canada, in Australian access regimes, in GB energy and in Scottish water suggests that settlement requires capable representation, a credible adjudicative fallback and a regulator willing to review packages rather than relitigate every component. Australia’s Better Resets process has moved in a useful direction, but engagement is not the same as bargaining. The paper therefore proposes a cautious Australian pilot, beginning with agreed facts and partial settlements before any full revenue-package settlement is attempted. |
| Keywords: | Negotiated Settlement, Energy Networks, Regulatory Contracting, Monopoly Regulation, Consumer Representation, Australia, Incentive Regulation, Energy Transition |
| JEL: | L51 L94 L95 D23 K23 |
| Date: | 2026–07–29 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2661 |
| By: | Kuhn, Florian; Kehrig, Matthias; Ziebarth, Nicolas L. |
| Abstract: | The share of gasoline consumption in household expenditures decreases with income, gasoline demand being least elastic for low-income households. Based on this empirical evidence for non-homotheticities, we develop a quantitative heterogeneous-agent general equilibrium model to quantify the distributional consequences of oil price shocks. Although oil price shocks have small aggregate effects, they hurt low-income households considerably with costs to lifetime utility two to three times larger for those in the bottom decile of income relative to those in the top decile. Additionally, the 2014/15 oil glut depressed gasoline prices, which delivered comparable welfare benefits to the 2018 tax cuts. |
| JEL: | D12 E22 H22 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20008 |
| By: | Nicola Borri; Kirill Shakhnov |
| Abstract: | Gateways are trading venues where regulation can change the assets investors can trade. We study this margin using MiCA-EU's Markets in Crypto-Assets Regulation-which led several exchanges to delist USDT pairs for European Economic Area users, while USDC obtained MiCA authorization. First, aggregate market shares and trading volumes barely move. Second, comparing Regulated-facing exchanges with globally oriented exchanges where MiCA is less likely to bind, we show that the cross-section shifts toward USDC-USDC share rises by 0.82 and relative trading volume by 0.54 pre-event standard deviations. Both reflect USDT trading contracting where it is delisted. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.09514 |
| By: | Alpino, Matteo; Ciapanna, Emanuela; Citino, Luca; Rovigatti, Gabriele |
| Abstract: | We take an off-the-shelf model of the day-ahead electricity market, in the spirit of (Reguant, 2019) and use it to study how different emergency policy interventions proposed in response to the 2021–2022 European energy crisis would feed into short run wholesale electricity price and quantity dynamics. Calibrating the model to Italian data, our analysis shows that an EU-wide cap on natural gas prices significantly reduces electricity prices, while consumed quantities increase only marginally. A mandated reduction in electricity demand during peak hours leads to modest price declines, while a national cap on gas prices for electricity generation triggers a sharper increase in consumption due to cross-border trade incentives. These findings suggest that emergency interventions can mitigate the short-term impact of price shocks, though they may also introduce inefficiencies in terms of energy consumption and market distortions. |
| Keywords: | Electricity market |
| JEL: | E10 E20 J60 K40 L50 O30 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19981 |
| By: | Bontemps, Christian; Gualdani, Cristina; Remmy, Kevin |
| Abstract: | We develop a two-stage game in which competing airlines first choose the networks of markets to serve in the first stage before competing in price in the second stage. Spillovers in entry decisions across markets are allowed, which accrue on the demand, marginal cost, and fixed cost sides. We show that the second-stage parameters are point identified, and we design a tractable procedure to set identify the first-stage parameters and to conduct inference. Further, we estimate the model using data from the domestic US airline market and find significant spillovers in entry. In a counterfactual exercise, we evaluate the 2013 merger between American Airlines and US Airways. Our results highlight that spillovers in entry and post-merger network readjustments play an important role in shaping post-merger outcomes. |
| Keywords: | Endogenous market structure; Networks; Airlines; Oligopoly; Product repositioning; Mergers; Remedies |
| JEL: | C57 D40 L11 L13 L40 L93 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20144 |
| By: | Decarolis, Francesco; Pellegrinetti, Tommaso; Rovigatti, Gabriele; Rovigatti, Michele; Shakhgildyan, Ksenia |
