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on Regulation |
| By: | Andre, Peter; Heidhues, Paul; Kőszegi, Botond; Murooka, Takeshi |
| Abstract: | We develop a model of price competition with procrastinating consumers in which market discipline is supposed to arise from both the initial selection of providers and the possibility of switching providers. As in other theories, consumers may forego large gains by sticking with their initially chosen offer, so competition at the switching stage is weak. Unlike in other theories, consumers - who falsely expect to switch soon - may also fail to select the best starting offer, so competition at the initial stage is weak as well. This mechanism can translate temporary product differentiation into permanently high prices, greatly enhance the price effect of persistent differentiation, or generate high markups even with perfect substitutes. Reflecting the same mechanism, sign-up deals do not serve their classically hypothesized role of returning ex-post profits to consumers, but instead often exacerbate the failure of price competition. We complement our analysis with a tailored survey of consumers, confirming the logic of procrastination underlying our model. Consumer procrastination thus emerges as a novel source of competition failure that applies where other theories do not, helping to explain high average prices in many markets with switching costs. |
| Keywords: | procrastination, price competition, competition failure, switching, subscription markets, present bias |
| JEL: | L11 L13 D11 D41 D43 D91 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safewp:340830 |
| By: | Ernst Fehr; Keyu Wu |
| Abstract: | In many markets, firms increase product complexity through add-on features, which can make the evaluation and comparison of products difficult and thus increase buyers' search cost. Does this product obfuscation limit buyers' search behavior and induce them to buy overpriced products? And if so, why does competition not eliminate obfuscated products? We show - based on competitive experimental markets - that if add-ons merely complicate the products without generating additional surplus, obfuscation via product complexity indeed becomes fragile because buyers display an aversion against complex products. However, in the presence of surplus-enhancing add-ons, obfuscation via product complexity becomes a stable market feature that severely constrains the depth and breadth of buyers' search. Sellers anticipate and take advantage of this by making unfavorable product features less visible and selling add-ons persistently above marginal cost. Even the most favorably priced product in the market is offered above marginal cost, and buyers persistently fail to find the best product such that inferior products have a good chance of being bought, leading to enduring price dispersion. Surplus-enhancing obfuscation opportunities are the causal driver of persistent profits and price dispersion because if we remove these opportunities, overall prices quickly converge to marginal cost. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2559 |
| By: | Hanming Fang; Soo Jin Kim |
| Abstract: | We analyze the effects of data neutrality regulations on downstream market competition, the incentive of the platform to produce data, and consumer welfare. In our framework, data neutrality requires that firms seeking access to the platform’s data be treated equally, irrespective of whether they are affiliated with the platform. We consider two forms of regulation. Under weak data neutrality, the platform must provide the same amount of data to affiliated and unaffiliated sellers; under strong data neutrality, it must also charge the same price. We show that weak data neutrality can be largely ineffective, as the platform may restore exclusion through discriminatory pricing. Strong data neutrality is more consequential, but it does not necessarily raise welfare. Although it broadens access and intensifies downstream competition, it also reduces the incentive of the platform to refine and produce data. Consequently, data neutrality can reduce the equilibrium amount of data available in the market, and this data-reduction effect can dominate its benefits, which enhance competition. These findings suggest that regulating access to platform data requires balancing fair competition against the incentive to generate valuable data inputs. |
| JEL: | D4 L1 L4 L5 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35159 |
| By: | María del Carmen Dircio Palacios Macedo (Department of Economics, Universitat Jaume I, Castellón, Spain); Paula Cruz-García (Department of Economic Analysis, Universitat de Valencia, Spain); Fausto Hernández-Trillo (Center for Research and Teaching in Economics (CIDE), Mexico); Emili Tortosa-Ausina (IVIE, Valencia and IIDL and Department of Economics, Universitat Jaume I, Castellón, Spain) |
