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on Regulation |
| By: | Bisceglia, Michele; Bonatti, Alessandro; Scott Morton, Fiona |
| Abstract: | We study how privacy regulation affects menu pricing by a monopolist platform that collects and monetizes personal data. Consumers differ in privacy valuation and sophistication: naïve users ignore privacy losses, while sophisticated users internalize them. The platform designs prices and data collection options to screen users. Without regulation, privacy allocations are distorted and naïve users are exploited. Regulation through privacy-protecting defaults can create a market for information by inducing payments for data; hard caps on data collection protect naïve users but may restrict efficient data trade. |
| Keywords: | Data; Defaults; Privacy |
| JEL: | D18 D82 D83 L12 L51 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20842 |
| By: | Duso, Tomaso; Peitz, Martin |
| Abstract: | Trade conflicts, geopolitical tensions, digital disruption, and the climate crisis pose major challenges for the European Union (EU) and its member states. As called for in the Draghi Report, industrial policy measures can increase competitiveness, strengthen resilience, and facilitate the twin transformation. This article explores ways in which competition policy can be realigned to better accommodate industrial policy objectives. Using German competition law as a reference point, it presents options with which legislatures and competition authorities can respond to current challenges, reconcile conflicting objectives, and adapt the decision-making framework. It then considers elements of a competition-oriented industrial policy, understood as an evidence-based, targeted approach in which competition serves both as a guiding principle and as a control variable. |
| Keywords: | Industrial policy; Competition; Regulation; Competition policy; Competitiveness; Internal market |
| JEL: | L40 L50 L52 K21 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20807 |
| By: | Martin, Simon; Verboven, Frank |
| Abstract: | Price caps are commonly used to protect consumers from excessive price increases, yet their consequences remain understudied. This paper analyzes the Belgian retail gasoline market, using daily price data from 2016–2019 for around 3, 000 gasoline stations. We examine whether price caps are effective at constraining prices, or instead serve as focal points that encourage coordinated price-setting behavior. We first document several key facts: pervasive price rigidity and the wide presence of prices at the caps or at integer discounts below the caps. We subsequently develop a framework to show that the price caps constrain only a limited fraction of stations, and induce a large fraction to coordinate on higher prices at or below the caps. Removing price caps would substantially reduce prices and profit margins by an amount comparable in magnitude to that associated with the collapse of an explicit cartel. |
| JEL: | D22 D83 L13 L41 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21297 |
| By: | Rhodes, Andrew; Zhou, Jidong; Zhou, Junjie |
| 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. |
| JEL: | D43 L13 L51 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21209 |
| By: | Genakos, Christos; Kampouris, Themistoklis |
| Abstract: | This paper examines the “right†geographic definition of relevant markets by analyzing how excise tax pass-through varies with local competition in the retail gasoline market of a large metropolitan city. Using a natural experiment from three unanticipated and exogenous fuel tax hikes and detailed station-level price data, we show that average pass-through is invariant to the number of nearby competitors across various geographic definitions. This contrasts with theoretical predictions and prior island-based evidence, suggesting that the entire metropolitan area functions as a single market. Our findings challenge standard isodistance- or isochrone-based market delineations used in academic research and competition policy. |
| JEL: | H22 L1 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21091 |
| By: | Fabra, Natalia; Llobet, Gerard |
| Abstract: | This paper examines how buyer counterparty risk—arising from the possibility that buyers renegotiate long-term contracts under the threat of default—distorts market efficiency. We develop a theoretical model showing that the prospect of renegotiation raises contract prices, further increasing the likelihood of renegotiation, and depresses investment. We then assess several policy interventions to promote contract liquidity in the presence of buyer counterparty risk, including public subsidies, financial guarantees, and collateral requirements. While these tools can mitigate price distortions and stimulate investment, they also introduce trade-offs such as moral hazard, reliance on costly public funds, or demand reductions. These insights are particularly relevant in sectors with capital-intensive, long-lived assets exposed to price volatility, notably in electricity markets, where underinvestment in renewable generation may slow down the energy transition and hinder decarbonization goals. Finally, we simulate the Spanish electricity contract market for solar PV to quantify the model’s predictions. |
| Keywords: | Dynamic contracts |
