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on Regulation |
| By: | Harim Kim (University of Connecticut) |
| Abstract: | Energy transition from coal to gas is reshaping the power sector to rely more on gas generation, which is cleaner but has more variable input costs. Using counterfactual analysis, I study the competitive effects of this transition, considering several transition paths that differ in the types of firms involved in retiring coal plants and investing in gas plants. I show that the variable nature of the marginal cost of gas generation creates an environment in which market power could increase after the transition. However, the transition’s impact on competition depends on the characteristics of the firms investing in new gas generation; the adverse impact is mitigated under a well-planned transition that leads to a more competitive industry structure. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:uct:uconnp:2025-08 |
| By: | Shota Ichihashi (Department of Economics, Queen's University, Kingston, ON, Canada) |
| Abstract: | I study a model of platform-enabled algorithmic pricing. Sellers offer identical products, to which consumers have heterogeneous values. Sellers can post a uniform price outside the platform or join the platform and delegate their pricing decision to the platform's algorithm. I show that the platform can offer a pricing algorithm to attract sellers, stifle off-platform competition, and earn a positive profit. Prohibiting the platform from using consumer data for its algorithm increases consumer surplus but decreases total surplus. A transparency requirement, which mandates the platform to share its data and algorithms with sellers, restores the first-best outcome for consumers. |
| Keywords: | price discrimination, algorithmic pricing, competition, collusion, algorithm |
| JEL: | D43 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:2503 |
| By: | Muxin Li (IGIER, Bocconi University, Milan, Italy); Ksenia Shakhgildyan (Economics Department and IGIER, Bocconi University, Milan, Italy) |
| Abstract: | We study the competitive effects of the 2018 Apple–Amazon brand-gating agreement, which restricted sales of Apple products on Amazon to a small set of authorized resellers while granting Amazon privileged access to Apple’s portfolio. Using cross-country panel data and dynamic difference-in-difference and triple-differences designs, we document three main findings: (i) a sharp decline in seller participation and product variety, (ii) a substantial increase in Amazon’s Buy Box share and prices, and (iii) no significant improvement in product quality or evidence of counterfeit removal. The results suggest that the agreement reduced intra-brand competition and consumer welfare while reinforcing Amazon’s gatekeeping position, raising concerns for antitrust enforcement and digital platform regulation. |
| Keywords: | Digital Platforms, Brand Gating, Vertical Restraints, Exclusive Dealing. |
| JEL: | L42 D22 L51 L1 L2 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:2506 |
| By: | Lasio Laura (European Commission, Joint Research Centre, Ispra, Italy); Jack (Peiyao) Ma (University of Oxford, Oxford, UK); Andrea Mantovani (TBS Business School, Toulouse, France); Carlo Reggiani (European Commission JRC, Seville, Spain and Department of Economics, University of Manchester, Manchester, UK); Néstor Duch-Brown (European Commission, Joint Research Centre, Seville, Spain) |
| Abstract: | This paper examines the impact of online travel agencies on hotel pricing strategies, consumer behavior, and market dynamics within the hospitality sector. Using channel-level proprietary data from major hotel chains across eight European countries, we adopt a structural approach to estimate demand and supply, and simulate policy counterfactuals. Our findings reveal that online travel agencies expand demand without exerting significant competitive pressure on market prices, due to limited substitutability between sales channels. We assess potential regulatory interventions. A fee cap would benefit hotels in the sample and consumers, while hurting outside competitors. Provisions that facilitate direct communication between hotels and customers, in the spirit of the disintermediation allowed by the DMA, would be successful in shifting some sales from the platform to the hotel website while reducing margins overall. |
| Keywords: | Online Travel Agents, Platform Regulation, Hotel Pricing |
| JEL: | D40 K20 K21 L10 L50 L86 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:2507 |
| By: | Ivan Rendo (Toulouse School of Economics, University of Toulouse Capitole) |