| Abstract: | Traditional competition analysis typically relates the exercise of market power in an industry to structural characteristics of a market, such as concentration, barriers to entry, and factor and demand conditions. However, this analysis is incomplete if we do not consider the effects of contact among firms across markets. The objective of this paper is to empirically examine the effect of multimarket contact and of intensity of multimarket contact on bank competition in Mexico for the period of 2011 to 2023, using information at the bank and municipal market level. The Mexican case provides a valuable context for analyzing the relationship between market power and multimarket contacts, given the several regulatory reforms that have occurred in recent years and that have eliminated entry barriers to new competitors, as well as the trend toward consolidation of the banking sector. The main results suggest a positive relationship between market power and the quantity and intensity of multimarket contacts. In this context, the hypothesis of "mutual forbearance" in the Mexican banking sector could not be rejected. These findings have relevant implications for competition policy, suggesting that regulators should account multimarket contact structures when assessing competitive dynamics in the banking sector. |
| Keywords: | bank competition, multimarket contact, mutual forbearance, Mexico |
| JEL: | G21 C33 L40 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:jau:wpaper:2026/07 |
| By: | Harold Houba (Vrije Universiteit Amsterdam); Evgenia Motchenkova (Vrije Universiteit Amsterdam) |
| Abstract: | Advances in data collection enable firms to use consumer information for personalized pricing. In Clavorà Braulin's (2023) symmetric two-dimensional model, this reduces prices and profits, while partial privacy yields the highest profits. Extending the model to asymmetric firms and vertically differentiated products, we show that these results are not robust under sizable asymmetries. Partial privacy may harm both firm and industry profits, while no privacy can outperform other regimes. Consumer welfare also depends on asymmetry: when large, partial privacy maximizes consumer surplus. These findings challenge prior literature and inform the design of privacy protection regulations. |
| Keywords: | Personalized Prices, Price Discrimination, Consumer Information, Privacy |
| JEL: | D4 D18 L13 |
| Date: | 2025–12–11 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20250072 |
| By: | Mark Glick (University of Utah); Gabriel A. Lozada (University of Utah); Darren Bush (University of Houston Law School) |
| Abstract: | We compare the Consumer Welfare Standard (CWS) and the Protect Competition Standard (PCS) in antitrust. While the two standards are often viewed as mutually exclusive alternatives, there is a larger overlap between the two standards than is usually acknowledged. We first delineate each, recount their respective origins and identify the main supporters of each view. We then compare the two standards across several dimensions: we analyze the practical differences between the two standards in merger and monopolization cases; analyze their fidelity to Congressional intent and to Supreme Court precedent; and discuss how the two standards are connected to normative economic theory. Finally, we discuss the social welfare implications of the differing goals of the two standards. It is our hope that this piece may assist policy makers, courts, and antitrust practitioners better understand the two standards and how they can be more effectively and conscientiously applied. |
| Keywords: | Antitrust Standards, Consumer Welfare Standard, Protect Competition Standard, New Brandeis School, Chicago Antitrust. |
| JEL: | K21 L41 |
| Date: | 2026–04–02 |
| URL: | https://d.repec.org/n?u=RePEc:thk:wpaper:inetwp248 |
| By: | Gerda Falkner |
| Abstract: | Is the EU 'distinctly rights-driven' (Bradford 2023), as suggested in recent debates about so-called digital empires opposing the EU to a systematically market-driven US and state-driven China? This article offers an in-depth study of a crucial EU digital policy initiative, the much-acclaimed Digital Services Act. Based on discourse/output analysis it uncovers that the EU hardly performs according to the ideal-type’s expectation. When making choices between stronger or weaker regulation of digital platforms as debated before the Act’s adoption, the platforms’ preferences were consistently and quite strongly preferred over more citizens’ rights-oriented policy options. Recognising and admitting this seems urgent in order to resist attempts from in- and outside the EU to question even the timid regulatory steps the DSA has brought. |
