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on Regulation |
| By: | Carlotta von Bebenburg; Gert Brunekreeft; Anton Burger |
| Abstract: | In recent years, the OPEX-CAPEX-incentive-bias (short: CAPEX-bias) received renewed attention in regulatory practice. A CAPEX-bias occurs when the OPEX solution is the more efficient approach, but regulation sets distorted incentives to choose the CAPEX solution. This paper presents a promising approach to address the CAPEX-bias: the fixed-OPEX-CAPEX-share (FOCS). With FOCS, all expenses, whether for capital goods (CAPEX) or operational measures (OPEX), are treated as TOTEX. A fixed portion, the capitalisation rate of this TOTEX, is then "capitalised" (quasi-CAPEX) and the remaining portion is directly expensed as quasi-OPEX ("pay-as-you-go"). Because all costs are treated equally, any distortion of behaviour that would arise because of the different treatment of costs, disappears. Similarly, the regulatory effort of scrutinising cost classification is no longer required. The paper also discusses practical implementation issues and first international experience. |
| Keywords: | monopoly regulation, CAPEX-bias, FOCS |
| JEL: | D42 K23 L51 |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:bei:00bewp:0039&r= |
| By: | Christian Hauenstein; Karlo Hainsch; Philipp Herpich; Christian von Hirschhausen; Franziska Holz; Claudia Kemfert; Mario Kendziorski; Pao-Yu Oei; Catharina Rieve |
| Abstract: | The European Union has increased pressure on Russia by enacting a coal embargo. Following a transition period, Russian coal imports will end in August 2022. Recent studies show that Germany will be able to substitute Russian supplies with imports from other countries by summer 2022. However, with the looming threat of a Russian gas supply stop, plans must be developed to ensure security of supply. In scenario calculations, DIW Berlin analyzed how the German electricity system can respond to a stop of Russian energy supplies (especially coal and natural gas) while still maintaining the accelerated coal phase-out and the 2022 nuclear phase-out plans. The calculations show that a secure electricity supply will be possible in 2023, even without Russian energy supplies. The shutdown of the final three nuclear power plants can and should take place as planned in December 2022. In the short term, coal-fired power plants from the grid reserves will have to be used and the standby mode of some power plants will have to be extended. In the medium term, the accelerated expansion of renewable energy infrastructure as envisaged by the German government in the set of measures known as the Easter Package is expected to lead to a decline in demand for natural gas and coal-fired power generation by 2030. Thus, an accelerated coal phase-out by 2030 as laid out in the coalition agreement is still possible. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwfoc:8en&r= |
| By: | Massimo Motta; Antonio Penta |
| Abstract: | We investigate the market effects of brand search advertising, within a model where two firms simultaneously choose the price of their (differentiated) product and the bids for the advertising auction which is triggered by own and rival's brand keywords search; and where there exist sophisticated/attentive consumers (who look for any available information on their screen) and naive/inattentive consumers (who only look at the top link of their screen), both aware of either brand's characteristics and price. Relative to a benchmark where only organic search exists, in any symmetric equilibrium each firm wins its own brand auction, and advertising has detrimental effects on welfare: (i) the sponsored link crowds out the rival's organic link, thus reducing competition and choice, and leading to price increases; (ii) the payment of the rival's bid (may) raise marginal cost, also contributing to raise market prices. Under extreme asymmetry (there is an incumbent and an unknown new entrant), we do find that the market effect of brand bidding might be beneficial, if the search engine does not list the entrant's link in organic search, and the share of the sophisticated consumers in the economy is large enough for an equilibrium in which the entrant wins the advertising auction on the search for the incumbent's brand to exist. |
| Keywords: | digital advertising, auctions, oligopoly, search engines, brands, horizontal agreements |
| JEL: | D44 L13 L4 |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1844&r= |
| By: | Andreas Freytag (Friedrich Schiller University Jena, University of Stellenbosch, CESifo-Research Network, STIAS Stellenbosch); Sebastian Schuhmann (Friedrich Schiller University Jena) |
| Abstract: | Vor allem bei Vorliegen eines Marktversagens ist ein staatlicher Eingriff nötig und gerechtfertigt. Dieser manifestiert sich in einer Vielzahl von Regeln und Gesetzen, die das Handeln von Marktakteuren einschränken. Die Anzahl der neu eingeführten Gesetze und Vorschriften in Deutschland ist konstant hoch. Als Folge ergeben sich für viele Unternehmen Unsicherheiten hinsichtlich der Erfüllung dieser Vorschriften. Ein Bürokratieabbau ist somit dringend nötig. Bisherige Bemühungen sind jedoch ohne umfassenden Erfolg geblieben. Sunset Legislation - also die Etablierung umfassender Evaluations- und Verfallsklauseln in Regulierungen - kann einen wichtigen Beitrag dazu leisten, ineffiziente oder überholte Regulierungen zu beenden oder anzupassen. So können die Regulierungsdichte gesenkt, rechtliche Klarheit geschaffen und Kosten der öffentlichen Verwaltung reduziert werden. Das kann entscheidend für die Bewältigung aktueller politischer Herausforderungen sein, so auch für die Bewältigung der Klimawandels. English abstract: