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on Regulation |
| By: | Cave, Martin |
| Abstract: | This paper gives a short overview of the impact which digitalisation has had over recent decades on selected cases of economic regulation, and of the changes it has brought and might bring, noting the need for the continuous adaptation of regulation in the public interest. It begins with an account of the role of digitalisation in the two most widely discussed sectors in recent decades: first, how incentive regulation using price controls in traditional utility sectors has recently incorporated piecemeal elements of digitalisation within a broadly unchanged framework; second, in the case of the more recently emerged digital platform sector, how a major fissure is observed between the EU's severe regulation of the largest platforms under the 2002 Digital Markets and Digital Services Acts, and USA's continuing reliance on competition law. It then considers the ongoing economy-wide pervasive spread of digitalisation via the use of Artificial Intelligence, the likelihood of its competitive supply and the nature of the case for its economic regulation. Finally, we note the likely use of AI in the very process of regulating both the two above-noted and other sectors and markets, and the implications of a possible ‘arms race’ between regulators and regulated firms in its use. |
| Keywords: | AI in the regulatory process; anti-monopoly regulation; digitalisation; regulation of platforms; role of artificial intelligence |
| JEL: | L51 L86 L43 |
| Date: | 2026–06–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:138010 |
| By: | Dunkle Werner, Karl; Jarvis, Stephen |
| Abstract: | Utility companies recover their capital costs through regulator-approved rates of return. Using a comprehensive database of utility rate cases, we find a significant premium for regulated returns on equity relative to several capital cost benchmarks. We show that firms decide strategically when to initiate new rate cases, such that regulated returns respond more quickly to increases in underlying capital cost benchmarks than to decreases. Higher regulated returns incentivize utilities to own more capital: a one percentage point rise in return on equity corresponds to an increase in capital assets of 2%–4%. Overall we find excess costs to U.S. consumers averaging $7 billion per year. |
| Keywords: | utility; rate of return; regulation; electricity; natural gas; capital investment |
| JEL: | Q40 L51 L94 L95 |
| Date: | 2026–07–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:138375 |
| By: | Abrell, Jan; Zaklan, Aleksandar |
| Abstract: | We analyze the extent to which marginal producers in four European day-ahead electricity markets pass through short-run marginal cost, and its components fuel and carbon cost, to wholesale electricity prices. Parametric estimates show that pass-through is complete in France and Germany, and incomplete in the Iberian and Dutch markets, mainly driven by fuel cost. For carbon cost, pass-through is more heterogeneous, with the evidence suggesting over-shifting in Germany and the Netherlands. Semi-parametric estimates show that pass-through increases with demand. In sum, we show that despite being located in interconnected power markets, electricity consumers receive different fuel and carbon price signals. |
| JEL: | Q54 Q58 L94 Q41 |
| Date: | 2026–05–07 |
| URL: | https://d.repec.org/n?u=RePEc:bsl:wpaper:2026/04 |
| By: | Sirui Li; Jing Su |
| Abstract: | This paper studies how consumers’ concerns about fairness interact with third-degreeprice discrimination of a two-sided monopoly platform. We show that the presenceof fairness concerns creates a negative demand externality from low-willingness-to-payto high-willingness-to-pay consumers, that is, charging less to the former reduces thelatter’s demand. With this novel externality, price-discriminating among consumerstriggers fairness concerns, which lowers consumer-side demand and ultimately restrictsthe platform’s profit exploitation from the seller side. Hence, a platform whose profitpotential from sellers is larger would take consumers’ fairness concerns more seriouslyand price-discriminate less. The results can explain why some major online platforms—despite the huge profit potential of targeting prices—shy away from price discriminationin response to consumers’ fairness concerns, while others care little about unfairnesscomplaints when price-discriminating among consumers. |
| Keywords: | fairness concerns; price descrimination; two-sided markets |
| JEL: | D42 D91 L11 L86 |
| Date: | 2026–05–11 |
| URL: | https://d.repec.org/n?u=RePEc:eca:wpaper:2013/406859 |
| By: | Robert D. Metcalfe; Alexandre B. Sollaci; Chad Syverson |
| Abstract: | Mergers are commonly evaluated by weighing their expected market power effects against any efficiency gains they create. The larger the market power effect of a proposed merger, the larger must be any efficiencies for it to raise social welfare. We show selection into merger proposal distorts the observed relationship between market power and efficiency effects. Even if market power and efficiency gains are independent (or even positively correlated) across all potential mergers, they will generally be negatively related among proposed mergers. This is because parties propose to merge only if the merger’s expected profitability exceeds a threshold, so the underlying components of profitability become substitutes in clearing that hurdle. It does not rely on managerial bias, behavioral frictions, or strategic misrepresentation. We demonstrate this negative correlation is present under very general conditions when the two effects are uncorrelated among all mergers. We also characterize conditions where this still holds even in the presence of positive underlying correlations and firms’ uncertainty about their own merger’s profitability. Policies that might raise the selection hurdle for proposed mergers do not alleviate the negative correlation; indeed, they would exacerbate it. Our analysis has direct implications for interpreting empirical merger retrospectives and for evaluating efficiency defenses in antitrust policy. |
