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on Regulation |
| By: | Scott Duke Kominers (Harvard Business School Harvard University; Harvard Business Becker Friedman Institute for Research in Economics University of Chicago; Department of Economics Harvard University); Piotr Dworczak (Northwestern University; Group for Research in Applied Economics (GRAPE)) |
| Abstract: | We propose an economic definition of price gouging: Price gouging occurs in a competitive market when lowering the price from the market-clearing level would increase total Utilitarian welfare. We then use price-theoretic tools to characterize determinants of price gouging in a setting with income heterogeneity and non-quasi-linear preferences that induce a motive to redistribute across agents. The circumstances under which price gouging occurs in our framework align with the contexts covered by existing anti‒price gouging laws. By proposing a definition of price gouging that does not appeal to any non-economic notions of (un)fairness or excess, we hope to provide a pathway for follow-up theoretical and empirical research. |
| Keywords: | price gouging, price control, market design |
| JEL: | D47 D63 D82 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:fme:wpaper:104 |
| By: | António Afonso; M. Carmen Blanco-Arana |
| Abstract: | This paper assesses the impact of the regulatory environment on the new business creation in 45 Least Developed Countries (LDC) using a panel data from 2000 to 2021. Empirical evidence, derived from a fixed effects (FE) model, indicates a strong relationship between business regulation and new business creation in LDC. This suggests that the regulatory framework of a country is a crucial factor that influences entrepreneurial decisions and can significantly contribute to economic growth. The overall economic situation of a country also has a positive and significant impact. Additionally, factors such as accessibility to financial services, political stability, control of corruption, and economic freedom clearly affect the establishment of new businesses in these countries. Similar results are obtained using the Generalised Method of Moments (GMM) estimator, through the use of a dynamic panel data approach. Finally, business regulation is also strongly associated with new business creation in OECD countries. |
| Keywords: | New business, regulatory environment, FE, GMM, panel data, LDC. |
| JEL: | M20 G18 C23 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:ise:remwps:wp03772025 |
| By: | Mehdi Guelmamen |
| Abstract: | The provision of drinking water has become a central concern for public authorities due to climate change, prompting policymakers to reevaluate their approach to this semi-renewable resource. In this paper, we assess the effect of inter-municipal cooperation on performance. Using a comprehensive panel dataset comprising all French drinking water providers from 2008 to 2021, we show that organizational forms chosen by municipalities have an effect on prices of drinking water paid by consumers. More precisely, our empirical findings reveal a selection bias in the estimation of price equations and we show that consumer prices are significantly higher on average when municipalities decide to cooperate. Inter-municipal cooperation does not necessarily lead to better performance in the provision of drinking water. |
| Keywords: | Intermunicipal cooperation, local government, public services, drinking water prices, selection bias. |
| JEL: | H11 H77 L11 L95 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ulp:sbbeta:2024-40 |
| By: | Czock, Berit Hanna (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)) |
| Abstract: | This study examines the static market and welfare effects of splitting the German bidding zone, comparing a two-zone and a three-zone configuration for a 2030 scenario. Using a state-of-the-art grid and market model with explicit representation of frictions in flow-based market coupling and redispatch, the analysis finds that the investigated two-zone split results in a 1.6% static welfare loss as redispatch cost savings do not overcompensate the negative effect of more transmission constraints in the electricity market. Contrarily, three zones lead to a 4.4% static welfare gain, as redispatch cost decrease further than with two zones and trade between German zones is enhanced due to a reduction of loop flows on interconnectors between Germany’s North and South. However, both bidding zone split options lead to significant distributional effects, with higher consumer costs and increased subsidy expenditures for renewable energy sources (RES), though these effects are less pronounced with three zones. Additionally, welfare effects are sensitive to scenario definition and representation of frictions. All in all, policymakers should carefully assess the uncertain welfare gains against the transition costs of a bidding zone split, while also considering distribution effects and interactions with existing policies such as the RES subsidy scheme. Reducing frictions in redispatch, albeit with new coordination challenges, could potentially achieve similar objectives with lower transaction costs and fewer distributional impacts. |