| Abstract: | This paper examines how proprietary algorithms used by dominant digital platforms create informational advantages in search auctions, reshaping market competition. Using experimental evidence and counterfactual simulations, we quantify the impact of algorithmic bidding on auction outcomes and competitive dynamics. Our findings reveal how platforms can leverage superior information to significantly improve their revenues, distorting competition and creating welfare losses for independent advertisers. We also show why platforms prefer selling a bidding algorithm service over directly selling data. These results highlight the need for greater scrutiny of algorithmic decision-making in platform markets, offering new insights for competition policy in digital economies. |
| Keywords: | Collusion |
| JEL: | C73 D82 D83 D18 D44 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19983 |
| By: | Nicolas Eschenbaum |
| Abstract: | Competing firms increasingly delegate pricing and bidding decisions to algorithms supplied by the same third-party providers. We study whether a shared algorithm leads competitors to internalise one another's profits, using data from the Australian National Electricity Market, where every battery's bids are observed at 5-minute frequency and can be linked to an identifiable autobidding provider. Bids constructed by the same provider co-move, and do so more strongly after a disclosure reform made the common scarcity state easier to observe: the same information that steers batteries towards efficient arbitrage also synchronises the bids of competitors who share a provider. To separate co-movement due to shared information from joint profit maximisation, we estimate each battery's dynamic value of stored energy and reclear the market under counterfactual bids. Owner-level profits cannot rationalise observed bidding: batteries forgo profitable dispatch where it would depress the prices earned by same-provider batteries owned by rival firms, and the estimated weight on those rivals' profits is close to one. We find evidence of this conduct only where a provider's share of near-margin battery capacity exceeds roughly 30%, corresponding to an installed share of roughly 20%. The identified conduct costs consumers an annualised $5.5 million on the current fleet, and it arises at the level of the algorithm provider rather than the asset owner, a layer that ownership-based concentration screens do not capture. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.13002 |
| By: | Liu, Ernest; Ma, Song; Veldkamp, Laura |
| Abstract: | We explore indicators of market power in a data market. Markups cannot measure competition, because most data products’ marginal cost is zero, making the markup infinite. Yet, data monopolists may not exert monopoly power because they cannot commit to restricting data sales to future customers. This limited commitment and strategic substitutability of data undermine sellers’ monopoly power. But data subscriptions restore this monopoly power. Evidence from online data markets supports the model's insight that subscriptions indicate market power. Model and evidence reveal that data subscriptions are better for consumers because they sustain the incentive to invest in high-quality data. |
| Keywords: | Data markets; Data economy |
| JEL: | C6 D4 D5 L1 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20120 |
| By: | Willem Boshoff (University of Stellenbosch) |
| Abstract: | South African competition policy has long pursued industrial-policy objectives alongside its core competition mandate. Public-interest considerations were embedded in merger control from 1998, and the 2018 amendments gave them equal legal status with the competition assessment. These developments preceded the current European debate on using competition policy to advance innovation and other industrial policy objectives in the EU. This paper examines how industrial-policy objectives have been pursued in South African competition policy over the past thirty years. In merger control, these are often advanced through conditions involving ESOPs, HDP ownership commitments, and supplier and enterprise-development funds, as well as through potential-competition theories of merger harm. They are also advanced by similar types of remedies following market inquiries and, increasingly, abuse and cartel investigations. |
| Keywords: | competition policy, industrial policy, merger control, public interest, ownership transformation, market inquiries, South Africa, potential competition |
| JEL: | L40 K21 O25 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:rza:ersawp:360 |
| By: | Camarda, Enrico; Fleitas, Sebastian |
| Abstract: | Price regulation and managed competition are widely used to promote quality in health care markets, where quality is often multidimensional and weakly correlated across dimensions. This paper studies how this multidimensionality affects price regulation, patient allocation, and provider behavior in the England's market for public General Practitioner (GP) services. Using counterfactual simulations, we evaluate reforms reducing quality-related payments. We find that such reductions can improve total welfare, in part because practices re-optimize in line with patient preferences. In absence of externalities, the consumer surplus is maximized at 40% of quality-related payments. Finally, incorporating patient preferences into payment design further enhances welfare. |
| Keywords: | Regulation; Quality of care |
| JEL: | L15 L44 L51 I11 I18 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20283 |