| JEL: | L13 L94 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21261 |
| By: | Gerlagh, Reyer; Liski, Matti; Vehviläinen, Iivo |
| Abstract: | When demand aggregates both price-sensitive and price-insensitive behaviors, uniform pricing becomes a deficient market design that generates negative surplus during extreme-price events. We develop a price-control mechanism that efficiently resolves the tradeoff between protecting consumers and limiting rents. The mechanism implements a dynamic price cap that responds to demand adjustments and induces truthful supply through incentive payments. In a quantitative application to the French wholesale electricity market during the 2022–2023 energy crisis, the mechanism would have lowered expected procurement costs by roughly €200 billion, about two-thirds of total projected costs in this central scenario. |
| Keywords: | Price controls; Market efficiency; Energy prices |
| JEL: | D45 D61 Q41 Q48 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20971 |
| By: | Katarzyna Maciejowska |
| Abstract: | Battery energy storage systems (BESS) are expected to play an important role in electricity markets with increasing shares of renewable generation. While existing research has primarily focused on price arbitrage and ancillary services, the role of grid fees in shaping BESS operation and profitability remains insufficiently understood. This article investigates how different levels of distribution fees affect the scheduling and economic viability of BESS in the day-ahead electricity market. The analysis employs a mixed-integer linear programming model of BESS operation combined with electricity price data from the German market. Four system configurations are considered: stand-alone storage and BESS combined with consumption, generation, or both. The value of storage is measured as the difference between system profits with and without BESS. In addition, a rolling-horizon optimization framework is used to evaluate the impact of forecast uncertainty and decision horizon length on operational outcomes. The results show that grid fees significantly influence both BESS profitability and operational strategies. For stand-alone storage, higher transmission charges reduce arbitrage revenues and battery utilization. When BESS is integrated with consumption and generation units, load shifting and self-consumption become the dominant sources of value, leading to a non-monotonic relationship between grid fees and storage profitability. These findings highlight the importance of considering tariff structures when evaluating storage investments and designing regulatory frameworks for electricity markets with increasing flexibility needs. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.22185 |
| By: | Becky King; Natalie Cohen; Anna Pietikäinen; Wiktor Samek |
| Abstract: | Policymakers regulating the digital economy face a difficult question: not only whether to intervene, but how to do so proportionately, balancing innovation against fast-evolving risks. This paper helps navigate that choice. It develops a methodology positioning regulatory models on a spectrum – from command-and-control, through performance-based regulation, market-based mechanisms and co-regulation, to different forms of self-regulation – categorised by their flexibility and the roles public and private actors play across the regulatory process. This enables structured comparison, clarifies trade-offs, and supports design of blended approaches combining different models. The paper offers criteria for model selection based on impact on innovation, market and private actor characteristics, and public institutional readiness. Applied to the digital economy, it finds that governments increasingly rely on blended models, with public actors retaining responsibility for setting regulatory objectives, while delegating the means of achieving them and regulatory delivery to private actors, under public oversight and accountability. |
| Keywords: | Co-regulation, Command-and-control, Digital economy, Digital regulation, Innovation, Market-based, Meta self-regulation, Performance-based regulation, Public Governance, Self-regulation |
| JEL: | H11 K23 L50 O38 D02 |
| Date: | 2026–07–15 |
| URL: | https://d.repec.org/n?u=RePEc:oec:govaah:26-en |
| By: | Johnen, Johannes; Shekhar, Shiva |
| Abstract: | This paper proposes a simple yet useful framework for evaluating vertical mergers in digital markets by distinguishing between product-specific and ecosystem-specific network effects. Vis-Ã -vis no network effects, product-specific network effects amplify foreclosure and steering incentives, as a rival’s growth directly undermines the platform’s product value. Conversely, ecosystem-specific effects dampen foreclosure incentives, since rivals contribute to the overall value of the platform ecosystem. We develop a formal model illustrating how this distinction shapes platform behavior and competitive outcomes. We apply this distinction to real-world examples to illustrate its potential usefulness. Our distinction implies that regulators may want to adopt a stricter standard with no presumption of efficiencies where product-specific effects dominate. In contrast, when ecosystem-specific effects prevail, merger evaluation should mirror traditional vertical merger analysis. Thus, offering a more nuanced approach to merger evaluation by presenting a practical screening tool to identify problematic vertical mergers in markets featuring network effects. |