| Abstract: | Unregulated online platforms often host extreme and socially undesirable content. As mainstream platforms tighten moderation, some users shift to unmoderated alternatives, leading to a leakage of extreme content. I develop a duopoly model where an ad-funded mainstream platform competes with an unmoderated fringe. Heterogeneous users choose platforms and create content reflecting their views. The mainstream platform trades off attracting fringe users with making content safer for advertisers. With strong network effects, the socially optimal moderation is more lenient than the profit-maximizing one. Therefore, regulation mandating stricter moderation may backfire by increasing overall content unsafety. |
| Keywords: | content moderation, platforms, social media, user-generated content. |
| JEL: | L86 L82 L51 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:2502 |
| By: | Jacopo Gambato; Bernhard Ganglmair; Julia Krämer |
| Abstract: | In a model of asymmetric regulation, a firm can comply with two regulatory targets, and a regulator can audit the firm for compliance. Inspection by the regulator is imperfect, and it assesses the firm’s compliance with the targets with different success probabilities. The firm fully complies only if compliance costs are low. Otherwise, the firm always prioritizes the requirement that is easier to enforce. Expanding regulatory capacity positively affects compliance with the easy-to-enforce target; however, a higher capacity can harm compliance with the hard-to-enforce target. |
| Keywords: | agency resources, asymmetric enforcement, compliance, multi-tasking, regulation |
| JEL: | H32 K20 L51 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_706 |
| By: | Ashvin Gandhi; YoungJun Song; Prabhava Upadrashta |
| Abstract: | This paper studies how product market competition shapes the impact of private equity (PE) acquisitions on consumers. We examine nursing home buyouts and observe that PE-owned facilities exhibit greater competitive sensitivity: competing more aggressively when competitive incentives are strong and exploiting market power more aggressively when competitive incentives are weak. We find that PE-owned facilities are more sensitive to local market competition—even when comparing effects only across facilities purchased as part of the same acquisition—and are more responsive to a pro-competitive policy helping consumers compare facilities. This suggests that the competitive sensitivity of acquirers and the concentration of markets where acquisitions occur are important factors contributing to the effects of a merger, as well as that pro-competitive polices can reshape the effects of PE ownership on consumers. |
| JEL: | G3 G32 G34 G38 I1 I11 I18 L1 L11 L15 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34306 |
| By: | Arnold-Keifer, Sonja; Barkhausen, Robin; Berger, Frederic; Hillenbrand, Thomas; Liesenhoff, Fabian; Niederste-Hollenberg, Jutta; Sánchez González, Rodrigo |
| Abstract: | This report investigates relationships between the water and electricity sectors, emphasizing their shared challenges in the context of climate change and urbanization. As both sectors are crucial for modern society, their evolution towards sustainability is increasingly vital. The report begins with a historical overview of each sector, illustrating how the electricity sector has pioneered innovative approaches that can inform the water sector's transition. The analysis identifies three key concepts - smart meters and dynamic pricing schemes, legal instruments such as cap-and-trade schemes, and extended sector coupling - that have proven effective in the electricity sector and evaluates their potential applicability to the water sector. Smart meters, which enable real-time monitoring and efficient demand management, could enhance water usage efficiency, while dynamic pricing models could incentivize conservation behaviours. Additionally, the exploration of legal instruments like cap-and-trade schemes may provide new frameworks for managing water resources more effectively. The report also discusses the potential for extended sector coupling, where the integration of water and energy systems can optimize resource use and improve resilience. This approach highlights the importance of viewing water not just as a utility, but as a resource that can contribute to energy management and sustainability. Despite the opportunities for innovation, the report acknowledges the challenges faced by the water sector, including its regulatory constraints and the fragmented nature of its market. These factors contribute to a slower adoption of new technologies compared to the electricity sector. However, the potential benefits of adapting successful strategies from the electricity sector are significant, with implications for resource management, regulatory compliance, and system integration. In conclusion, the report advocates for further research and pilot projects to explore the feasibility and impact of these concepts within the water sector. By leveraging lessons learned from the electricity sector, stakeholders can enhance the resilience, efficiency, and sustainability of water systems, ultimately contributing to a more sustainable future for both sectors. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:fisisi:328002 |
