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on Regulation |
| By: | Hoernig, Steffen |
| Abstract: | Due to technological convergence, multiple infrastructures can now offer broadband or triple-play services, while the existing access regulation is based on a single essential network. We show that continued asymmetric access regulation of one network does not control sufficiently for market power and benefits the unregulated network, and that symmetric regulation would lead to higher consumer surplus. Furthermore, the whole setup of access regulation may not be viable in the long run if regulatory constraints provide strong first-mover advantages to the unregulated network. |
| Keywords: | Access regulation; Cable; Convergence; Copper |
| JEL: | L51 L96 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8399&r=reg |
| By: | Antoine Martin; Bruno M. Parigi |
| Abstract: | We construct a model in which bank capital regulation and financial innovation interact. Innovation takes the form of pooling and tranching of assets and the creation of separate structures with different seniority, different risk, and different capital charges, a process that captures some stylized features of structured finance. Regulation is motivated by the divergence of private and social interests in future profits. Capital regulation lowers bank profits and may induce banks to innovate in order to evade the regulation itself. We show that structured finance can improve welfare in some cases. However, innovation may also be adopted to avoid regulation, even in cases where it decreases welfare. |
| Keywords: | Bank capital ; Bank reserves ; Banking law |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:492&r=reg |
| By: | Sophie Bernard (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | This paper presents a theoretical model of remanufacturing where a duopoly of original manufacturers produces a component of a final good. The specific component that needs to be replaced during the lifetime of the final good creates a secondary market where independent remanufacturers enter the competition. An environmental regulation imposing a minimum level of remanufacturability is also introduced. The main results establish that, while collusion of the firms on the level of remanufacturability increases both profit and consumer surplus, a social planner could use collusion as a substitute for an environmental regulation. However, if an environmental regulation is to be implemented, collusion should be repressed since competition supports the public intervention better. Under certain circumstances, the environmental regulation can increase both profit and consumer surplus. Part of this result supports the Porter Hypothesis, which stipulates that industries respecting environmental regulations can see their profits increase. |
| Keywords: | Remanufacturing, competition, environmental regulation, Porter hypothesis. |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00594051&r=reg |
| By: | Sebastian A. Schuetz (Lueneburg-Wolfsburg chamber of industry and commerce) |
| Abstract: | In 2007 the world faced one of the biggest financial crises ever. It was the third important financial crisis in the last 12 years. Spillovers to the real economy and moral hazard behaviour of carpetbaggers resulted in enormous pressure on worldwide political institutions to approve a more rigorous regulation on financial institutions and predict financial crises via early warning systems. We analyzed the performance of structured finance ratings and structured finance issuance/outstanding to detect the main shortcomings of the subprime crisis. Afterwards we explain the behaviour of market participants with theoretical models and a survey of institutions involved in securitization. With the conclusions of this analysis we evaluate the EU regulation on credit rating agencies and current Basel II enhancements. Finally we can determine that most regulatory enhancements are in accordance with our analyzed shortcomings. Some approaches like the introduction of a leverage ratio are counterproductive and a danger for worldwide economic growth. |
| Keywords: | structured finance, ratings, regulation, subprime crisis, Basel II, leverage ratio |
| JEL: | G21 G24 G28 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:178&r=reg |
| By: | Klein, Michael; Mayer, Colin |
| Abstract: | Mobile banking is growing at a remarkable speed around the world. In the process it is creating considerable uncertainty about the appropriate regulatory response to this newly emerging service. This paper sets out a framework for considering the design of regulation of mobile banking. Since it lies at the interface between financial services and telecoms, mobile banking also raises competition policy and interoperability issues that are discussed in the paper. Finally, by unbundling payments services into its component parts, mobile banking provides important lessons for the design of financial regulation more generally in developed as well as developing economies. |
| Keywords: | Banks&Banking Reform,Access to Finance,Emerging Markets,Debt Markets,Technology Industry |
| Date: | 2011–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5664&r=reg |