| Keywords: | Network externalities; Platforms; Vertical integration; Foreclosure; Steering |
| JEL: | L22 L41 L51 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20899 |
| By: | Dubus, Antoine; Legros, Patrick |
| Abstract: | Firms may share data to discover potential synergies between their data sets and algorithms, eventually leading to more efficient mergers and acquisitions (M&A) decisions. However, data sharing also modifies the competitive balance when firms do not merge, and a company may be reluctant to share data with potential rivals. Under general conditions, we show that firms benefit from (partially) sharing data. By doing so, they can merge conditionally based on high synergies. Compared to a laissez-faire situation, the presence of a regulator allowing or refusing the M&A may increase or decrease data sharing, with a concomitant increase or decrease in consumer surplus. Hence, regulation can lower the surplus of consumers it is willing to protect. We revisit the Google/Fitbit acquisition through the lens of this interplay between strategic data sharing and antitrust policy. |
| Keywords: | Artificial intelligence; Synergies; Mergers and acquisitions; Incomplete information; Antitrust |
| JEL: | G34 K21 L1 L21 L24 L5 L86 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21125 |
| By: | Blanchard, Pablo; Fleitas, Sebastian; González Valdenegro, Rodrigo |
| Abstract: | We study the equilibrium welfare effects of using state-owned enterprises (SOEs) to discipline market power. We estimate a dynamic equilibrium model of Uruguay’s individual capitalization pension system, where a high-quality SOE competes with private firms in the presence of worker inertia. We find that the presence of a SOE lowers equilibrium fees and increases investment returns. Replacing it with a private firm would more than double its fee and raise private firms’ fees by 8 percent. Reducing inertia mitigates but does not offset privatization. Comparing policy instruments, we show that direct price regulation yields higher welfare gains than competition through an SOE. |
| Keywords: | Regulation |
| JEL: | L51 N2 H4 L21 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21152 |
| By: | Nicole Adler; Gianmarco Andreana; Gerben de Jong |
| Abstract: | Climate policy in global network industries is implemented across fragmented jurisdictions, yet firms respond through integrated operational networks. We develop a two-stage game-theoretic framework to analyze how firm-level responses interact with alternative governance structures. Regulators first choose emissions charges. Firms subsequently compete through pricing, service capacity and capital deployment decisions. The analytical results demonstrate that uniform global regulation maximizes welfare in symmetric markets. However, in sufficiently asymmetric markets, a uniform global charge is dominated by decentralized regimes. Multiple regulatory instruments better accommodate region-specific market externalities. We apply this framework to a calibrated case study of North American, Western European and transatlantic aviation markets. The numerical results establish that a globally coordinated regulator setting region-specific charges achieves the highest aggregate welfare. These aggregate gains nonetheless mask substantial distributional disparities across jurisdictions. Effective climate governance in network industries therefore requires more than determining an efficient emissions charge. Policy instruments ought to accommodate regional heterogeneity and transfer mechanisms will be necessary to ensure efficient, politically stable cooperation. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.17290 |
| By: | Omar Chisari; Antonio Estache; Juan Ignacio Mercatante |
| Abstract: | This paper analyses the potential transitional direct and indirect macroeconomic impacts of an electricity price increase due to the entry of new large data centers in an economy without excess energy capacity. It tracks the short term distributional, employment, fiscal, sectoral and growth effects of the associated electricity demand shock, if the prevailing electricity price regulation remains unchanged. The quantitative analysis is based on a computable general equilibrium model calibrated for Argentina. The simulations suggest that the failure to adjust the pricing regulation could lead to a short run output drop in the industrial and service sectors. This would increase unemployment and worsen income distribution since the shock hurts less the highest income class in relative terms. |
| Keywords: | Computable General Equilibrium Models; Data Centers; Electricity; Pricing; Regulation; Incidence |
| JEL: | C68 D58 E16 E20 E60 H12 H22 L11 L50 L94 O11 O32 Q40 |
| Date: | 2026–07–05 |
| URL: | https://d.repec.org/n?u=RePEc:eca:wpaper:2013/411995 |
| By: | Alice Lixuan Xu; Clemens Stiewe |