| By: | Nicola Bartolini; Silvia Romagnoli; Amia Santini |
| Abstract: | Renewable Power Purchase Agreements have become increasingly important instruments for supporting the energy transition, as they offer revenue stability to renewable energy producers and price certainty to electricity consumers. This paper develops a financial framework for the valuation and risk assessment of fixed-price renewable PPAs. We formalize the payoff structures of the main PPA designs adopted in practice for wind and photovoltaic generation and derive fair contract prices based on financial valuation principles. We further propose a market risk-assessment methodology based on Monte Carlo simulation and introduce a parsimonious continuous-time model for solar irradiance suitable for financial applications. An empirical analysis of the Italian electricity market shows that fair prices and risk profiles vary substantially across technologies and contractual structures, highlighting the trade-off between downside protection and participation in favorable market outcomes. This framework provides practical tools for the pricing and risk evaluation of renewable PPAs. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.03115 |
| By: | Do, Jihwan; Miklos-Thal, Jeanine |
| Abstract: | The cloud services industry, which is currently dominated by a few large providers, has come under scrutiny from antitrust authorities worldwide. One concern is that ``egress fees"—charges for transferring data out of a provider’s cloud—could harm competition and welfare by discouraging multi-clouding, whereby a user combines services from several providers. Motivated by this policy concern, we analyze the effects of banning price discrimination against multi-stop shoppers in a market where multi-product firms sell complementary goods to buyers with elastic demands, and multi-stop shoppers impose higher service costs than one-stop shoppers. We find that if buyers are locked into a specific product combination, then a ban on price discrimination against multi-stop shoppers raises social welfare for a wide range of demand functions. If product choices are endogenous and buyers' product preferences are weak, however, then a ban on price discrimination tends to harm social welfare. |
| JEL: | D43 L13 L40 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20101 |
| By: | Kudela, Peter; Havranek, Tomas; Irsova, Zuzana; Kudelova, Anna; Sikl, Vojtech |
| Abstract: | Energy planners have long assumed that electricity demand will grow more price-responsive as metering, automation, and storage spread, an assumption now embedded in decarbonization plans. We test it against the empirical record: 4, 720 own-price elasticity estimates from 462 studies, with data spanning 1934-2024, ranked on a single ladder of identification quality from naive regressions to randomized experiments. Three findings emerge. First, the best-identified studies find smaller responses than naive ones: the publication-bias-corrected short-run elasticity is about -0.16 (a 10% rise in the electricity price cuts consumption by under 2%), and only -0.09 among the best-identified studies, whose adjusted value is statistically indistinguishable from zero. Second, responsiveness grows with time to adjust, roughly doubling from -0.16 in the short run to -0.38 in the long run as the capital stock turns over, but this pattern has itself been stable for decades. Third, and most important, responsiveness shows no upward trend across nine decades of data; if anything, the most technology-rich settings, including time-of-use pricing, are the least price-responsive in total consumption. Prices alone have not made total electricity consumption more responsive; broader demand flexibility will have to be engineered and paid for, through enabling technology, contracts, and program design. |
| Keywords: | electricity demand, price elasticity, meta-analysis, identification, publication bias, demand flexibility |
| JEL: | Q41 Q48 C18 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:342366 |
| By: | Nocke, Volker; Schutz, Nicolas |
| Abstract: | We study welfare distortions in a multiproduct-firm pricing game with constant elasticity of substitution (CES) or multinomial logit (MNL) demand. Using approximations both around small market shares and around monopolistic competition conduct, we identify sufficient statistics to gauge the extent of inefficiencies caused by oligopolistic market power. We find that, at a low order, the oligopoly distortions are proportional to the Herfindahl index of industry concentration. At a higher order, distortions also depend on the cubic Hannah-Kay concentration index. Additionally, we show that the welfare loss from resource misallocation is approximately proportional to the difference between the cubic Hannah-Kay index and the square of the Herfindahl index. |
| Keywords: | Oligopoly pricing; Misallocation; Industry concentration; Herfindahl index; Sufficient statistic |
| JEL: | L13 D43 E20 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20019 |
| By: | Bergemann, Dirk; Bonatti, Alessandro; Wu, Nick |
