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on Regulation |
| By: | Zac, Amit; Gal, Michal S. |
| Abstract: | The integration of large language models (LLMs) into recommender systems (RS) has given rise to a new generation of Conversational RS (CRS). This study asks how CRS systems shape consumer behavior, and, in particular, their spending. Despite the rapid proliferation of such systems, including widely used tools like OpenAI's ChatGPT and Google's Gemini, we still lack evidence on their behavioral effects. This study provides the first controlled empirical test of CRS influence on real purchasing decisions. In a laboratory experiment, complemented by large-scale API studies, participants were randomly assigned to one of four conditions: a traditional search baseline, GPT, Gemini, or a customized GPT designed to steer users toward more expensive products. CRS consistently increase consumer expenditures, with Customized GPT producing the highest average spending. Importantly, these effects are not driven by differences in perceived product quality, prior shopping experience, or generalized trust. Rather, they stem from subtle linguistic framing and increased exposure to premium brands. Taken together, the findings position LLM-based CRS as novel and potent choice architects with downstream implications for consumer protection, market design, and regulatory oversight. |
| Keywords: | recommendation systems, conversational recommender systems (CRS), largelanguage models (LLMS), LLM-empowered recommendation systems, consumerbehavior, algorithmic choice architecture, algorithmic bias, human-AI shoppinginteraction, trust in CRS, algorithmic regulation |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cbscwp:336742 |
| By: | Jong-Hee Hahn (Yonsei University); Seongkyun Kim (Software Policy & Research Institute) |
| Abstract: | This paper investigates the welfare effects of price parity (most-favored-nation, MFN) clauses in platform markets characterized by cross-platform investment externalities. Although price parity clauses can reduce fee competition and elevate retail prices, they may also improve efficiency by incentivizing platforms to increase demand-enhancing investments. Using a representative consumer model, we demonstrate that under conditions of substantial investment leakage and moderate marginal investment costs, the efficiency gains from enhanced investment can outweigh the negative impact of higher prices. We derive sufficient conditions under which platform profits, consumer surplus, and overall social welfare are all increased by the presence of price parity clauses. The stronger the platform competition, the greater the likelihood that price parity clauses will reduce consumer welfare. |
| Keywords: | Price parity (MFN) clauses, Investment externalities, Antitrust, Platform |
| JEL: | L1 L4 D4 D8 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:yon:wpaper:2026rwp-282 |
| By: | Jong-Hee Hahn (Yonsei University); Seongkyun Kim (Software Policy & Research Institute) |
| Abstract: | This paper examines the welfare effects of most-favored-nation (MFN) clauses in markets where platforms not only act as intermediaries but also compete to offer auxiliary services such as delivery. Analyzing a linear demand model in which platforms set both transaction and service fees, we show that although MFNs intensify competition for service fees, their tendency to elevate transaction fees dominates, reducing aggregate transaction volume and thereby diminishing consumer surplus and overall welfare. This result holds for asymmetric platforms, provided all remain active in the market, and is robust to changes in the intensity of platform competition. |
| Keywords: | Online platform, MFNs, Price parity, Antitrust, Service competition |
| JEL: | L1 L4 D4 D8 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:yon:wpaper:2026rwp-281 |
| By: | Philippe Bontems (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); Stephen F Hamilton (United States of America); Jason Lepore (United States of America) |
| Abstract: | Multisided platforms have emerged as an increasingly important market structure with the rise of the digital economy. In this paper, we consider sequential price setting behavior by platforms and demonstrate sequential pricing outcomes Pareto dominate simultaneous pricing outcomes in terms of firm and industry profits. We compare policy implications and find prices are more balanced across the platform and average prices are higher under sequential pricing than under simultaneous pricing. We also demonstrate that pricing power can be considered independently on each side of the market under multihoming behavior. |
| Keywords: | Platform competition, Two-sided markets, Network effects |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05513277 |
| By: | Martin Peitz; Anton Sobolev; Paul Wegener |
| Abstract: | Advertisers place ads on publishers’ websites to attract the attention of multihoming consumers. Because of competition in the product market, advertisers may have an incentive to partially or fully foreclose their rivals. A gatekeeper may be able to limit publishers’ access to some of the consumers. We fully characterize the equilibrium in which the gatekeeper, publishers, and advertisers make strategic pricing decisions. We show how the presence of the gatekeeper affects the advertisers’ foreclosure decisions and the surplus of the different market participants. |