| Abstract: | This paper estimates the effect of cross-border transmission constraints on suspected market power abuse in the German wholesale electricity market. Using a 2SRI instrumental variables approach, we study suspected strategic behavior by German gas- and coal-fired power plants in 2022-2024. Cross-border transmission constraints are measured using the maximum and minimum bounds of zonal net position, while suspected market power abuse is measured as the upward or downward deviation of observed dispatch from a modeled competitive benchmark. We find that transmission constraints significantly elevate the likelihood of suspected market power abuse. When headroom for further imports is already scarce, reducing import headroom by one Gigawatt (GW) increases the odds of suspected capacity withholding by 15%. Similarly, reducing export headroom by one GW when it is scarce increases the odds of suspected capacity push-in, a strategy to depress prices, by 16%. These results provide empirical support for interconnection expansion as an instrument to mitigate market power. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.00977 |
| By: | Maria Chiara Fatigato (Sapienza Università di Roma - Dipartimento di Studi Giuridici ed Economici) |
| Abstract: | The paper examines the evolution of the regulatory state in Brazil, focusing on the transformation of the public role in the economy and the regulation of public services following the 1988 Federal Constitution. Drawing on the main contributions of Brazilian and European legal scholarship, it investigates how Brazil progressively moved beyond the interventionist model by redefining the State as regulator, supervisor and guarantor of the public interest rather than as a direct economic operator. The analysis argues that this transformation does not simply reflect the adoption of a neoliberal model but results from the interaction between the French administrative law tradition, the theory of public service, Anglo-Saxon New Public Management and the U.S. model of independent regulatory agencies. Through an examination of the constitutional framework, independent regulatory authorities and the principles governing public services, the paper shows how the Brazilian regulatory model seeks to reconcile market freedom, users' protection and the effective safeguarding of fundamental rights. |
| Keywords: | regulatory state, Brazil, public services, independent regulatory agencies, comparative administrative law, Brazilian Constitution of 1988, economic regulation, New Public Management |
| JEL: | K23 K20 H11 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:gfe:pfrp00:00086 |
| By: | Xin Meng; Hikmet Günay; Mehdi Arzandeh |
| Abstract: | When a wireless carrier exits, its spectrum may remain idle until regulators complete a reassignment process. During this interval, regulators must decide whether to leave the spectrum unused or grant temporary access rights to an incumbent carrier. We study this trade-off in a two-period model in which temporary spectrum access lowers the incumbent’s marginal cost before entry is possible, while consumers who purchase in the first period become locked in through multi-period contracts. Under a wait-and-assign policy, the spectrum remains idle in the first period. Under a temporary-transfer policy, the incumbent receives access to the idle spectrum in the first period but gives up any cost advantage if entry occurs, as the entrant receives the spectrum and competes on equal-cost terms. Temporary access therefore affects entry incentives only through installed-base accumulation rather than through input foreclosure or a persistent cost advantage. We show that there exists a region of the parameter space in which entry occurs under wait-and-assign but is deterred under temporary transfer. In this region, temporary transfer can increase total welfare because the gains from lower production costs, immediate utilization, and avoided entry costs outweigh the surplus generated by postentry competition. Consumer surplus may also increase when the benefit of offering lower prices to a larger captive customer base exceeds the loss of competition in the residual market. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:dpr:wpaper:1316 |
| By: | Haese, Jérémie; Kretschmer, Tobias; Peukert, Christian |
| Abstract: | How early-stage platforms can overcome the chicken-and-egg problem is a central strategic challenge. We develop a dynamic model of two-sided platform adoption in which user utility depends on same-side and cross-side network effects, and adoption is shaped by advertising that increases sensitivity to perceived utility. We highlight the distinct role of advertising as a salience amplifier rather than a direct utility shifter. We derive closed-form conditions under which a platform takes off or collapses, showing that even when one side cannot sustain growth alone, targeted advertising on the other side can trigger self-reinforcing adoption. We show how advertising reduces the required strength of indirect network effects for critical mass and provides strategic guidance on where to allocate early marketing resources. To illustrate these mechanisms, we run agent-based simulations to illustrate the dynamics of three platform archetypes: marketplaces, service platforms, and ad-funded social networks. The simulations confirm that modest early advertising can reliably push the system past its critical threshold and that the optimal side to target depends on market size, the direction and strength of network effects, and competitive conditions within each side. We extend our model to incorporate competition between two platforms in which advertising can have spillovers (category versus brand advertising) and find that early differences in advertising levels across the platforms can tip the market towards one platform. We conclude with a discussion of managerial implications, giving actionable guidance for platform entrepreneurs to overcome the chicken-and-egg problem. |