In the event of market failure, state intervention is urgent and justified. Such interventions consist of rules and laws that restrict the actions of market participants. The number of newly introduced laws and regulations in Germany is constantly high. Consequentially, many companies face uncertainties regarding compliance with these regulations. Cutting red tape is therefore imperative. Efforts to drive this objective forward have not been fully successful. Sunset legislation - i.e. the establishment of comprehensive evaluation and termination clauses - can make an important contribution for ending or adapting inefficient or outdated regulations. Thereby, it can reduce regulation density, facilitate legal certainty, and reduce public administration costs. This can be critical for addressing current major policy challenges, especially tackling climate change. |
| Keywords: | sunset legislation, better regulation, Bürokratieabbau, Überregulierung |
| JEL: | H83 L51 O38 |
| Date: | 2022–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2022-008&r= |
| By: | Antoine Dubus; Patrick Legros |
| Abstract: | Firms may share information to discover potential synergies between their data sets and algorithms, which eventually may lead to more efficient mergers and acquisitions (M&A) decisions. However, as pointed out by Arrow, information sharing also modifies the competitive balance when companies do not merge, and a firm may be reluctant to share information with potential rivals. Under general conditions, we show that firms benefit from (partially) sharing information. Because more sharing of information may increase industry expected profits both when there is head-to-head competition and when there is an M&A, the presence of a regulator who can prevent or allow the M&A can decrease or increase the level of information sharing, as well as consumer surplus, with respect to the no-regulator case. A regulator who can also control the level of information sharing will allow firms to share information. |
| Keywords: | synergies, mergers, sale of data, incomplete information, antitrust, privacy |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/344835&r= |
| By: | David Cayla (GRANEM - Groupe de Recherche Angevin en Economie et Management - UA - Université d'Angers - AGROCAMPUS OUEST - Institut National de l'Horticulture et du Paysage) |
| Abstract: | Conceived in the 1930s as a way to renew free market liberalism, neoliberal doctrines aim to institute a competitive order that would regulate the market as well as society. Yet, interpretations of how competition should be enforced have varied throughout history. The European Union, with its ordoliberal origins, tends to follow an interventionist approach while the United States, where the Chicago School has gained influence, fears that inadequate public interventions may diminish global efficiency. The digital revolution and the appearance of the Tech Giants introduces a new challenge. Faced with massive increasing returns to scale, the competition authorities initially reduced their interventionism to enjoy more market efficiency. But the emergence of digital platforms and the will to protect personal data from abusive uses pushes them now to adopt a new strategy for more interventions that goes beyond the economic and efficiency issues. This paper argues that the neoliberal vision is no longer accurate to regulate the digital economy. It shows that the platform economy is not an alternative way to manage the market, but an alternative to the market itself. To face these issues, a completely new conception of public regulation is therefore needed. |
| Keywords: | Digital economy,Personal data,Competition policy,Neoliberalism,Ordoliberalism JEL Classification Codes: B05 |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-03689401&r= |
| By: | Earnhart, Dietrich; Germeshausen, Robert; von Graevenitz, Kathrine |
| Abstract: | Information-based policies play an important role in environmental protection efforts around the world. These policies use information provision and/or disclosure to shape behavior in order to meet the policy objective; for example, mandatory information disclosure requires firms to measure and report their pollutant emissions. This study investigates the influence of a particular information-based policy - the European Union's mandatory and public emission registry of polluting facilities - on financial outcomes of German firms: revenues, costs, and profits. Using detailed firm-level data for the years 1998 to 2016, we exploit size- and pollution-specific reporting thresholds to isolate the effect of this policy. We compare firms that own facilities required to report in the first EPER wave with similar firms that do not own such facilities. For this comparison, we deploy both a difference-in-differences design and an event study. Our findings suggest that the introduction of EPER in 2001 increased both operating revenues and expenditures, yielding a neutral impact on the operating profits of affected firms. These results support neither of the two competing hypotheses regarding financial outcomes: costly regulation hypothesis and Porter Hypothesis. |
| Keywords: | Information-based Regulation,Environmental Policy,Financial Performance,Porter Hypothesis |
| JEL: | K32 L21 O31 Q52 Q58 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:22015&r= |
| By: | Michele Fioretti (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Jorge Tamayo (Harvard Business School - Harvard University [Cambridge]) |