| By: | Markoulakis, Andreas; Nduka, Eleanya |
| Abstract: | We investigate how different facets of energy security, e.g., energy vulnerability (domestic energy supply, import dependency, technology development on energy sources), energy affordability (higher prices) and energy reliability (power cuts frequency) impact the support for different sources of renewable energy — offshore and onshore wind power, biomass energy and solar power. Our results show that there is a common pattern for energy vulnerability since as concerns decline, the probability of support for each renewable source also declines, but the rate of decline is larger for biomass and onshore wind. Energy imports dependency and affordability reveal a distinction between the wind power sources and the other sources since both offshore and onshore wind power are affected less by energy imports concerns or affordability concerns. Energy reliability is the only facet that leads to a rise in the probability of support for offshore wind. The above results are critical for policy appraisal purposes to inform policymakers on the differences between energy security facets and renewable energy sources when designing future energy policies towards net zero strategies. |
| Keywords: | Energy security ; renewable energy ; offshore wind ; onshore wind ; solar ; biomass. JEL Classification: Q20 ; Q40 ; Q42 ; Q48 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1583 |
| By: | Benito Arruñada |
| Abstract: | This article suggests that the partial but strong incentives that characterized privately valuable public services in the classical 'liberal' state might be more effective than the comprehensive but weak incentives introduced by the 'internal markets' created when reforming the welfare state. The article compares three organizational forms: (1) the bureaucratic expense center used to provide privately valuable services such as healthcare through the organizations created by the welfare state; (2) the internal markets introduced to reform them; and (3) the hybrid solutions that have been used by the liberal state since the 19th century to provide such privately valuable services. This comparison suggests that market forces may play a better role in organizing public services when they are limited to a few variables, which makes stronger incentives possible and, at the same time, reduces the need for extensive planning and supervisory staff. |
| Keywords: | internal markets, competition, public services, bureaucracy, expense centers, welfare, incentives, user fees, user choice |
| JEL: | H11 H42 H51 H52 K23 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:upf:upfgen:1899 |
| By: | Nicola Meccheri |
| Abstract: | In an international duopoly involving two countries (markets) and two ports, this paper examines how unilateral and passive port cross-ownership interacts with the degree of port privatization and the presence of tariff protection in shaping port performance and welfare outcomes. Port cross-ownership affects the usage fees set by ports in the two countries in different ways but consistently reduces their overall level. Under free trade, this fosters international trade and intensifies product market competition, thereby increasing consumer surplus while reducing firm profits. However, domestic welfare rises only in the country whose port holds a stake in the foreign port. Under tariff protection, by contrast, port cross-ownership induces countries to differentiate their tariff policies, with the country whose port holds a stake in the other setting a lower tariff. As a result, firm profits increase substantially in the other country, while consumers are not excessively disadvantaged. Depending on the degree of privatization, cross-ownership can enhance welfare in both countries, and, counterintuitively, tariff protection may improve welfare only for the country with a foreign port stake. |
| Keywords: | port cross-ownership, privatization, tariff protection, international duopoly |
| JEL: | F13 L13 L33 R48 |
| Date: | 2025–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:pie:dsedps:2025/325 |
| By: | Tin Cheuk Leung (Department of Economics, Wake Forest University, Winston-Salem, NC, USA); Shi Qi (Department of Economics, College of William and Mary University, Williamsburg, VA, USA); Koleman Strumpf (Department of Economics, Wake Forest University, Winston-Salem, NC, USA) |