| By: | Gerald Eisenkopf (Department of Economics, University of Konstanz, Germany); Ansgar Wohlschlegel (Wirtschaftspolitische Abteilung, University of Bonn, Germany) |
| Abstract: | We analyze educational institutions’ incentives to set up demanding or lax curricula in duopolistic markets for education with endogenous enrolment of students. We assume that there is a positive externality of student achievement on the local economy. Comparing the case of regulated tuition fees with an unregulated market, we identify the following inefficiencies: Under regulated tuition fees schools will set up inefficiently lax curricula in an attempt to please low-quality students even if schools internalize some of the externality. On the other hand, unregulated schools set up excessively differentiated curricula in order to relax competition in tuition fees. Deregulation gets more attractive if a larger fraction of the externality is internalized. |
| Keywords: | Education, Local Externalities, Product Differentiation, Price Competition, Vouchers |
| JEL: | I28 L13 |
| Date: | 2011–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:knz:dpteco:1116&r=reg |
| By: | Roychowdhury, Punarjit; Dutta, Mousumi |
| Abstract: | The informal economy has been occupying a key position in the development-discourse ever since it was ‘discovered’ in the Ghana in the second half of the 20th century. A good deal of literature has grown up in the past forty years with efforts to ‘formalize’ the concept of informality and to integrate it with mainstream development economic theory. In particular, there is a strong controversy regarding the appropriate policy response to informality: Should it be left on its own or should the state intervene in the functioning of the informal sector? And, if the state needs to regulate the informal sector, what instruments of regulation can it possibly put to use? Based on the literature that has developed around these issues, the paper provides a formal econometric model of regulation and enforcement. Using secondary data collected for 46 countries from different sub-continents over the period between 1980 and 2008, this study explores the inter-relationship among regulation, enforcement and the level of informal employment for different countries across the world. The study establishes that regulation by itself has no role in reducing or aggravating the level of informality in an economy. Regulation will only affect levels of informality when it is enforced. |
| Keywords: | Informal sector; Regulations; Panel data |
| JEL: | L51 C33 |
| Date: | 2011–05–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:30818&r=reg |
| By: | Leheyda, Nina; Beschorner, Patrick; Hüschelrath, Kai |
| Abstract: | In 2002, the Swiss Competition Commission (COMCO) introduced a Notice on the Competitive Treatment of Vertical Restraints in Automobile Trade ('Car Notice'). The objective of the Car Notice has been to strengthen competition in the Swiss car market, in particular by avoiding price-fixing practices and market foreclosure and stimulating intrabrand competition in the market for new car sales and competition in the service market. Based on a survey conducted among Swiss car market players, we find that the Car Notice only had a slight impact on competition in the Swiss car market. Although some changes have been identified, they typically cannot solely be explained by the impact of the Car Notice but rather result from general market developments that have led to stronger competition in Switzerland. -- |
| Keywords: | vertical agreements,automobile market,multibranding,intrabrand competition,interbrand competition,ex-post evaluation of competition policy |
| JEL: | K21 L42 L62 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:11034&r=reg |
| By: | Leheyda, Nina; Beschorner, Patrick; Hüschelrath, Kai |
| Abstract: | The paper studies the effects of the Pfizer and Pharmacia (2003) merger on competition in the Swiss pharmaceutical market and compares the assessment of the Swiss Competition Commission (COMCO) with the post-merger market developments. We find that the merger has had a miniscule impact on the Swiss pharmaceutical market. This has primarily to do with the fact that the product portfolios of both companies have shown no or only slight overlaps. In both cases of potential anticompetitive effects, the companies successfully proposed to divest some of their assets in order to prevent a further strengthening of their dominant position. The remedies included products in the development phase which were not available on the market at the time of the decision. In other markets in which either an overlapping of businesses of both companies existed or in which one of the merging entities held a dominant market position, no significant effects of the merger were noticed. This might have to do with both, existing price regulation in the Swiss drug industry and changes in Pfizer's product portfolio following the merger. Furthermore, with respect to other potentially interesting market characteristics such as investment behaviour, R&D, sales or employment, available data on global company level does not allow an isolation of the possible effects of the merger. -- |
| Keywords: | mergers,ex-post evaluation,pharmaceutical markets |
| JEL: | K21 L42 L62 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:11035&r=reg |