| Abstract: | Renewable generation creates a tradeoff between current and future energy production as generators produce energy by releasing previously stored resources. Studying the Colombian market, we find that diversified firms strategically substitute fossil fuels for hydropower before droughts. This substitution mitigates the surge in market prices due to the lower hydropower capacity available during dry periods. Diversification can increase prices, instead, if it results from mergers steepening a firm's residual demand. Thus, integrating production technologies within firms can smooth the clean-energy transition by offsetting higher prices during scarcity periods if the unaffected technologies help store renewables more than exercise market power. |
| Keywords: | Energy transition,Renewables,Hydropower generation,Diversified production technologies,Energy storage,Wholesale electricity markets |
| Date: | 2021–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpspec:hal-03389152&r= |
| By: | Comisión Nacional de los Mercados y la Competencia (CNMC) (Comisión Nacional de los Mercados y la Competencia (CNMC)) |
| Abstract: | The study analyzes the competitive conditions in the online advertising sector in Spain and offers a series of recommendations to improve the functioning of this market from the perspective of competition and efficient regulation. Online advertising is key to competition as it allows advertisers to reach their consumers. It is also the main source of funding for content on the Internet and is one of the most important revenue streams for large digital platforms. A more competitive functioning of the advertising industry will help start-ups and innovators to better communicate their messages. This would increase the efficiency of the whole economy. |
| Keywords: | Competition, Online advertising, Digital advertising, Digitization, Data, Regulation |
| JEL: | L40 K21 L82 L86 |
| Date: | 2021–07–07 |
| URL: | http://d.repec.org/n?u=RePEc:awo:epaper:e/cnmc/002/2019_eng&r= |
| By: | Matteo Bizzarri (University of Naples Federico II and CSEF.) |
| Abstract: | This paper studies how input-output connections among firms determine the distribution and the welfare impact of market power in a production network. Firms compete by choosing supply and demand functions relating quantities to prices. In this way, firms' ability to affect prices, the total size, and the distribution of surplus are endogenous objects and are determined in equilibrium by the technology and the network structure. Firms have market power in both input and output markets: restricting market power exclusively in either output or input markets can reverse the ranking of market power among firms. Firms act strategically, taking their position in the supply chain into account: ignoring this effect would yield lower distortions and lower final prices. With a suitable parametric functional form, the equilibrium is in linear schedules. An equilibrium exists for very general networks, and an algorithm to compute it is provided. Finally, horizontal mergers (even with some synergies) always increase the final price, despite countervailing power. |
| Keywords: | production networks, oligopoly, double auction, supply function equilibrium. |
| JEL: | L13 D43 D44 D57 |
| Date: | 2022–06–20 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:648&r= |
| By: | Rohan Best (Department of Economics, Macquarie University); Paul J. Burke (Crawford School of Public Policy, Australian National University) |
| Abstract: | This paper uses household survey data from Australia to investigate whether renters face larger energy bills than otherwise similar households. We find that a negative unconditional effect of renting on residential electricity expenditure becomes positive when controlling for log net wealth, with renters on average spending about 8% more than otherwise similar households. This is a larger effect than in most prior studies. The effect operates via higher usage quantities rather than higher average prices, and a similar effect is found for overall residential energy expenditure including natural gas. Central to the story is that renters tend to have lower net wealth, and net wealth is associated with higher energy use due to reasons including additional appliance ownership. This makes net wealth an important control. The findings cast light on the potential for more ambitious policy responses to reduce energy-related disadvantages faced by renters in Australia. There is also scope for further research into whether similarly large effects are evident in other countries. |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:een:ccepwp:2202&r= |
| By: | Gert Brunekreeft; Marius Buchmann; Julia Kusznir |
| Abstract: | Mit der zunehmenden Dezentralisierung und Digitalisierung der Stromversorgung steigt auch der Bedarf an Innovationen im regulatorischen Rahmen, um die institutionellen Rahmenbedingungen an die sich ändernden Anforderungen anzupassen. Die SINTEG-Verordnung und analoge Ansätze für Reallabore gehen einen Schritt in diese Richtung, führen in ihrer Umsetzung aber noch zu zentralen Hemmnissen für regulatorische Innovationen. Insbesondere der eingeschränkte Anwendungsbereich, der administrative Aufwand und die mangelnden Anreize für Teilnehmer wurden in Rahmen von Experteninterviews als zentrale Schwachstellen der aktuellen regulatorischen Experimente basierend auf der SINTEG-Verordnung identifiziert. Wir schlagen daher in diesem Artikel mit dem Experimentierbudget und der Anwendung von Regulatory Innovation Trials (RIT) zwei Ansätze vor, um bestehende Konzepte für regulatorische Experimente weiterzuentwickeln und um Innovationen im Regelrahmen (bspw. der ARegV) zu ermöglichen. |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:bei:00bewp:0038&r= |
| By: | Armel Jacques |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:tep:tepprr:rr22-03&r= |