| Keywords: | Market Design; Electricity Markets; Nodal Pricing; Energy System Modeling; Renewable Energies; Bidding Zones |
| JEL: | C61 D47 D61 Q40 |
| Date: | 2025–05–15 |
| URL: | https://d.repec.org/n?u=RePEc:ris:ewikln:2025_004 |
| By: | Junjie Chen; Takuro Yamashita |
| Abstract: | An information broker incentivizes consumers to share their information, while designing an information structure to shape the market segmentation. The information broker is a metaphor for an Internet platform that matches consumers with retailers. We are interested in a market with heterogeneous retailers and heterogeneous consumers. The optimal broking mechanism consists of a simple threshold-based structure where consumers with strong preferences are assigned to the efficient retailer while consumers with weaker preferences are assigned to the inefficient retailer stochastically. Our analysis suggests that the privacy protection policy may have a stronger impact on less competitive retail markets. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2503.19539 |
| By: | Theresa Daniel (Justus-Liebig-University Giessen, Department of Economics); Maximilian Maurice Gail (Justus-Liebig-University Giessen, Department of Economics); Phil-Adrian Klotz (Düsseldorf Institute for Competition Economics (DICE), Heinrich Heine University Düsseldorf) |
| Abstract: | This paper examines the impact of Germany’s nationwide 9-Euro-Ticket, a temporary almost fare-free transport ticket, on highway passenger traffic. Using a difference-in-differences approach, we find a significant reduction of approximately 4.5%, primarily driven by decreased weekend traffic. Event study results also indicate considerable heterogeneity across time, federal states, and road types. A similar but more persistent effect is observed for the Deutschlandticket, the permanent successor to the 9-Euro-Ticket. However, our findings suggest that neither ticket has resulted in a lasting shift from private cars to public transport, especially among commuters. Hence, the overall efficiency of this measure remains uncertain, particularly in view of the high direct costs and the necessary investments required to improve Germany’s rail infrastructure in the near future. |
| Keywords: | Modal Shift, 9-Euro-Ticket, Deutschlandticket, Difference-in-Differences |
| JEL: | R48 R41 L91 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:mar:magkse:202507 |
| By: | Andrews, Dan (OECD); Garnero, Andrea (OECD) |
| Abstract: | Restraints clauses that prevent workers from joining (or starting) a competing firm (non-compete clauses), the disclosure of confidential information or the poaching of former co-workers or clients are traditionally justified to protect legitimate business interests (e.g. trade secrets, investments in training). Yet, there are increasing concerns that such clauses may be deployed to suppress job mobility and competition. This paper reviews the international evidence base and finds that non-compete clauses are more prevalent than anticipated, with up to one-quarter of employees subject to such clauses in some countries. These clauses extend beyond highly paid professionals to include low-wage and elementary workers, often bundled with other restrictions, further diminishing workers’ bargaining power. The balance of evidence suggests that non-compete clauses suppress job mobility, firm entry, innovation, wages and productivity, which more than offset any gains from enhanced incentives for firm-specific investment. Regulatory efforts to limit non-compete clauses are gaining traction in some countries but comprehensive empirical evidence remains scarce outside the United States, underscoring the need for more research. |
| Keywords: | non-compete clauses, monopsony, earnings, knowledge diffusion, mobility |
| JEL: | J31 J41 J42 L40 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17865 |
| By: | Jeddi, Samir (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI)) |