| Abstract: | Self-preferencing by dominant digital platforms has become a focal point for antitrust scrutiny, yet little empirical work has examined this behavior in the context of video streaming. This paper provides the first systematic analysis of self-preferencing on a subscription-based streaming platform, focusing on Netflix. We assemble a novel dataset that combines a weekly panel of Netflix’s U.S. catalog from 2016 to 2025, official Top 10 rankings since 2021, Wikipedia page views as an external proxy for popularity, and device-level streaming data from tens of millions of U.S. smart TVs. We begin by showing that the exit of licensed series significantly increases the likelihood of subscriber churn, whereas the effect of movie exits is small and even slightly negative. This underscores the risks of dependence on non-original serialized content and motivates Netflix’s incentives to promote Originals. We then document that Netflix Originals are substantially more likely to appear in the Top 10 rankings than non-originals, conditional on popularity and availability. The magnitude of this self-preferencing effect is comparable to the influence of popularity itself, especially for serialized content. Finally, using a difference-in-differences design with matched titles, we show that Top 10 inclusion has a significant causal impact on subsequent viewer engagement, with stronger effects for Originals. Taken together, our findings suggest that Netflix leverages interface prominence to steer attention toward its proprietary content while insulating itself from the risks associated with expiring licenses, raising important implications for content competition and platform governance in the streaming era. |
| Keywords: | Self-Preferencing; Netflix; Digital Platforms; Platform Bias |
| JEL: | D22 K21 L40 L82 M21 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:2508 |
| By: | Yousef Adeli Sadabad; Mohammad Reza Hesamzadeh; Gyorgy Dan; Matin Bagherpour; Darryl R. Biggar |
| Abstract: | The System Price (SP) of the Nordic electricity market serves as a key reference for financial hedge contracts such as Electricity Price Area Differentials (EPADs) and other risk management instruments. Therefore, the identification of drivers and the accurate forecasting of SP are essential for market participants to design effective hedging strategies. This paper develops a systematic framework that combines interpretable drivers analysis with robust forecasting methods. It proposes an interpretable feature engineering algorithm to identify the main drivers of the Nordic SP based on a novel combination of K-means clustering, Multiple Seasonal-Trend Decomposition (MSTD), and Seasonal Autoregressive Integrated Moving Average (SARIMA) model. Then, it applies principal component analysis (PCA) to the identified data matrix, which is adapted to the downstream task of price forecasting to mitigate the issue of imperfect multicollinearity in the data. Finally, we propose a multi-forecast selection-shrinkage algorithm for Nordic SP forecasting, which selects a subset of complementary forecast models based on their bias-variance tradeoff at the ensemble level and then computes the optimal weights for the retained forecast models to minimize the error variance of the combined forecast. Using historical data from the Nordic electricity market, we demonstrate that the proposed approach outperforms individual input models uniformly, robustly, and significantly, while maintaining a comparable computational cost. Notably, our systematic framework produces superior results using simple input models, outperforming the state-of-the-art Temporal Fusion Transformer (TFT). Furthermore, we show that our approach also exceeds the performance of several well-established practical forecast combination methods. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.18887 |
| By: | Joseph E. Stiglitz; Maxim Ventura-Bolet |
| Abstract: | We develop a tractable model to study how AI and digital platforms impact the information ecosystem. News producers — who create truthful or untruthful content that becomes a public good or bad — earn revenue from consumer visits. Consumers search for information and differ in their ability to distinguish truthful from untruthful information. AI and digital platforms influence the ecosystem by: improving the efficiency of processing and transmission of information, endangering the producer business model, changing the relative cost of producing misinformation and altering the ability of consumers to screen quality. We find that in the absence of adequate regulation (accountability, content moderation, and intellectual property protection) the quality of the information ecosystem may decline, both because the equilibrium quantity of truthful information declines and the share of misinformation increases; and polarization may intensify. While some of these problems are already evident with digital platforms, AI may have different, and overall more adverse, impacts. |
| JEL: | D8 D83 O33 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34318 |