| Keywords: | political science; digital services act; eu policy choices; platforms; european union |
| Date: | 2026–03–13 |
| URL: | https://d.repec.org/n?u=RePEc:erp:eifxxx:p0053 |
| By: | Choi, Jay Pil; Jeon, Doh-Shin; Menicucci, Domenico |
| Abstract: | This paper examines how competition affects the timing of AI deployment under safety risk. We show that competition can generate two distortions relative to joint–profit maximization: a race to the bottom and insufficient entry. A race to the bottom arises when first-mover advantages induce premature deployment and is more likely as technological correlation (homogenization) increases. Conversely, firms may delay entry to free-ride on rivals’ experimentation, leading to insufficient entry. Even when private incentives under joint–profit maximization are aligned with social incentives, competition can still induce socially inefficient early deployment. We discuss policy implications for improving deployment timing. |
| Keywords: | AI, Competition, Optimal Deployment Time, Race to the Bottom. |
| JEL: | D4 L1 L5 |
| Date: | 2026–05–07 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131711 |
| By: | Bradley Setzler |
| Abstract: | Existing structural analyses of the harmful effects of market consolidation focus on either product or labor markets in isolation, ignoring that product market competitors often compete for workers as well. This paper develops a unified framework for merger evaluation, finding that firms' simultaneous exercise of oligopoly power in the product market and oligopsony power in the labor market amplifies the harm from mergers to both consumers and workers. The model also demonstrates how merger-induced gains in labor market power incentivize firms to reduce product quality, highlighting an additional channel for consumer harm. The model's predictions are tested and quantified in the context of the recent consolidation of the US hospital industry. Linking panel data from several sources on all US hospitals from 1996-2022, a difference-in-differences design is estimated for nearly 150 high-concentration within-market mergers. Hospital mergers significantly reduce patient volume, increase prices, reduce employment, lower wages, and deteriorate quality of care, resulting in higher patient mortality. After recovering the structural parameters, the estimated model replicates observed merger impacts. Counterfactual exercises reveal that ignoring increased labor (product) concentration would lead one to under-predict the harm of mergers to consumers (workers). |
| Keywords: | labor market power, endogenous quality, mergers and antitrust, hospital industry |
| JEL: | J42 L41 I11 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2561 |
| By: | My Thi Diem Phan; Trung Tuyen Truong; Hoai Phuong Ha; Dat Thanh Nguyen |
| Abstract: | Norway's electricity market is heavily dominated by hydropower, but the 2021--2022 energy crisis and stronger integration with Continental Europe have fundamentally altered price formation, reducing the reliability of forecasting models calibrated on historical data. Despite the critical need for updated models, a unified benchmark evaluating feature contributions across all structurally diverse Norwegian bidding zones remains lacking. Here we present a comprehensive evaluation of electricity price forecasting across all five Norwegian Nord Pool bidding zones. We constructed a multimodal hourly dataset spanning 2019--2025 and evaluated eight forecasting model families including LightGBM, ARX, and advanced deep learning architectures using a strictly causal test set. We implemented robust rolling-origin backtesting, leave-one-group-out feature ablation, and conditional regime analysis to dissect model performance and feature utility. Our results show that LightGBM achieves the best performance in every zone with MAE ranging from 1.64 to 5.74~EUR/MWh, while the ridge ARX model remains a highly competitive linear benchmark in northern zones. Feature ablation reveals that models relying solely on lagged prices and calendar variables achieve high accuracy and often match or exceed full multimodal integration. However, conditional regime analysis demonstrates that external features like reservoir levels and gas prices remain crucial to stratify forecast errors, which consistently increase under stressed market regimes. This highlights the practical value of model interpretability and regime awareness for decision makers facing structural changes in market dynamics. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.26634 |
| By: | Florian Heine (Vrije Universiteit Amsterdam); Jasper Sluijs (Utrecht University) |