| By: | Gorecki, Paul K. |
| Abstract: | The market for corporate control plays an important role in ensuring that assets are deployed in an efficient and effective manner. However, on occasion, mergers might lead to a reduction in competition and a consequent rise in prices and/or other anticompetitive effects. The Competition Act 2002 provides that all mergers that meet certain financial thresholds must be notified to the Competition Authority in order that they are subject to a competitive effects assessment. However, there are concerns that the notification thresholds result in many mergers with little or no nexus to Ireland being notified. While it is the case that the vast majority of merger notifications do not raise competition concerns, Ireland is not out of line with other jurisdictions which have mandatory notification thresholds such as the EU and the US. Nevertheless, that should not lead to complacency. The paper quantifies the impact of reforms made in 2006 and 2007 by the Competition Authority and the Minister of Enterprise, Trade and Employment to the merger notification thresholds. The evidence suggests that these tighter better specified thresholds led to a reduction of at least 40-50 per cent in the number of merger notifications. However, more could be done, albeit probably to a lesser extent than the earlier reforms. Applying the International Competition Network's Recommended Practices for Merger Notification Procedures, a series of proposals are made in the paper for revising the merger notification thresholds to better select mergers with a nexus to Ireland. Such moves should facilitate a more effective and efficient market for merger control by reducing transaction costs involved in the merger process as well as allowing Competition Authority resources to be deployed elsewhere, a not inconsiderable advantage in a period of austerity. |
| Keywords: | Ireland/MERGERS/competition/competition act/US/employment/cost |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp383&r=reg |
| By: | Silver, Gregory Mead |
| Abstract: | In 1948, the United States Supreme Court declared the operations of eight of the nation’s largest motion picture studios in violation of the 1890 Sherman Antitrust Act. The decision ordered them to disintegrate their producer-distributor roles from cinemas. The Court believed this would promote competitive practices in a hitherto uncompetitive industry. However, these desired benefits were not entirely reached. Instead, by leading the Hollywood studio system to collapse, the Court also distorted the supplychain for motion pictures. This work utilizes Coasian analyses of transaction costs to show that institutional integration was an efficient structure for the motion picture industry. It explores the motives to integrate and the benefits it garnered. Having laid this groundwork, it then assesses the effects theatre divorcement had on the industry and offers plausible counterfactuals had the studios remained intact after 1948. |
| JEL: | N0 L82 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:wpaper:30043&r=reg |
| By: | Emmanuelle Auriol (TSE (ARQADE and IDEI), Université de Toulouse I (France)); Pierre M. Picard (CREA, University of Luxembourg (Luxembourg), and CORE, Université catholique de Louvain (Belgium).) |
| Abstract: | In this paper, we discuss the choice for build-operate-and-transfer (BOT) concessions when governments and firm managers do not share the same information regarding the operation characteristics of a facility. We show that larger shadow costs of public funds and larger information asymmetries entice governments to choose BOT concessions. This result stems from a trade-off between the government's shadow costs of financing the construction and the operation of the facility and the excessive usage price that the consumer may face during the concession period. The incentives to choose BOT concessions increase as a function of ex-ante informational asymmetries between governments and potential BOT concession holders and with the possibility of transferring the concession cost characteristics to public firms at the termination of the concession. |
| Keywords: | Public-private-partnership, privatization, adverse selection, regulation, natural monopoly, infrastructure, facilities. |
| JEL: | L43 L51 D82 L33 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:11-04&r=reg |
| By: | Adil Diani (LAMETA - Laboratoire Montpellierain d'économie théorique et appliquée - CNRS : UMR5474 - INRA : UR1135 - CIHEAM - Université Montpellier I - Montpellier SupAgro) |