| Keywords: | gatekeeper, ad-funded media, advertiser competition, ad blocking, uniform pricing, foreclosure, imperfect competition |
| JEL: | L12 L13 L15 M37 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_731 |
| By: | Comisión Nacional de los Mercados y la Competencia (CNMC) (Comisión Nacional de los Mercados y la Competencia (CNMC)) |
| Abstract: | SMEs are a key element for the efficient and competitive functioning of the Spanish economy. This Study identifies problems that affect them in their process of creation, growth and participation in public procurement, and puts forward recommendations for improvement. First, it recommends promoting a more integrated and pro-competitive market, by coordinating regulations and encouraging the use of model ordinances. Second, it calls for facilitating business creation by strengthening the operation, efficiency and dissemination of CIRCE and the PAE network, and by promoting regulatory sandboxes. Third, it advocates for a regulatory framework that supports business growth by tailoring obligations for SMEs and avoiding threshold effects. Fourth, it recommends steering public policies toward competition and growth by applying the “once-only” principle and implementing pro-competitive support and aid schemes. Fifth, it calls for strengthening measures to combat late payments. With regard to public procurement, the Study recommends reinforcing a pro-competitive approach in the planning, preparation and design of tenders; facilitating the submission of bids; reducing burdens during contract execution; ensuring that contracting authorities are provided with sufficient resources; and reviewing and simplifying the regulatory framework. Finally, it recommends seeking advice from the CNMC. |
| Keywords: | Regulation, Business creation, Business growth, Public procurement |
| JEL: | H57 K20 K23 L26 L50 L51 L53 |
| Date: | 2026–01–13 |
| URL: | https://d.repec.org/n?u=RePEc:awo:epaper:e/cnmc/004/23_eng |
| By: | Christoph Carnehl; Anton Sobolev; Konrad Stahl; André Stenzel |
| Abstract: | We study information design in a vertically differentiated market. A third party publicly discloses information about the product qualities of two competing firms. More precise information improves consumer matching but increases perceived differentiation, enabling firms to raise prices. Disclosing the product ranking alone suffices to maximize industry profits in a fully covered market. Consumer surplus, however, is maximized by a rank-preserving policy that withholds any information that overturns the prior ranking, as gains from price competition outweigh losses from allocative inefficiency. The conflict between profit- and consumer-optimal policies persists in settings with endogenous participation and nonlinear or asymmetric costs. |
| Keywords: | Information Design, Vertical Product Differentiation, Quality Rankings, Competition |
| JEL: | D43 D82 L13 L15 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_700v2 |
| By: | Christian Montet (UPF - Université de la Polynésie Française); Véronique Sélinsky (Barreau de Montpellier); Florent Venayre (UPF - Université de la Polynésie Française) |
| Abstract: | The article assesses whether competition authorities in New Caledonia and French Polynesia are the appropriate bodies to regulate network industries such as energy and telecommunications. Noting the longstanding shortcomings of regulation by local executive branches, it examines proposals to broaden the mandates of the Polynesian and Caledonian competition authorities. Drawing on economic theory and international experience, the study shows that combining regulatory and competition functions weakens the agencies' independence, clarity of remit, and overall effectiveness. It argues that, in small island economies, any potential cost savings are minimal compared with the governance risks involved. The authors ultimately advocate for strengthened cooperation with France's national energy and telecommunications regulators rather than pursuing local institutional integration. |
| Abstract: | L'article évalue si les autorités de concurrence de Nouvelle-Calédonie et de Polynésie française constituent des instances appropriées pour réguler les industries de réseau telles que l'énergie et les télécommunications. Constatant les insuffisances persistantes de la régulation par les exécutifs locaux, il examine les propositions visant à élargir les mandats des autorités de concurrence polynésienne et calédonienne. S'appuyant sur la théorie économique et l'expérience internationale, l'étude montre que la combinaison des fonctions de régulation et de concurrence affaiblit l'indépendance, la clarté du mandat et l'efficacité globale de ces agences. Elle soutient que, dans les petites économies insulaires, les économies potentielles sont minimes au regard des risques de gouvernance qu'elles impliquent. Les auteurs plaident finalement pour un renforcement de la coopération avec les régulateurs nationaux français de l'énergie et des télécommunications plutôt que pour une intégration institutionnelle locale. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05508291 |