| Abstract: | The increasing share of intermittent renewable energy generation amplifies power price volatility, raising the need for storage technologies such as battery energy storage systems (BESS). However, limited transmission infrastructure, particularly constrained grid connections, poses a major barrier to the deployment of both BESS and further renewable generation. Co-locating BESS with wind and solar assets can increase grid connection utilization and lower project costs. This study examines the effects of grid connection rationing on hybrid PV-BESS systems, accounting for weather-induced generation uncertainty and price fluctuations. Findings indicate that PV and BESS margins exhibit a strong negative correlation, leading to risk diversification. Grid withdrawal constraints substantially reduce contribution margins and increase risk exposure by lowering the diversification effect. In contrast, hybrid PV-BESS systems can reduce their grid injection capacity by up to 60% of their nameplate capacity without significantly affecting contribution margins or risk, as peak solar generation coincides with low power prices. A market premium payment diminishes the diversification benefits of hybrid PV-BESS systems and encourages greater grid connections by inflating the value of generation during low-price periods. These findings suggest that the central features of the German EEG innovation tender scheme for hybrid BESS systems - grid withdrawal constraints and a market premium - created an unnecessary excess burden for taxpayers. |
| Keywords: | PV-battery storage; Grid constraints; Renewable integration; Diversification; Risk mitigation |
| JEL: | C61 C63 D81 L51 Q41 Q42 |
| Date: | 2025–05–19 |
| URL: | https://d.repec.org/n?u=RePEc:ris:ewikln:2025_005 |
| By: | Arve, Malin (Dept. of Business and Management Science, Norwegian School of Economics); Dyskeland, Ole Kristian (Dept. of Business and Management Science, Norwegian School of Economics); Foros, Øystein (Dept. of Business and Management Science, Norwegian School of Economics) |
| Abstract: | We analyze competition between two digital platforms selling subscriptions for unlimited access to their content catalogs (e.g., streaming and TV broadcasting platforms). A content provider offers additional content to the platforms. The content provider chooses between offering a revenue sharing contract and a per-consumer wholesale pricing contract towards the platforms, thereby endogenously determining whether its content will be distributed non-exclusively (on both platforms) or exclusively (on one platform). Our model yields clear predictions: In markets with low initial exclusivity, the content provider and both platforms prefer per-consumer wholesale pricing to endogenously promote non-exclusive distribution. Platforms set subscription prices that lead to full consumer singlehoming. Conversely, in markets with high initial exclusivity, all market players prefer a revenue-sharing contract that induces exclusive distribution, with platforms setting prices that encourage some consumers to multihome. |
| Keywords: | Multihoming; incremental pricing; content provision |
| JEL: | L13 L14 L82 |
| Date: | 2025–05–13 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:nhhfms:2025_017 |
| By: | Sophie M. Behr; Merve Kucuk; Maximilian Longmuir; Karsten Neuhoff |
| Abstract: | The energy crisis following Russia’s invasion of Ukraine exposed the heightened vulnerability of low-income households to rising heating costs, particularly those in energy inefficient buildings. Using data from the German Socio-Economic Panel (SOEP), this study examines the distributional impact of heating costs across income deciles and evaluates the effectiveness of policy interventions. We find that low-income tenants are the most vulnerable segment of the population, with elevated risks of energy poverty. While carbon pricing with landlordtenant cost splitting shields low-income households from carbon costs, it fails to offset overall energy price increases. In contrast, a "Worst-First" retrofit strategy, prioritizing upgrades in the least efficient buildings, substantially reduces heating costs and mitigates energy poverty. Our findings highlight the need for targeted retrofit policies to ensure both equitable decarbonization and economic relief for vulnerable households. |
| Keywords: | Distributional effects, energy efficiency, retrofit, carbon prices, energy price crisis |
| JEL: | Q41 Q48 D31 D63 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2119 |
| By: | Mattia Di Ubaldo (University of Sussex); Michael Gasiorek (University of Sussex); Barry Reilly (University of Sussex); Aldo Sandoval-Hernandez (Innovation, Science and Economic Development Canada) |
| Abstract: | Regulatory requirements are an important determinant of production and thus trade patterns. The effects can be complex as the requirements with which firms and/or products have to comply can either hinder or stimulate international trade. We use machine learning and text-analysis tools on a core set of EU Regulations and Directives to construct a novel set of indices of EU ‘regulatory intensity’ at the HS 6-digit level along three dimensions: technical production requirements, compliance, and conformity assessment. We then test the responsiveness of EU imports from EU and non-EU countries to regulatory intensity by estimating a gravity model with a stringent set of fixed effects. Distinguishing between the areas of regulation is crucial to understand the its impacts on trade: higher production requirements stimulate EU imports, while higher compliance and conformity assessment requirements affect EU imports negatively, mainly from non-EU countries. The trade effects are driven by products characterised by higher complexity, and countries for which the EU is a less relevant export-destination. |