| Abstract: | Arguments in favor of liberalizing the market for services are becoming increasingly widespread. These arguments particularly apply to financial services, telecommunications, and transportation, which are key sectors that significantly contribute to a nation's economic development. However, the challenges of liberalizing the market for services to foreign competition are evident. Furthermore, this liberalization entails a broad and complex set of policies, regulatory instruments, institutions and constituencies, domestically and in the foreign arena, in the public and the private sector. Experience has shown that considerable care must be given to the assessment of the nature, pace and sequencing of regulatory reform and liberalization in order to meaningfully enhance a nation's economic growth and development. Morocco has signed, ratified, and implemented several Free Trade Agreements (FTAs) and is engaged in discussions with other partners. Issues that concern the market of services are gaining in importance in Morocco's foreign trade policy. Moreover, Morocco has continued to reform its sectoral policies, making notable progress in services sector performances in a bid to diversify its economy. This paper tries to outline some features that concern the trade in services policies and reforms in Morocco and its negotiation process adopted by enforcing bilateral, regional and multilateral agreements. |
| Keywords: | Morocco; Trade in Service; Trade Policy; Reform, Liberilization, Regulatory impacts. |
| Date: | 2011–01–21 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00594401&r=reg |
| By: | Kenneth Small (Department of Economics, University of California-Irvine) |
| Abstract: | This paper assesses the costs and effectiveness of several energy policies for light-duty motor vehicles in the United States, using the National Energy Modeling System (NEMS). The policies addressed are higher fuel taxes, tighter vehicle efficiency standards, and financial subsidies and penalties for the purchase of high- and low-efficiency vehicles (feebates). I find that tightening fuel-efficiency standards beyond those currently mandated through 2016, or imposing feebates designed to accomplish similar changes, can achieve by 2030 reductions in energy use by all light-duty passenger vehicles of 7.1 to 8.4 percent. A stronger feebate policy has somewhat greater effects, but at a significantly higher unit cost. High fuel taxes, on the order of $2.00 per gallon (2007$), have somewhat greater effects, arguably more favorable cost-effectiveness ratios, and produce their effects much more quickly because they affect the usage rate of both new and used vehicles. Policy costs vary greatly with assumptions about the reason for the apparent myopia commonly observed in consumer demand for fuel efficiency, and with the inclusion or exclusion of ancillary costs of congestion, local air pollution, and accidents. |
| Keywords: | Fuel efficiency; Light-duty vehicles; Energy policy; Greenhouse gases; Feebate; Fuel tax |
| JEL: | L92 R48 Q48 Q54 Q52 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:101108&r=reg |
| By: | Widerberg, Anna (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | Combinations of various policy instruments to deal with the threat of climate change are used throughout the world. The aim of this article is to investigate an electricity market with two di¤erent policy instruments, Tradable Green Certi…cates (TGCs) and CO2 emission allowances (an Emission Trading System, ETS). We analyze both the short- and long-run e¤ects of a domestic market and a market with trade. We …nd that increasing the TGC quota obligation will decrease the electricity produced using non-renewable sources as well as the long-run total production of electricity. For the electricity produced using renewable energy sources, an increase in the quota obligation leads to increased production in almost all cases, with assumptions based on historical data. The impacts of the ETS price on the electricity production are negative for all electricity production, which is surprising. This means that the combination of ETS and TGCs gives unexpected and unwanted results for the electricity production using renewable sources, since an increase in the ETS price leads to a decrease in this production. <p> |
| Keywords: | Climate change; Tradable green certi…cates; Emission allowances; Electricity |
| JEL: | Q40 Q42 Q48 |
| Date: | 2011–05–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0504&r=reg |
| By: | Konstantinos Angelopoulos (University of Glasgow); George Economides (Athens University of Economics and Business); Apostolis Philippopoulos (Athens University of Economics and Business, University of Glasgow and Visiting Scholar at the Bank of Greece) |
| Abstract: | We welfare rank different types of second-best environmental policy. The focus is on the roles of uncertainty and public finance. The setup is the basic stochastic neoclassical growth model augmented with the assumptions that pollution occurs as a by-product of output produced and environmental quality is treated as a public good. To compare different policy regimes, we compute the welfare-maximizing value of the second-best policy instrument in each regime. In all cases studied, pollution permits are the worst recipe, even when their revenues are used to finance public abatement. When the main source of uncertainty is economic, the best recipe is to levy taxes (on pollution or output) and use the collected tax revenues to finance public abatement. However, when environmental uncertainty is the dominant source of extrinsic uncertainty, Kyoto-like rules for emissions, being combined with tax-financed public abatement, are better than taxes. Finally, comparing pollution and output taxes, the latter are better. |
| Keywords: | General equilibrium; uncertainty; environmental policy |
| JEL: | C68 D81 H23 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:bog:wpaper:119&r=reg |