| Keywords: | Two-sided markets; Advertising |
| JEL: | M37 O33 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21012 |
| By: | Gollier, Christian |
| Abstract: | Within the same sector, technologies yielding larger variable costs are more sensitive to disruptions during a recession. For this reason, assets lower in the merit order should be valued using a larger risk-adjusted discount rate. We characterize the efficient discount rates along the technological merit order in a standard CCAPM framework, and we link them to their option values. We apply our results to the electricity sector in France, showing that the CCAPM beta of fossil electricity is more than twice that of renewable or nuclear electricity. This fossil beta is increasing with the carbon price. We also propose a methodology to measure the value creation of different generation technologies in a given electricity mix by comparing their levelized costs and prices of electricity that take risks and intermittency into account. |
| Keywords: | Energy transition; CCAPM beta; option pricing; carbon price; cost-benefit analysis. |
| JEL: | G12 H43 Q48 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131967 |
| By: | José Luis Moraga-González (Vrije Universiteit Amsterdam); Evgenia Motchenkova (Vrije Universiteit Amsterdam); Long Hoàng (Vrije Universiteit Amsterdam) |
| Abstract: | This paper analyzes a monopoly platform’s joint pricing and investment decisions in the canonical two-sided market model of Armstrong (2006). Participants are heterogeneous in outside options and derive both stand-alone benefits from joining the platform, and network benefits from interacting with the opposite side. The platform sets participation prices on both sides and chooses investments that enhance user experience. We characterize monopoly distortions in participation, pricing, and investment relative to a social planner. Taking investment as given, the monopoly outcome features under-participation on both sides, yet participation prices need not transparently reflect these participation distortions. We show that at least one participation price is excessively high relative to the social optimum. Equivalently, while one side’s participation price may be inefficiently low, participation prices that are too low on both sides are impossible. When investment enhances network benefits, marginal returns are proportional to interaction volume; since the planner induces greater participation and therefore more interactions, the monopoly underinvests on both sides. By contrast, when investment enhances stand-alone benefits, marginal returns scale with own-side participation, so investment distortions may be asymmetric across sides, although overinvestment on both sides is ruled out. An application to app platforms, with user-side device pricing and developer-side commissions on in-app purchases, yields sharp predictions for device price, commission and investment distortions, as well as for the effects of commission caps on buyer and seller surplus. |
| Keywords: | two-sided platforms, pricing and investment inefficiency, app-stores, commission caps |
| JEL: | D42 L12 L14 L40 O30 |
| Date: | 2026–04–02 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20260015 |
| By: | Athanassiou, Phoebus; Czák-Ludwig, Stephanie; Di Gabriele, Nico |
| Abstract: | This paper examines the implications of the provision, in the European Union, of bank-like services, including payment services, by large non‑bank groups (i.e. groups that do not comprise entities with a banking licence), and evaluates policy options to address the emergence of so-called neo-conglomerates by recalibrating the regulatory perimeter. Drawing on five EU case studies (a messaging app white‑label arrangement, a complex multi‑partner “super‑app” model, a systemic payment group, a borderless financial technology firm (fintech) and a bank) – this paper illustrates how financial services may be delivered through digital unbundling and re-bundling, embedded distribution and white‑label partnerships. It maps the business models, licensing structures, fintech partnership chains and data frictions that may obscure group‑wide risks and complicate home‑host supervisory cooperation. The cases were included for illustrative purposes only, and implying no judgement at all on the soundness or governance of the firms concerned, nor on the effectiveness or adequacy of the actions taken by the relevant supervisory authorities. The paper also identifies potential “blind spots” in the regulatory frameworks applicable at the time of writing and misalignments in prudential, conduct and operational objectives. Building on guidance from standard‑setting bodies and international organisations on supervisory approaches to financial innovation, fintech and Big Tech, the paper identifies four priority areas for consideration, with a view to limit regulatory arbitrage and systemic interdependencies, while at the same time preserving innovation. [...] JEL Classification: G28, E58, K23, O33, F36, G32 |
