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on Regulation |
| By: | Russell Pittman (U.S. Department of Justice) |
| Abstract: | In its 2023 decision approving the acquisition of the Kansas City Southern Railway by the Canadian Pacific, the U.S. Surface Transportation Board conditioned its approval on the merged railway’s commitment “to keep gateways open on commercially reasonable terms” – that is, to allow shippers and non-merging railroads to continue to enjoy the option of using joint-line service, despite the merger’s creation of the alternative of single-line service on the merged railroad. A century has p assed since the Board’s predecessor agency, the Interstate Commerce Commission, first imposed a condition of the maintenance of open gateways as a condition for approving a rail merger. This paper asks three questions. First, exactly what, in practice, are open gateways? Second, how have the two regulatory agencies dealt with the inherent tension between maintaining open gateways and achieving merger efficiencies? Third, what is the current state of play? |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:doj:eagpap:202403 |
| By: | David Newbery |
| Keywords: | Data centres, Variable Renewable Electricity, congestion, locational pricing |
| JEL: | H23 L94 Q28 Q42 Q48 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:enp:wpaper:eprg2623 |
| By: | Mike Eggleston |
| Abstract: | A survey of federal and local programs looks at help available to low-income Eighth District households for paying utility bills, weatherizing homes and improving energy security. |
| Keywords: | Federal Reserve District, 8th; energy assistance; energy security; utility bills |
| Date: | 2026–10–22 |
| URL: | https://d.repec.org/n?u=RePEc:fip:l00001:103979 |
| By: | Martin Peitz |
| Abstract: | South Africa has addressed digital platforms not through digital-specific regulation but through the Online Intermediation Platforms Market Inquiry and subsequent non binding guidance by the Competition Commission. It thus offers a test case for how far a general market-inquiry instrument can perform the functions of such regulation. The article distinguishes between competition problems that the Commission has addressed and those it has not; for the latter, the absence of intervention may reflect the scope of the inquiry rather than a limit of the instrument. For the former, including price parity, self-preferencing and the use of business-user data, the South African framework reaches much the same conduct as the EU Digital Markets Act (DMA) and furthermore takes account of the participation of small firms and firms owned by historically disadvantaged persons. The differences from the DMA lie in what triggers intervention and in how obligations are specified, how long they apply and how they are enforced. The German and UK digital-specific regimes answer these questions differently from the DMA. How far South Africa’s market-inquiry instrument performs the functions of digital-specific regulation therefore also depends on which regime serves as the reference point. |
| Keywords: | digital platforms; market inquiry; ex ante regulation; South Africa; Chapter 4A Competition Act; Online Intermediation Platforms Market Inquiry; Digital Markets Act; section 19a GWB; DMCC Act; contestability. |
| JEL: | K21 K23 L40 L51 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_787 |
| By: | Jens-Uwe Franck; Martin Peitz |
| Abstract: | Recommendation systems create value by reducing search and information costs, but they also give platforms control over visibility and effective access to users. Recommendation power can weaken competitive constraints by distorting competition among offers or by protecting the platform’s gateway position against rival gateways and direct routes to users. It can also be used to extract surplus from end users or business users. We present specific theories of harm for these uses of recommendation power and illustrate them with competition cases. We then discuss how these theories of harm can be assessed empirically, accounting for how market participants respond to recommendation design. |
| Keywords: | recommender system, recommendation bias, platform design, foreclosure, exploitation, self preferencing, steering. |
| JEL: | L12 L13 L41 L42 L86 D83 K21 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_786 |
| By: | Roger D. Blair (University of Florida); Javier D. Donna (University of Miami) |
| Abstract: | We analyze vertical mergers when the upstream and downstream markets each have a dominant firm and a competitive fringe. Adding a fringe at each stage of the successive monopoly model of Spengler (1950) generates the anticompetitive mechanisms of the post-Chicago literature. The merger eliminates double marginalization but creates incentives for input foreclosure, customer foreclosure, and fringe exit. Our main result links customer foreclosure to input foreclosure. When the merged firm sources internally, independent suppliers with high operating costs can exit. Their exit reduces the supply available to downstream rivals and, relative to retaining that capacity, raises the input price rivals pay and the merged firm’s foreclosure wedge. In an equilibrium construction, consumer prices remain below the pre-merger level. With atomless participation, consumer harm is ruled out under stated conditions; with indivisible downstream participation, it can arise. We derive implications for merger review under Section 7 of the Clayton Act. |
| Keywords: | Vertical mergers, double marginalization, input foreclosure, dominant firm and competitive fringe, raising rivals’ costs, non-predatory exit, antitrust policy |
| JEL: | L42 L13 L41 K21 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:aoz:wpaper:410 |
| By: | Patrick Arnold; Marc Moller; Makoto Watanabe |