| By: | Noemie Martin; Pierre-Olivier Pineau |
| Abstract: | Reducing energy consumption and carbon emissions are two cornerstones of the fight against climate change. Signaling negative externalities of individual consumption on the environment is at the heart of public policies, and usually materializes through an increase in the price of polluting good and services. However, social resistance typically arises when such policies are implemented. In this experiment, we are interested in testing the context in which individuals would be willing to pay more for electricity. We use the situation of Québec (Canada), where low-cost hydropower sold below market value, akin to a consumption subsidy, leads to high residential consumption. Increasing regulated prices closer to their market value would result in a direct welfare gain and free some green energy, reducing greenhouse gases (GHG) in other sectors. The choice to pay more is a prisoner’s dilemma, and we find in this framework that giving clear and transparent information on the consequences of the price increase induces a majority of people to choose to pay more. In addition to the economic benefit of the public good, the presence of the environmental benefit increases contributions. Participants with a more severe budget constraint tend to contribute less. These results are encouraging for the development of efficient energy policies reducing GHG emissions. La réduction de la consommation d'énergie et des émissions de carbone sont deux pierres angulaires de la lutte contre le changement climatique. Signaler les externalités négatives de la consommation individuelle sur l'environnement est au cœur des politiques publiques, et se matérialise généralement par une augmentation du prix des biens et services polluants. Cependant, la résistance sociale se manifeste généralement lorsque de telles politiques sont mises en œuvre. Dans cette expérience, nous souhaitons tester le contexte dans lequel les individus seraient prêts à payer plus cher pour l'électricité. Nous utilisons la situation du Québec (Canada), où l'hydroélectricité à faible coût vendue en dessous de la valeur du marché, ce qui s'apparente à une subvention à la consommation, entraîne une forte consommation résidentielle. Une augmentation des prix réglementés plus proches de leur valeur de marché entraînerait un gain de bien-être direct et libérerait une partie de l'énergie verte, réduisant ainsi les gaz à effet de serre (GES) dans d'autres secteurs. Le choix de payer plus est un dilemme du prisonnier, et nous trouvons dans ce cadre que donner des informations claires et transparentes sur les conséquences de l'augmentation des prix incite une majorité de personnes à choisir de payer plus. En plus de l'avantage économique du bien public, la présence de l'avantage environnemental augmente les contributions. Les participants ayant une contrainte budgétaire plus sévère ont tendance à moins contribuer. Ces résultats sont encourageants pour le développement de politiques énergétiques efficaces réduisant les émissions de GES. |
| Keywords: | Public good,Voluntary environmental action,Green electricity, Bien public,action environnementale volontaire,électricité verte |
| Date: | 2022–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2022s-18&r= |
| By: | Rim Lahmandi-Ayed (UR MASE - Modélisation et Analyse Statistique et Economique - ESSAIT - Ecole Supérieure de la Statistique et de l'Analyse de l'Information - Université de Carthage - University of Carthage); Hejer Lasram (UR MASE - Modélisation et Analyse Statistique et Economique - ESSAIT - Ecole Supérieure de la Statistique et de l'Analyse de l'Information - Université de Carthage - University of Carthage, Innov'com, Sup'com, University of Carthage Ariana, Tunis, Tunisia); Didier Laussel (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This paper studies a model of vertical successive monopolies where students/workers buy qualication from an university then sell skilled labor to a monopolist who itself sells its nal product to consumers, linking this way for the rst time the education sector to the labor and output markets. The question is whether a public university should be partially or fully privatized. The partially privatized university xes the tuition fees in order to maximize a weighted sum of prots and social welfare. A larger share of the private sector means lower training costs but, at given training costs, higher margins and lower nal output levels. We prove that partial privatization of the university is optimal when public ineciency is not too severe and that the State keeps in this case a large majority of university's shares. When the ineciency parameter increases above some critical level, one switches discontinuously to full privatization. We show that these results are robust to the introduction of a feasibility constraint requiring university prots to be non-negative following privatization. |
| Keywords: | Education,labor market,successive monopolies,vertical dierentiation,partial-privatized university,State regulation |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03591048&r= |
| By: | J. Scott Marcus |
| Abstract: | A version of this Policy Contribution will be published as a chapter in Whalley, J., V. Stocker and W. Lehr (eds) (2023) Beyond the Pandemic? Exploring the impact of Covid-19 on telecommunications and the internet, Emerald Publishing, forthcoming COVID-19 has accelerated the shift to remote work. Enabling knowledge workers to do their jobs from home or elsewhere brings benefits by increasing labour participation, avoiding unproductive commuting time (thus reducing the... |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:bre:polcon:49075&r= |