| Abstract: | In digital advertising, auctions determine the allocation of sponsored search, sponsored product, or display advertisements. The bids in these auctions for attention are largely generated by auto-bidding algorithms that are driven by platform-provided data. We analyze the equilibrium properties of a sequence of increasingly sophisticated auto-bidding algorithms. First, we consider the equilibrium bidding behavior of an individual advertiser who controls the auto-bidding algorithm through the choice of their budget. Second, we examine the interaction when all bidders use budget-controlled bidding algorithms. Finally, we derive the bidding algorithm that maximizes the platform revenue while ensuring that all advertisers continue to participate. |
| Keywords: | Data; Advertising; Competition; Auctions |
| JEL: | D44 D82 D83 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20263 |
| By: | Jokelainen, Antto; Markkanen, Jaakko; Leppälä, Samuli; Siikanen, Markku; Sipiläinen, Matti; Toivanen, Otto |
| Abstract: | We study entry deregulation in the Finnish pharmacy market where prices, markups, and the number and location of pharmacies are regulated. The number of pharmacies increases substantially with free entry, particularly in urban areas. Although almost all consumers benefit, rural areas and areas with older populations benefit less. The increase in aggregate consumer surplus is dominated by decreases in pharmacy profits and government tax revenue; thus, free entry turns is socially excessive. The prevailing entry restrictions may thus work reasonably well from a total welfare perspective, but with distributional consequences: Incumbent pharmacists benefit at the expense of customers. |
| Keywords: | Entry regulation; Deregulation; Pharmacies; Pharmaceuticals; Welfare |
| JEL: | L43 L81 R12 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20095 |
| By: | David Imhof; Thierry Madi\`es; Martin Huber |
| Abstract: | This paper analyzes the internal organization and economic effects of a bid-rigging cartel in the road construction sector of the Swiss canton of Ticino, active from 1999 to 2005. Using exceptionally rich documentary evidence, we reconstruct how cartel members coordinated bids and allocated contracts under a formal agreement known as the 'convention'. We show that, despite the absence of side payments, the cartel implemented a cost-based allocation mechanism that closely approximated the first-best collusive outcome. Regression and machine-learning analyses indicate that observable cost proxies systematically predict both winning bids and bid rankings. The evidence further suggests that cartel members strategically mimicked competitive bidding behavior, allowing them to evade standard econometric detection methods. Using double machine learning, we estimate average overcharges of at least 45\%, and potentially substantially higher, highlighting the significant financial harm caused by this sophisticated form of collusion. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.30470 |
| By: | Ambec, Stefan; Coria, Jessica |
| Abstract: | Public consultations are widely used in regulatory processes, allowing stakeholders to present their viewpoints despite their inherent biases. Some stakeholders, such as firms, are known to be pro-business, while others, such as environmental NGOs, are pro-environment. We develop a framework to analyze how a regulator should process information provided by biased stakeholders. We distinguish between stakeholders whose biases are high and known and those whose biases are small but unknown, such as national authorities. We show that the regulator should follow the advice that runs counter to a stakeholder's typical bias, i.e., to regulate if firms so advise, and not to regulate if environmental organizations so advise. Without such advice, she should prioritize the comments provided by stakeholders with smaller but unknown bias. Next, we contrast our theoretical results with the regulation of chemicals in the European Union. In line with our theory, we find that support for regulation has a strong and significant impact on the decision to regulate when the support comes from firms but not when it comes from NGOs and environmental agencies. We also find that national authorities have a stronger influence than other stakeholders in the regulation decision, both by the number of comments and the relative support. |
| JEL: | D04 D21 H53 Q48 D58 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20292 |
| By: | Ahlvik, Lassi; Kaariaho, Tuomas; Liski, Matti; Vehviläinen, Iivo |
| Abstract: | This paper studies household responses to a sharp energy price increase. Using Finnish household-level microdata from the 2022 European Energy Crisis, we exploit quasi-random contract expiration dates to identify adjustments across key margins: energy use, earnings, financial distress, and residual consumption. High- and middle-income households primarily reduce electricity use and modestly increase earnings, whereas low-income groups lack these adjustment channels, facing rising defaults and cutbacks in other spending. Households with an anticipation period adjust electricity use in advance, softening the impacts of the price shock. We apply these results to quantify the incidence of a hypothetical carbon price. |