| Abstract: | This paper considers the effects of common ownership on advance purchase markets featuring intertemporal price discrimination (e.g. airline tickets). Common ownership increases advance prices, while spot prices can decrease. We show that common ownership is anticompetitive but the increase in average transacted prices is smaller than under uniform pricing, although consumers shift towards more informed, more expensive purchases. Common ownership is less detrimental for consumers than under uniform pricing and can even benefit consumers when consumers are sufficiently uninformed about their preferences in advance. |
| Keywords: | common ownership, intertemporal price discrimination, advance selling, consumer learning |
| JEL: | D43 D82 L13 L41 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13095 |
| By: | Rangrang Zhang (Institute for Future Initiatives); Michael J. Roberts (University of Hawaii) |
| Abstract: | Power systems are planned for summer heat waves and, as heating electrifies, winter cold snaps. We ask which weather extremes set the cost of a wind-and-solar grid, and whether the planning weather year matters. In a capacity-expansion model of the United States in 2050, we solve 26 emission caps, re-optimize zero-emission systems on seven weather years, and test selected portfolios under other years. With expanding wind and solar, the heat-wave week never has the highest average price. The highest-priced week falls in winter in six of seven years, at 5.9 to 9.6 times the annual price, and moves between years. These winter weeks are warmer than the coldest week, with unusually low combined wind and solar output. Planning on the mildest winter leaves up to 2.1% of annual energy unserved under other years; adding difficult weeks cuts unserved energy by 99.6% for 8% more cost. |
| Keywords: | resource adequacy, weather years, heating electrification, cold snaps, renewable energy droughts, interregional transmission, capacity expansion |
| JEL: | Q41 Q42 Q48 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:hai:wpaper:202605 |
| By: | Jean-Marc Zogheib (UPN SEGMI - Université Paris Nanterre - UFR Sciences économiques, gestion, mathématiques, informatique - UPN - Université Paris Nanterre) |
| Abstract: | Two platforms compete in prices and information disclosure levels. Platforms derive revenues from two possible channels, i.e., by supplying their service to consumers and by selling consumer data to a data intermediary. While a consumer signing up to one platform's service decides how much personal information to provide to improve service quality, the platform chooses how much such consumer data to share with the third-party data intermediary. We find that platforms essentially trade-off between consumer valuations and disclosure levels to determine their business strategies when consumers single-home. Under multi-homing, business strategies are more complex to assess and may completely shift compared to single-homing. The valuation of consumer data onto the data intermediary is a decisive component of platforms' choices. All things being equal, implementing a strict privacy regime with no data disclosure can be optimal under single-homing, while a soft privacy regime with data disclosure may be preferred under multi-homing. |
| Keywords: | Competition, Online privacy, Information disclosure, Multi-homing |
| Date: | 2026–12 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05834698 |
| By: | Mark L. Egan; Dominic Russel; Claire Shi; Vincent Yao |
| Abstract: | How competitive will the market for generative AI be as it matures? Using novel transaction level credit and debit card data covering 174 million consumers and 114 billion transactions, we study the adoption of paid services and the demand-side foundations of competition in this market. As of April 2026, approximately 2.9% of U.S. consumers pay for at least one major generative AI service, with adoption highest among younger and higher-income consumers. Nearly all of these paid users subscribe to basic plans that cost $30 or less per month. Three patterns suggest limited differentiation and low switching costs. First, although multihoming is common, it has declined as providers’ capabilities have expanded. Second, annual customer retention rates range from 20% to 45% across major AI providers, lower than those for many other subscription products. Third, switching rises around major model releases. Motivated by these findings, we develop and estimate a structural model of AI service demand and supply that reveals strong competitive pressure. Consumers are highly price sensitive, have much weaker preferences for particular providers than for AI overall, and view AI services as increasingly close substitutes. Our results suggest that, absent a substantial increase in AI model quality differentiation, growing substitutability among services will constrain providers’ pricing power and allow consumers to capture a large share of the surplus generated by these services. |
| JEL: | D12 L13 O33 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35953 |
| By: | Meera Mahadevan; Ryan McCord; Robyn Meeks; Manisha Pradhananga |
| Abstract: | When governments modernize infrastructure to a common standard, do households receiving the largest implicit upgrades benefit most? We study a Nepal electricity modernization rollout that installed smart meters and raised connection capacity to enable greater use of electricity. We find that treated households reported more reliable electricity and billed use rose 5 percent on average. However, households receiving the largest upgrades, who had lower expenditures and fewer appliances at baseline, showed no increase in use while their bills rose 19 percent and late payments increased. Households already at the standard increased use without comparable payment strain, benefiting from increased reliability. |
| Keywords: | electric utilities, infrastructure, digitalization |