| Keywords: | group-wide supervision, neo-conglomerates, regulatory arbitrage, regulatory perimeter, systemic risk |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbops:2026394 |
| By: | Nu Nu Win (Australian National University); Jonathan Hambur (Reserve Bank of Australia); David Hansell (Australian National University); Neil Crighton (Australian Competition and Consumer Commission) |
| Abstract: | Mergers and acquisitions (M&A) can have important implications for competition, prices and productivity. However, there is no comprehensive data on M&A activity in Australia, in part due to the absence of any formal requirement for merger parties to notify the regulator. The lack of data has limited scope for research on the impact of M&A activity. This paper takes an important first step in filling this gap by combining a number of administrative datasets and methodologies to build the first large-scale database of Australian M&A transactions, covering the past 20 years. We take three approaches: following clusters of employees moving between firms in a linked employer-employee database; firms moving between tax consolidated groups; and firms submitting takeovers and other notification forms to the Australian securities regulator. This yields a total of around 1, 500 mergers a year. Analysing this database we find that mid-sized, high profit but low productivity firms are most likely to be targets, as are firms with lots of patents, while large entities with trademarks are most likely to be acquirers. Moreover, we find evidence of serial acquisitions taking place, particularly in a number of high-profile industries. |
| Keywords: | competition; mergers |
| JEL: | L1 L4 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:rba:rbardp:rdp2026-04 |
| By: | Akyildirim, Erdinc; Gozgor, Giray; Ho, Thang; Wagner, Alexander F. |
| Abstract: | Mandatory disclosure is commonly intended to deter corporate misconduct by increasing transparency. We examine an alternative channel: disclosure may primarily change the likelihood that misconduct becomes detectable. Exploiting staggered introductions of ESG disclosure mandates across 53 countries, we study how regulation affects the observed incidence of misleading ESG communications identified by external monitors. Following mandate adoption, the number of detected incidents increases significantly. The rise is concentrated in areas with stronger scrutiny, among larger and more visible firms, in countries with higher institutional quality, and where media and civil society oversight are more effective. Moreover, capital markets react more negatively to incidents after disclosure becomes mandatory, particularly when claims are more verifiable. Together, the evidence indicates that disclosure reforms enhance the observability and credibility of ESG information, enabling outsiders to uncover misrepresentation rather than preventing it. Our findings highlight that transparency regulation can raise reported misconduct even as it improves accountability. |
| Keywords: | Greenwashing; Detection; Information environment; Regulatory enforcement |
| JEL: | G38 M41 G14 Q56 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21190 |
| By: | Divakaruni, Anantha; Tveiten, Hedda Rytter; Hvide, Hans K. |
| Abstract: | We provide the first large-scale quasi-experimental evidence on the effectiveness of tightening insider trading regulation. The SEC in 2022 eliminated several loopholes in the regulation of 10b5- 1 trading plans. Linking 158, 000 stock sales by company executives to plan adoption dates, we document substantial pre-reform abnormal returns for “loophole trades†including single-trade plans and sales shortly after plan adoption. Although the reform shut the loopholes, executives’ abnormal returns did not decline. Plausible mechanisms include self-policing before the reform and shifting opportunistic trading toward the rule’s margin afterward. Our results highlight limits of legal design aimed at reducing insider opportunism. |
| Keywords: | Insider trading |
| JEL: | G14 G18 K22 K42 G34 J33 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21199 |
| By: | Nicola Cetorelli; Shohini Kundu |
| Abstract: | When economists and policymakers talk about nonbank finance, they usually have in mind activity that takes place outside the banking system in institutions that compete with banks for the provision of financial intermediation services, such as fintech lenders, money market funds, private credit vehicles, insurers, and broker-dealers. A substantial share of U.S. nonbank financial activity, however, takes place inside bank holding companies (BHCs), conducted by nonbank subsidiaries that operate alongside regulated commercial banks under common ownership and integrated management. In this first post of our three-part series, we document the scale of nonbank activity within BHCs and describe the balance-sheet features that, as the remainder of the series shows, make these subsidiaries a vehicle for regulatory arbitrage. |
| Keywords: | banks; nonbanks; bank holding companies (BHCs); regulation; arbitrage; boundaries of the firm |
| JEL: | G21 G23 G28 G38 |
| Date: | 2026–07–15 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednls:103533 |