| JEL: | H23 Q41 Q54 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19972 |
| By: | Olmstead-Rumsey, Jane; Puglisi, Federico; Wu, Liangjie |
| Abstract: | Should Big Tech firms be banned from acquiring other firms? We address this question by developing a growth model with platform-based consumption. The platform supplies some products in the economy, and startups supply the rest, with the platform intermediating consumption of goods in the digital sector. Acquisitions increase the platform's product offerings and have competing effects on the entry of new startups. Theoretically, an acquisition ban reduces growth in the short run but may increase it in the long run. Calibrating the model to data on U.S. households' time use on digital platforms suggests a small welfare loss from an acquisition ban due to slower growth in both the short and long run. |
| Keywords: | Digital platforms; Endogenous growth; Mergers and acquisitions; Conglomerate mergers; Big tech; Startups |
| JEL: | E20 O41 L40 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20156 |
| By: | Magnus Lundgren; Jonas Tallberg |
| Abstract: | Artificial intelligence (AI) is rapidly transforming economies, societies, and polities, raising fundamental questions about how it should be regulated. Policymakers face choices over whether to prioritize innovation or safety, rely on public oversight or private self-regulation, and govern nationally or internationally. Yet little is known about how citizens evaluate these competing priorities. Here we report a conjoint survey experiment conducted in seven countries with diverse political and economic profiles. We find that citizens strongly support regulating AI and generally prioritize safety over innovation, public governance over private self-regulation, and international over national approaches. The preference for safety is strongest among those who perceive AI as risky, unpredictable, and personally consequential. These findings reveal a systematic misalignment between dominant regulatory approaches and citizen preferences. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.14585 |
| By: | Eliaz, Kfir; Spiegler, Ran |
| Abstract: | A monopolist curates a database for users seeking to learn a parameter's value: "nowcasters" focus on its current value, while "forecasters" target its long-run value. The monopolist designs a menu of contracts described by fees and data-access levels, balancing revenue and data-storage costs. The optimal menu offers full access to historical data, while current data is fully provided to nowcasters but may be withheld from forecasters. Compared to the social optimum, the monopolist oversupplies historical data, undersupplies current data, and may provide excessive data overall. |
| Keywords: | Data markets |
| JEL: | D42 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20299 |
| By: | Natasha Aggarwal (TrustBridge Rule of Law Foundation); Amol Kulkarni (TrustBridge Rule of Law Foundation); Shruti Aji Murali (Axiom5); Bhavin Patel (TrustBridge Rule of Law Foundation); Vishnu Suresh (TrustBridge Rule of Law Foundation) |
| Abstract: | The Competition Commission of India (CCI) operates under significant capacity constraints, with nearly half its sanctioned posts vacant and a growing backlog of pending cases. The efficiency with which it allocates scarce resources in its thresholdstage screening function under Section 26(2) of the Competition Act, 2002 therefore assumes considerable importance. We analyse a sample of 111 Section 26(2) orders issued between 2014 and 2024, interview practitioners and CCI officials, and survey screening practices across six jurisdictions. We find that approximately 42% of the orders in our dataset arise from "peripheral matters", that is, complaints falling outside competition law's scope or unsupported by evidence, which are nonetheless processed through the same institutional procedures as substantive complaints, with a median disposal time of 30 days. Werecommend a layered approach, including clearer public guidance, guided digital filing mechanisms, AI-assisted review tools, and statutory prioritisation frameworks, to improve resource allocation while preserving access to competition law enforcement. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:bjd:wpaper:21 |
| By: | Jarkko Harju; Ida Kankaanranta; Kaisa Kotakorpi |
| Abstract: | We study the effects of taxi market deregulation in Finland, which removed price controls and lowered barriers to entry. The reform led to a surge in firm entry and a modest increase in exit, indicating substantial changes in market structure. Average taxi prices increased slightly according to price indices, while monthly firm-level reported sales and VAT declined by over 10 percent. Operating costs and mileage remained largely unchanged, suggesting limited demand responses. These findings point to increased tax evasion following deregulation. Consistent with this interpretation, we document a small rise in property crime, with no effects on other criminal offenses. |
| Keywords: | taxi market, deregulation, prices, sales, mileage, exit, entry, tax evasion, crime |
| JEL: | L52 L91 L98 H26 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12819 |