| Abstract: | State ownership is increasingly positioned as a policy tool for governments towards strategic autonomy and sustainability transition. A possible side effect is the creation or strengthening of dominant state-owned enterprises (SOEs), which theory suggests may engage in exclusionary (predatory) pricing. Disagreement remains, however, over the price thresholds for which exclusionary pricing should be unlawful. We run a laboratory duopoly with a dominant incumbent and a non-dominant entrant across three treatments: a private baseline market; a mixed market with an inefficient SOE incumbent (Mixed–Efficiency); and a mixed market where the SOE incumbent pursues social welfare (Mixed–Social). We measure exclusionary pricing below variable cost, below own break-even level, and above the competitor’s break-even level. We find pervasive exclusionary pricing followed by the competitor's exit in both private and mixed markets. Moreover, after exclusion monopoly pricing by the remaining competitor lowers consumer surplus and total surplus. This finding is remarkable given the professed rarity of exclusionary pricing in previous experimental research. Above break-even exclusion appears in Mixed–Social; below-cost exclusion occurs in all treatments. We observe mirrored outcomes across mixed markets: in Mixed–Efficiency the more efficient private entrant withstands exclusion and eventually displaces the SOE, whereas in Mixed–Social the SOE’s social welfare objective function supports more aggressive pricing that prompts entrant exit. These results argue for more vigilant monitoring of SOEs’ competition-law compliance and for entry-safeguarding policies when creating or strengthening dominant SOEs. |
| Keywords: | Exclusionary Pricing, Predatory Pricing, State-Owned Enterprises, Experiment, Mixed Markets |
| JEL: | C91 L13 L32 |
| Date: | 2026–04–23 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20260017 |
| By: | Kim, Pyung (University of California, Santa Barbara) |
| Abstract: | This study exploits South Korea's unique dual-policy framework to evaluate the comparative effects of carbon pricing and command-and-control regulation on firm-level environmental performance. Using a difference-in-differences design with firm-level panel data from 2011 to 2022, I compare outcomes between firms regulated under a command-and-control program (Target Management System, TMS) and those subject to a market-based carbon pricing mechanism (Emissions Trading Scheme, ETS). The results show that ETS-regulated firms reduced energy use by approximately 5.8% to 8.8% and carbon emissions by 7.3% to 8.5% across model specifications. However, the effects on carbon intensity were inconsistent. Event-study analyses suggest that these differing effects are driven by the heterogeneous timing of firm responses: immediate but short-lived reductions in energy use, persistent declines in carbon emissions, and gradual improvements in emissions efficiency. Phase-specific estimates further indicate that more market-oriented ETS phases were associated with stronger reductions in carbon emissions and intensity, underscoring the role of incentive-based policy design in enhancing environmental outcomes. |
| Date: | 2026–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:ac4wb_v1 |
| By: | Krantz, Sebastian; Srinivasan, Sharada; Begazo, Tania |
| Abstract: | This paper studies the complementarities between energy and digital infrastructure in developing countries. Using geospatial data on power transmission lines, power plants, cell towers, and fiber-optic nodes matched to settlement-level wealth indicators across sub-Saharan Africa, and detailed subnational data from Liberia, we estimate the joint effects of proximity to energy and digital infrastructure on local economic development. We test whether the marginal returns to one infrastructure type are increasing in the availability of the other. Our results confirm significant positive complementarity effects. Across sub-Saharan Africa, both digital and power infrastructure proximity are strongly associated with higher settlement wealth, with stable positive interaction coefficients (semi-elasticities) of approximately 1.5 International Wealth Index points across all control specifications, indicating that marginal returns to each infrastructure type are substantially amplified by the presence of the other. These findings are robust across linear fixed-effects regressions and nonparametric Local-Linear Causal Forest (LLCF) estimates; the LLCF further reveals that proximity to the complementary infrastructure type is the single strongest predictor of treatment effect heterogeneity, a direct nonparametric signature of complementarity. The quality of digital connectivity as measured by internet speed is an important mediator. In Liberia, energy consumption per connection also interacts positively with cell tower proximity, confirming complementarity at the intensive margin of energy usage. Our findings support coordinated, spatially bundled investment in both infrastructure types as a development policy priority. |