| JEL: | L94 P48 Q40 Q56 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13093 |
| 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 information contained in the CCPC Determination, there is a relatively high probability that the decision constitutes a Type II (false negative) error, i.e. the CCPC failed to identify a potentially anti-competitive merger. At the very least, the transaction should have been subject to a more detailed review, rather than being cleared on the basis of a preliminary investigation. The decision in this case adds to a list of CCPC merger decisions 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 L1 L13 L40 |
| Date: | 2026–05–15 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:130317 |
| By: | Ertian Chen; Lichao Chen; Lars Nesheim |
| Abstract: | The European Union Emissions Trading System is set to substantially increase the effective carbon price faced by airlines. We estimate a two-stage model of airline competition with endogenous product entry, direct departure frequencies, and pricing. Impacts are highly asymmetric across carrier types and market segments. Consumer surplus declines by up to 34% overall and up to 95% in medium- and long-haul markets. Short-haul markets gain welfare as airlines reallocate capacity toward shorter routes. Airline profits decline by 1–42%, but carbon tax revenue of $1.9–2.9 billion and the social value of avoided emissions of $2.7–4.0 billion more than offset private-surplus losses. |
| Date: | 2026–10–28 |
| URL: | https://d.repec.org/n?u=RePEc:azt:cemmap:20/26 |
| By: | Marie-Laure Cabon-Dhersin (University of Rouen Normandie); Joanna Poyago-Theotoky (University of Salento, Department of Economics and The Australian National University, Research School of Economics); Natacha Raffin (ENS Paris-Saclay, CEPS) |
| Abstract: | We explore the interplay of competition and environmental policies to address the question of whether green antitrust has beneficial effects in terms of both environmental and consumer welfare performance. We focus on two environmental policy tools, an emission tax and an emission standard, and explore three particular configurations: competitive ‘green R&D, collaborative ‘green’ R&D in the form of a joint lab, and the benchmark case of no ‘green’ R&D. Firms compete in the product market by selling a homogeneous product, either by setting prices (Bertrand competition) or quantities (Cournot competition) while facing convex costs. We show that ‘green antitrust’ can unambiguously improve the effectiveness of environmental policy without undermining the interests of either consumers or producers, establishing a ‘win-win-win’ outcome. |
| Keywords: | ‘Green’ R&D, emission tax, environmental standard, ‘green’ antitrust, R&D cooperation, joint lab, convex costs |
| JEL: | L13 L4 Q55 Q58 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:fem:femwpa:2026.22 |
| By: | Farina, Tatiana; Franke, Günter; Konow, Felix-Julius; Krahnen, Jan Pieter; Langenbucher, Katja; Lindner, Vincent; Lüders, Erik; Straka, Max; v. der Decken, Jasper |
| Abstract: | The review of the Markets in Crypto-Assets Regulation (MiCAR) takes place in European policy environment shaped by competitiveness and a global payment landscape shaped by geoeconomic competition. This paper contributes to the ongoing political discussion on stablecoins with a number of recommendations. First, it advocates for alignment of reserve-requirements of MiCAR-compliant stablecoins with rules similar to the US-GENIUS Act, thereby replacing the need to hold reserves in bank deposits with high-quality liquid assets (HQLAs). Second, it calls for an equivalence and recognition regime to mitigate the financial stability risk arising from multi-issuance; third, it emphasizes that stablecoins and the digital euro are not mutually exclusive. The digital euro remains an important tool to prevent dollarisation and to achieve strategic payments autonomy. Finally, it proposes to shift supervision of crypto-asset service providers (CASPs) to the European Securities and Markets Authority (ESMA) as stress-testing and reliable data collection can be undertaken more efficiently at Union level. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safewh:344247 |
| By: | An Chen; Christian Laudag\'e; Shihao Zhu |
| Abstract: | We study optimal collective investment subject to a Value-at-Risk (VaR)-type constraint that accounts for uncertainty about future regulatory requirements. The constraint incorporates several possible wealth thresholds and imposes a minimum weighted average probability of meeting them. We characterize the optimal terminal wealth, which combines regions of constant wealth at regulatory thresholds with Merton-type investment regions. Unlike a classical VaR constraint with only one threshold, our formulation generates protection against several thresholds. For two possible thresholds, we identify when both are protected and when protection concentrates on the larger one. Numerical results show that the regulatory constraint can substantially reshape the optimal payoff and generate large welfare losses relative to unconstrained investment when the required compliance probability is high, even the smaller wealth threshold is high, or initial capital is limited. In heterogeneous investor pools, welfare losses depend strongly on the composition of the risk aversions and the Pareto weights governing risk sharing. Losses are particularly pronounced when highly risk-averse investors dominate the pool. Moreover, investors with smaller capital contributions can bear disproportionately large shares of the total welfare loss, while larger contributors may bear less than their capital-proportional share. Thus, regulatory uncertainty not only reduces aggregate welfare but can also create substantial disparities in how its costs are distributed among investors. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.32959 |