| By: | Francesco Decarolis |
| Abstract: | The energy crisis of 2022–2023 marked a turning point for European electricity markets. It exposed how tightly power prices remain linked to gas, how market volatility can destabilize investment, and how fragmented national responses can undermine the integrity of the internal energy market. In the wake of that shock, the European Union has placed electricitymarket reform at the center of its Clean Industrial Deal, coupling decarbonization with competitiveness and energy security. The 2024 Electricity Market Design (EMD) reform and forthcoming guidance on Contracts for Difference (CfDs) and Power Purchase Agreements (PPAs) aim to ensure that long-term investment signals coexist with short-run market efficiency. Yet implementation will determine success: translating legislative intent into market outcomes requires sound economic design and clear institutional coordination. This report was prepared to support that process. It analyzes how PPAs and CfDs can jointly mobilize private and public capital while preserving efficient dispatch and price discovery. Drawing on academic research, EU policy documents, and empirical evidence from different countries, the study provides a structured framework for reform. It links economic theory on incomplete markets and risk allocation to the operational experience of regulators, utilities, and corporate buyers. The analysis proceeds from the recognition that volatility in high renewable systems is not an anomaly but a structural feature, one that must be managed. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:baf:cbafwp:cbafwp26264 |
| By: | Comisión Nacional de los Mercados y la Competencia (CNMC) (Comisión Nacional de los Mercados y la Competencia (CNMC)) |
| Abstract: | Photovoltaic self-consumption installations (PVSC) have grown exponentially in the Spanish electricity system since 2021. These installations, along the storage systems coupled to them, have also benefited from significant public aid during the same period. Such aid may have affected both the development of the sector and the competitive dynamics in the energy field and in other markets. The study analyses the various public support schemes offered at the national, regional and local levels in the form of grants, tax reductions and tax deductions. It assesses their impact on the penetration of the PVSC and, from there, evaluates their effect on competition. To strengthen the effectiveness and pro-competitive effects of these support measures, as well as to minimise possible competitive distortions, the CNMC recommends, first, reinforcing the institutional framework and coordination among administrations. This includes ensuring that the combined aid intensity does not exceed a certain threshold, implementing one-stop-shop solutions, and grouping incentives. Second, it proposes defining aid in terms of fixed unit amounts and regularly reassessing priority areas eligible for public support. Third, it suggests speeding up access to aid by streamlining administrative procedures and granting aid automatically where possible, expanding advance payment systems for subsidies, concentrating tax reduction in the first year, and considering the use of financial instruments. |
| Keywords: | Regulation, Competition, Public aid, Electricity generation, Photovoltaic self-consumption |
| JEL: | H23 K23 L52 L9 Q42 Q48 |
| Date: | 2025–10–21 |
| URL: | https://d.repec.org/n?u=RePEc:awo:epaper:ei/02/2023_eng |
| By: | Abramova, Inna; Barrios, John Manuel |
| Abstract: | Private equity (PE) has moved rapidly into professional services, yet its impact on accounting, where licensing regimes, reputational capital, and partnership governance traditionally limit external ownership, remains poorly understood. We examine how PE ownership alters the organization and market structure of accounting firms using data from 1999-2024 that link more than 3, 600 PE transactions to detailed information on mergers and acquisitions (M&A), labor markets, and audit pricing. PE investment increases sharply after 2020 and extends to both CPAlicensed audit firms and non-CPA advisory practices, with most activity in large mid-tier PCAOBregistered firms. After PE entry, firms grow faster: non-audit revenues rise, employment expands, and cross-state M&A accelerates, consistent with platform-building and consolidation. These adjustments have market-level implications. PE investment raises labor-market concentration in key accounting occupations and drives up ERISA audit fees in a standardized setting, as confirmed by a synthetic difference-in-differences design. Our results reveal a key tension at the core of professions: preserving independence and competition in a market increasingly driven by financial capital. |
| Keywords: | Private equity, accounting firms, audits, consolidation, market power, labormarket concentration, M&A, professional services |
| JEL: | G23 G34 L22 L84 M41 M42 J44 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cbscwp:336743 |
| By: | Gaston Besanson; Marcelo Celani |