| JEL: | L0 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35221 |
| By: | Newbery, D. M. |
| Abstract: | Variable renewable electricity (VRE) is typically located far from load centres. As marginal curtailment is 3+ times average curtailment, unless transmission is expanded commensurately, VRE curtailment will rise rapidly. This article develops a novel close d-form solution to give formulae for the efficient balance of transmission expansion, renewables capacity and voluntary curtailment in a simplified model where VRE is distant from load. Given equilibrium in demand centres, the solutions are independent of market prices, depending only on cost and technology parameters. If local grid-connected storage covers most of its cost, co-located storage increases its profit for onshore wind and lowers optimal export capacity. The model is calibrated for on-shore British wind. Overhead lines, if built sufficiently rapidly, have little effect on desirable levels of curtailment/congestion for Scottish wind, but for Britain's proposed undersea links high costs increase efficient curtailment to the point where further Scottish wind expansion becomes unprofitable. |
| Keywords: | Transmission Constraints, Access Regimes, Variable Renewable Electricity, Storage, Curtailment, Zonal Pricing |
| JEL: | H23 L94 Q28 Q42 Q48 |
| Date: | 2026–05–11 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2638 |
| By: | Akio Kawasaki (Faculty of Economics, Oita University); Noriaki Matsushima (Osaka School of International Public Policy, the University of Osaka) |
| Abstract: | Digital entrants in health care and health insurance often compete against public or mission-oriented organizations rather than only against private rivals. We develop a Hotelling model of mixed competition in which a private data-rich firm chooses the scope of consumer-data collection and then uses the acquired information to personalize offers. The rival supplies a standard service and is either a welfare-maximizing public firm or a profit-maximizing private firm. We characterize equilibrium data collection, prices, consumer surplus, profits, and social welfare. The private digital firm chooses a wider data-harvesting range when its rival is private than when its rival is public, because a public rival uses welfare-oriented pricing to discipline the induced market allocation rather than to maximize its own profit. The welfare ranking is non-monotonic in the value created by personalization. When the benefit from personalization is either small or large, competition against a public rival yields higher welfare; when the benefit is intermediate, competition against a private rival can dominate because it induces a broader rollout of personalized service. These results highlight that the welfare effects of digital entry depend jointly on data-driven personalization and the ownership objective of incumbent health-sector organizations. |
| Keywords: | digital services, personalized pricing, public entities, health services |
| JEL: | I13 L13 D43 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:osp:wpaper:26e005 |
| By: | Johan Albrecht (-) |
| Abstract: | Europe's €1.2 trillion grid investment challenge by 2040 is commonly framed as a financial challenge. This paper argues that the central obstacle is institutional: Europe's hybrid liberalization model generates a structural mismatch between energy system transformation ambitions and governance capacity. Drawing on political economy and infrastructure governance theory, this paper develops an integrated governance framework identifying four interconnected failures rooted in the institutional incompatibility between the liberalization paradigm and the coordination requirements of the energy transition. First, we face a liberalization paradox as fixed market outcomes are increasingly imposed on free market platforms, while four competing design logics — geoeconomic, capitalist, ecological, and social-integrative — operate without any hierarchical guidance. Second, permitting bottlenecks reflect not bureaucratic inefficiency but decades of accumulated democratic preferences, requiring a new theory of necessary infrastructure. Third, flexibility governance misframes behavioral adaptation as techno-economic optimization, undermining civic legitimacy at scale. Fourth, grid congestion forces grid operators or regulators into reactive industrial policy decisions without democratic mandate. These failures compound in the financing dimension: incentive misalignments, fiscal deterioration, and fragmented EU instruments produce reactive and inadequate investment. The framework demonstrates that technical and financial interventions — however substantial — cannot substitute for the institutional reconstruction that transformation requires. As European coordination emerges as a precondition for grid development, the paper raises the fundamental question of whether the era of market liberalization is giving way to a new era of system planning. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:rug:rugwps:26/1142 |