| Keywords: | Infrastructure complementarity, electrification, digital connectivity, economic development, Africa |
| JEL: | O18 O13 L96 H54 O55 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkwp:340836 |
| By: | Palast, Gregory.; Oppenheim, Jerrold.; MacGregor, Theo. |
| Keywords: | privatization, social implication |
| URL: | https://d.repec.org/n?u=RePEc:ilo:ilowps:993848033402676 |
| By: | Libertucci, Massimo; Dzezulskis, Skirmantas; McPhilemy, Samuel |
| Abstract: | This paper describes and evaluates the European Union (EU) banking sector capital framework, focusing on how the international standards set by the Basel Committee on Banking Supervision have been implemented within the EU. Using granular supervisory data for significant institutions under the Single Supervisory Mechanism (SSM), we quantify the capital impact of EU-specific regulatory choices, supervisory measures and macroprudential policies. We show that most EU capital requirements stem from Basel standards, which encompass both prescriptive “Pillar 1” components and elements that are expected to be designed and calibrated at the jurisdictional level. The paper describes the evolution of capital ratios and requirements since the inception of the SSM and discusses the relationship between changes in capital levels and indicators of banking sector performance. To provide a comparative perspective, a model-based counterfactual exercise compares capital requirements of EU banks with those that would arise if EU banks were subject to the main prudential regulations that currently apply in the United States, which vary depending on the size of the bank. The results show that for the largest EU banks, the current US rules would entail stricter requirements, whereas mid-sized EU banks would be subject to less stringent requirements. Our findings show that EU capital requirements are broadly comparable to those in other jurisdictions and are largely in line with international standards. When assessing broader indicators of bank performance, we highlight the importance of considering not only private costs and benefits, but also intended effects and broader societal objectives. [...] JEL Classification: G21, G28, F36 |
| Keywords: | bank capital regulation, banking supervision, Basel III, European Union banking sector, supervisory policy |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbops:2026387 |
| By: | Ram Sewak Dubey; Maysam Rabbani; Rodrigo Pinto |
| Abstract: | We evaluate subsidy mechanisms in the FCC's Rural Health Care program using administrative data covering the full population of participants. The original price-cap mechanism removes cost-containment incentives for health care providers. An ad valorem mechanism introduced in 2014 addresses this flaw by making providers bear 35% of costs. However, allowing consortium applications creates a new distortion: cross-subsidization from eligible to ineligible members. We develop theoretical models predicting these effects and estimate treatment effects using an extension of the two-way fixed effects framework with continuous treatments. We find that the ad valorem mechanism substantially reduces program spending relative to the price cap, while the consortium option significantly inflates it. Enforcement records and an inverted U-shaped relationship between cross-subsidization intensity and ineligible member share corroborate the findings. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.22895 |
| By: | Christine Tapler |
| Abstract: | This master’s thesis analyzes how the European Union is perceived by the United States in the context of digital policy and how the United States respond to it. The analysis covers the first Trump administration, the Biden administration, and the initial months of the second Trump presidency. Through a qualitative content analysis of official US government documents and media reports, the study finds that, throughout these administrations, the European Union is predominantly regarded as market-oriented rather than norm-driven. While both Trump administrations adopted a largely negative tone, portraying it as protectionist or obstructive, the Biden administration adopted a more constructive approach, emphasizing shared economic objectives and democratic principles. Clear patterns emerged in US responses: the first Trump administration was mainly reactive and rhetorical; the Biden administration focused on partnership; and the early second Trump administration intensified confrontation through sharper rhetoric and concrete countermeasures. |
| Keywords: | political science; digital policy; united states; european union |
| Date: | 2026–04–28 |
| URL: | https://d.repec.org/n?u=RePEc:erp:eifxxx:p0055 |