| Keywords: | Non-tariff Measures, EU Single Market, regulatory intensity, imports |
| JEL: | F13 F14 |
| URL: | https://d.repec.org/n?u=RePEc:sus:susewp:0325 |
| By: | Maximilian M. Gail (Justus Liebig University Giessen, Chair for Industrial Organization, Regulation and Antitrust); Georg Götz (Justus Liebig University Giessen, Chair for Industrial Organization, Regulation and Antitrust); Daniel Herold (Justus Liebig University Giessen, Chair for Industrial Organization, Regulation and Antitrust); Jan Schäfer (Justus Liebig University Giessen, Chair for Industrial Organization, Regulation and Antitrust) |
| Abstract: | In December 2020, Germany implemented a policy restricting online pharmacies from offering rebates on prescription drugs to members of the statutory health insurance. This policy change created a natural experiment, allowing us to analyze its impact on the pharmaceutical market using Difference-in-Differences. Utilizing a novel dataset, we find that the ban led to a shift in consumer behavior, increasing offline pharmacy Rx sales by 1.36% to 1.65%. However, the policy’s effects were unevenly distributed across pharmacies. While all pharmacies experienced some benefit, the impact was disproportionately larger for higher-revenue pharmacies. For instance, pharmacies in the lowest revenue decile saw a modest annual profit increase of €1, 360, whereas those in the highest decile gained more than five times that amount. Our findings indicate that the introduction of VOASG alone was insufficient to reverse the declining trend in pharmacy numbers in Germany. To strengthen the comprehensive supply of pharmaceuticals to the general population, additional reforms are necessary. |
| Keywords: | Pharmacies, Prescription Drugs, Resale Price Maintenance, Regulation, Public Health |
| JEL: | L5 I18 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:mar:magkse:202505 |
| By: | Mehdi Guelmamen; Serge Garcia; Alexandre Mayol |
| Abstract: | Inter-municipal cooperation (IMC) is frequently promoted as a solution to improve the management of local utilities such as drinking water. Yet its effectiveness remains ambiguous: while IMC can create economies of scale, it may also induce transaction costs that undermine its benefits. In France, drinking water services are managed at the municipal level, where local governments can decide whether to cooperate—and if so, whether to adopt a purely technical cooperative arrangement or a more politically integrated, supra-municipal governance structure. Using a comprehensive panel of French water utilities from 2008 to 2021, we investigate the factors that lead municipalities to remain independent. Our econometric analysis, based on a correlated random effects probit model with a control function approach, yields several key findings. First, while IMC is associated with higher water prices, these increased tariffs are offset by better network performance, as indicated by lower water loss indices and improved water quality. Second, we find that the more politically integrated form of cooperation is more common among publicly managed utilities and among municipalities seeking to reduce their dependence on imported water. These findings provide new insights into the governance of common-pool resources, suggesting that while cooperation can improve service provision, its institutional design must carefully balance organizational costs against expected efficiency gains. |
| Keywords: | water resource management, public utilities, local government, inter-municipal cooperation (IMC), transaction costs. |
| JEL: | H11 L11 L95 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ulp:sbbeta:2025-07 |
| By: | Mehdi Guelmamen |
| Abstract: | Drinking water governance has emerged as a critical issue for policymakers. Climate change and the increase in human consumption exacerbate drought episodes, and the institutional arrangements for providing drinking water are increasingly diverse but vary in effectiveness. This paper explores the various contemporary organizational pathways in drinking water governance. Our aim is to provide a comprehensive understanding of the dynamics and implications of different organizational approaches in water management, shedding light on policy and strategic choices for sustainable and effective governance. Recommendations for future research are also considered. |
| Keywords: | Drinking water governance, local government, public services, literature review. |
| JEL: | H11 L11 L95 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ulp:sbbeta:2024-48 |