| By: | Massey, Patrick |
| Abstract: | This paper analyses the decision of Ireland’s Competition and Consumer Protection Commission (CCPC) in relation to a merger between two veterinary practice groups. Several aspects of the CCPC’s analysis in the case are highly unsatisfactory. Based on the information contained in the CCPC Determination, there is a relative high probability that the CCPC decision constitutes a Type II (false positive) error, i.e. the CCPC failed to identify a potentially anti-competitive merger. The CCPC decision in this case adds to list of cases involving potential Type I and Type II errors, raising serious questions about the quality of the CCPC’s merger analysis and internal quality control procedures. It also suggests that lessons have not been learned from previous cases. |
| Keywords: | Merger Control; Market Definition; Type II error; substantial lessening of competition; Catchment Areas; Closeness of competition. |
| JEL: | K21 L13 L40 |
| Date: | 2026–05–12 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129081 |
| By: | Zhang, Y. |
| Abstract: | Many products generate network spillovers: a user’s value of such a product is higher when her contacts also use it. This paper studies competition between an entrant and an incumbent selling such products. In the model, the firms set personalised prices (for example, via targeted discounts), and consumers embedded in a network choose which product to buy. The pattern of equilibrium consumption is shown to be the same as if firms were to charge a price of 0 to all consumers. The equilibrium prices reflect incumbent advantage and depend on the network structure in nuanced ways. The equilibrium characterisation provides the foundation for studying the profitability of entry and the effects of anti-trust tools in such markets. A key structural feature of the network is found to be cohesiveness – the extent to which consumers within a group are densely connected to one another. Firms are more likely to enter if they have a consumer base that is cohesive and influential. While regulators use interoperability as a tool to improve market contestability, I show that interoperability can actually discourage entry depending on the cohesiveness of consumer bases. |
| Date: | 2026–04–17 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2634 |
| By: | Morell, Alexander; Schellenberg, Daniel |
| Abstract: | This paper cautions against the use of consumer protection as a Trojan horse for broader regulation of third-party litigation funding (TPLF) in the EU. The EU already operates a uniform consumer protection framework that prevents adverse outcomes for consumers across the board, including legal services. Section II evaluates a selection of arguments commonly advanced in the debate on regulating TPLF. It reviews frequently invoked concerns and demonstrates why they are unlikely to materialize, suggesting that proponents of regulating TPLF overstate its risks. Section III situates these concerns within the existing EU law framework, demonstrating that many of them are already mitigated by existing legislation. We therefore challenge the premise that restricting litigation funding advances customer protection and advocate for a carefully calibrated approach that preserves the functions of TPLF, intervening only when concrete and demonstrable risks can be observed. |
| Keywords: | Third-Party Litigation Funding, TPLF, EU, Consumer Protection |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safewp:341093 |
| By: | OECD |
| Abstract: | Responsible innovation in synthetic biology is reshaping biotechnology policy worldwide. This paper examines how governments are adapting governance frameworks for synthetic biology, using the OECD Framework for Anticipatory Governance of Emerging Technologies as an analytical lens. The analysis reviews national strategies, regulatory initiatives and policy instruments across OECD members and partners, identifying emerging practices across five governance dimensions: guiding values, strategic intelligence, stakeholder engagement, agile regulation and international co-operation. Drawing on examples from national advisory mechanisms and innovation programmes, the paper illustrates how governments are integrating anticipatory governance principles into bioeconomy policy. While these approaches signal a shift toward more forward-looking and adaptive regulation, implementation remains uneven across jurisdictions. The paper concludes with policy considerations for strengthening anticipatory governance and supporting responsible innovation in the emerging bioeconomy. |
| Keywords: | Agile regulation, Anticipatory governance, Bioeconomy policy, Responsible innovation, Synthetic biology governance |
| JEL: | O31 O38 Q55 K23 |
| Date: | 2026–05–21 |
| URL: | https://d.repec.org/n?u=RePEc:oec:stiaac:193-en |
| By: | Maksym Nechepurenko |