| Abstract: | As generative AI commercializes, competitive advantage is shifting from one-time model training toward continuous inference, distribution, and routing. At the frontier, large-scale inference can function as cognitive infrastructure: a bottleneck input that downstream applications rely on to compete, controlled by firms that often compete downstream through integrated assistants, productivity suites, and developer tooling. Foreclosure risk is not limited to price. It can be executed through non-price discrimination (latency, throughput, error rates, context limits, feature gating) and, where models select tools and services, through steering and default routing that is difficult to observe and harder to litigate. This essay makes three moves. First, it defines cognitive infrastructure as a falsifiable concept built around measurable reliance, vertical incentives, and discrimination capacity, without assuming a clean market definition. Second, it frames theories of harm using raising-rivals'-costs logic for vertically related and platform markets, where foreclosure can be profitable without anticompetitive pricing. Third, it proposes Neutral Inference: a targeted, auditable conduct approach built around (i) quality-of-service parity, (ii) routing transparency, and (iii) FRAND-style non-discrimination for similarly situated buyers, applied only when observable evidence indicates functional gatekeeper status. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.22750 |
| By: | Moloney, Niamh |
| Abstract: | Examines the EU's capital markets union (CMU) agenda for financial markets, looking at the possibility of disruptive normative change to EU financial market governance including the limits of legislative reform, the likelihood of deregulation becoming a policy tool, and the risks to the CMU project. |
| Keywords: | deregulation; EU law; European Securities and Markets Authority; financial markets; financial regulation |
| JEL: | F3 G3 |
| Date: | 2025–01–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126176 |
| By: | Lancieri, Filippo Maria; Pereira Neto, Caio Mário da Silva; Karolczak, Rodrigo Moura; De Assis, Barbara Marchiori |
| Abstract: | On July 30, 2025, President Trump imposed 50% tariffs on imports from Brazil and sanctioned a sitting Brazilian Supreme Court Justice, both partially because of Brazil's online content moderation decisions. This is an extreme, but not an isolated event: worldwide, legislators and regulators struggle to craft public policies that address problems of disinformation and online harassment while protecting the freedom of expression - leading to increasing international confrontations. One key question in content moderation is content adjudication - or who is responsible for deciding what type of speech violates the law and should be taken down. This article presents the results of a six-year, large empirical and qualitative project on the adjudication of fake news disputes by Brazilian Courts from 2018 onwards. It examines what led Brazilian judges to order the takedown of online content, which social networks and types of content were most affected by judicial decisions, and whether there is evidence that incumbent politicians abused the system, among other factors. It also critically analyzes the evolution of this novel courtdriven content moderation regime - one in which Courts play an increasingly active role in policing online discourse - with significant implications for the Brazilian information ecosystem, democratic institutions, and judicial reputation. Ultimately, the Brazilian experience teaches/reinforces five lessons to jurisdictions rethinking their online content moderation regulatory regimes: (i) content moderation systems must articulate clear end goals to work properly; (ii) experimentation in content moderation regulation is possible and desirable, allowing for incremental learning and adaptation; (iii) a content moderation system must have strict protection against the slippery slope that may lead it to censorship and arbitrariness; (iv) contentbased moderation systems become part of the information environment - claims about neutrality in adjudication cannot, by themselves, support long-term systemic legitimacy; (v) increasing regulatory fragmentation impose new urgency on the development of international guidelines for limits on the extraterritoriality of online decisions. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cbscwp:336739 |
| By: | Constanze Liepold (constanze.liepold@eonerc.rwth-aachen.de); Reinhard Madlener (RMadlener@eonerc.rwth-aachen.de) |
| Abstract: | The rapid electrification of private heating and mobility increases residential electricity demand and requires new mechanisms to stabilize power grids. Direct load control (DLC) offers a technically effective way to manage demand-side flexibility, yet its acceptance by private households remains uncertain. This study investigates willingness-to-accept (WTA) and preference structures for DLC programs in the German-speaking D-A-CH region (Germany, Austria, Switzerland), using a large-scale survey (N = 10, 346) and a choice-based conjoint experiment. Five core tariff attributes (financial compensation, intervention frequency, intervention duration, controllable technology, and Control Options) were evaluated across socio-economic groups using a hierarchical Bayes model. Financial compensation is found to be the most influential factor, followed by duration and frequency of interventions. Control Options are strongly preferred and associated with negative WTA values, indicating that autonomy substantially increases acceptance. Technology-related differences are found to be small: wallboxes require the highest compensation, while heat pumps and battery storage are generally well accepted. Cross-country differences in WTA are found to be statistically significant but modest, with Germany showing the highest compensation requirements. Socio-economic effects are minor. Overall, households accept DLC when interventions are short, predictable, and transparent, and when users retain basic control. These results suggest that effective DLC programs must combine fair compensation with autonomy safeguards and clear communication to ensure social acceptability. |
| Keywords: | Direct load control; Demand-side flexibility; Socio-Economic Status; D-AC-H Region; Discrete Choice Experiment |
| JEL: | D12 C25 Q41 |
| Date: | 2025–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:ris:fcnwpa:022308 |
| By: | Murad Farzulla |
| Abstract: | We investigate whether cryptocurrency markets differentiate between infrastructure failures and regulatory enforcement at the return level, complementing a companion conditional variance analysis that finds 5.7 times larger volatility impacts from infrastructure events (p = 0.0008). Using event-level block bootstrap inference on 31 events across Bitcoin, Ethereum, Solana, and Cardano (2019-2025), we find no statistically significant difference in cumulative abnormal returns between infrastructure failures (-7.6%) and regulatory enforcement (-11.1%): the difference of +3.6 pp has p = 0.81 with 95% CI [-25.3%, +30.9%]. This null acquires substantive meaning alongside the companion's highly significant variance result: the same events that produce indistinguishable return responses generate dramatically different volatility signatures. Markets differentiate shock types through the risk channel -- the second moment -- rather than expected returns. The block bootstrap methodology, which resamples entire events to preserve cross-sectional correlation, reveals that prior parametric approaches systematically understate uncertainty by inflating degrees of freedom. Results are robust across eight specifications including permutation tests, leave-one-out analysis, and the Ibragimov-Mueller few-cluster test. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.07046 |
| By: | Bruce I. Carlin; Tingting Liu; Micah S. Officer; Agathe Pernoud; Danni Tu |
| Abstract: | Allocation mechanisms in M&A deals are complex, but a main feature is that a target board controls who to invite to the sale. In a theoretical model, we show that it is optimal for the target to invite fewer potential acquirers when they are more homogeneous (i.e., when their values for the target are more correlated). Furthermore, greater correlation (and hence a smaller optimal bidder pool) yields the target a higher surplus from the sale (i.e., higher premium). We test the model empirically and show that M&A deals with smaller bidder pools are associated with higher target returns. This is not a result of synergies in the deals: the target's share of the surplus is simply higher in deals with smaller bidder pools. Finally, we show that cash deals are associated with larger, whereas stock deals have smaller, pools of bidders. |
| JEL: | G34 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34846 |
| By: | Teresa Corzo Santamaria; Jose Portela; Eduardo S. Schwartz |
| Abstract: | Geopolitical tensions, supply-chain concerns and policy risk have moved to the forefront of the pharmaceutical industry. This paper develops a real options valuation model of drug R&D that captures sequential clinical investment with technical failure, stochastic costs, uncertain cash flows, and optimal abandonment. We incorporate two regulatory shocks: a reduction in effective exclusivity period and a price-control shock that reduces net cash flows. Calibrating to an incremental CNS program, we find that project value at initiation is highly right-skewed: the mean is USD 69.6m but the median is negative, so expected value is driven by rare high-upside outcomes. Regulatory risk mainly compresses this upside. Both reductions in effective exclusivity and price-based interventions substantially weaken investment incentives, even when they occur with moderate probability. Value is strongly convex in exclusivity length, with the final years carrying the highest marginal value. We introduce iso-value maps that summarize how time-based and price-based policies substitute in their impact on project valuation, to clarify the trade-offs inherent in regulatory design: losing two years of exclusivity is comparable to roughly a 30% cash-flow contraction. Using a standard revenue-to-R&D elasticity, these valuation effects imply a 10% to 25% long-run contraction in investment. The framework provides a transparent mapping from policy design to project value and investment incentives. |
| JEL: | G1 I18 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34863 |