| Abstract: | The introduction of leverage on prediction-market event contracts raises three structurally distinct questions that have not been addressed jointly: how leverage changes manipulation incentives, how it interacts with informed-trading rents, and how regulatory frameworks should respond. This paper develops a theoretical framework for the first two and a synthesis of the existing regulatory landscape for the third. The principal analytical move is a two-axis manipulation taxonomy distinguishing market-price manipulation from real-world outcome manipulation, where the manipulator affects the underlying event itself. Continuous-underlying derivative markets generally do not make outcome manipulation a venue-level payoff channel; event-linked markets do. Within this taxonomy, leverage plays asymmetric roles: it scales market-price manipulation linearly but shifts the cost-benefit threshold for outcome manipulation, and it scales informed-trading rents in three ways (direct multiplication, Sharpe-ratio preservation, detection-cost amortization). Section 7 connects Paper 1's pre-emption and halt-protocol findings (CC-007b, CC-008) to three manipulation channels: pre-emption introduced by the dynamic-margin engine, halt-arbitrage introduced by the resolution-zone halt protocol, and strategic bad-debt-shifting that no engine in Paper 1's framework family addresses. The framework's manipulation-resistance contribution is a re-allocation of attack surface, not a net reduction. The regulatory synthesis covers principal jurisdictions (US, EU, UK, Singapore, offshore) and identifies three regulatory-arbitrage pathways. The paper concludes with 14 recommendations for venue operators, regulatory bodies, and the research community, separated into framework-independent and framework-conditional categories. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.10486 |
| By: | Di Carlo, Donato; McNamara, Kathleen R.; Moschella, Manuela |
| Abstract: | Across advanced economies, states are reasserting a more directive role in shaping markets. One prominent expression of this shift is the resurgence of industrial policy as a form of interventionist economic governance. This introduction develops a tripartite framework to analyze contemporary industrial policy in terms of goals, instruments, and authority structures—asking for what ends states intervene, through what means, and by and for whom. Applying this lens to Europe and the European Union (EU), the special issue shows how a polity long seen as the archetype of the regulatory state is increasingly departing from this model through a renewed embrace of industrial policy. We identify four ideal‐typical phases of EU industrial policy since the postwar era and argue that, since the 2020s, the EU has entered a distinct Transformational Phase. This phase is marked by the geopoliticization of interventionist goals, hybrid fiscal, geoeconomic and regulatory instruments, and a vertical and horizontal decentering of European market interventionism. Together, the introduction and contributions to the special issue offer a conceptual and empirical lens on industrial policy as a defining feature of twenty‐first‐century activist economic governance. |
| Keywords: | economic governance; state capitalism; European Union; industrial policy; political economy; market interventionism |
| JEL: | R14 J01 |
| Date: | 2026–07–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:138096 |
| By: | Will Rafey |
| Abstract: | This paper proposes and applies new methods to value water rights and assess misallocation across competing uses in California, the world’s fourth largest economy. The empirical strategy combines detailed microdata on farms, evapotranspiration, historical water rights, and the hydrological flow network in order to isolate sources of inefficiency within the hydrological network, assess distributional implications of water access under current property rights, and evaluate alternative mechanisms for water reallocation. |
| JEL: | D23 D61 L1 L2 Q1 Q24 Q25 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35176 |
| By: | Eleonore Batteux (University College London); Zarema Khon (Nazarbayev University, Graduate School of Business); Avri Bilovich (University College London); Samuel G.B. Johnson (University of Waterloo); David Tuckett (University College London) |
| Abstract: | Consumers are drawn to the promise of certainty that precise forecasts seem to provide, even though they are often misleading. Yet we know less about how consumers respond when precise forecasts prove inaccurate. In this paper, we investigate how inaccurate precise compared to range forecasts affect consumer judgments and decisions over time in an investment context. Specifically, we assess how they affect consumers' loyalty towards the forecaster and as well as their willingness to make the same kind of investment again. Consumers were less trusting of and loyal to investment management firms which communicated inaccurate precise forecasts, compared to firms which communicated inaccurate range forecasts which acknowledged uncertainty. But we did not find evidence that consumers changed their minds as to the sector into which they wanted to invest. In other words, they seem to punish the firm for inaccurate forecasts but this did not shift their preference for their type of investment. Interestingly, these effects largely persisted when consumers encountered similar inaccurate forecasts one week later, suggesting they do not learn to be suspicious of precise forecasts in general from exposure to inaccurate forecasts. Overall, our findings show that it is not in firms' interest to communicate overly precise forecasts under uncertainty as they risk punishment by consumers. |
| Keywords: | forecasting, uncertainty, investing, trust, consumer loyalty, communication |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:asx:nugsbw:2025-03 |
| By: | Hugo Perilleux |
| Date: | 2026–04–08 |
| URL: | https://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/406770 |