|
on Regulation |
| By: | Lisa Bagnoli; Salvador Bertomeu-Sanchez; Antonio Estache; Maria Vagliasindi |
| Date: | 2021–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/335116&r=reg |
| By: | Dippon, Christian M.; Hoelle, Matthew D. |
| Abstract: | Online platforms and marketplaces are services that bring consumers and producers together via the internet by providing consumers direct and instantaneous access to an extensive array of global goods and services and by enabling producers to reach consumers largely untethered by size and geographic reach. The popularity of online platforms and marketplaces attests to the societal benefits these services offer to consumers and producers alike. However, some US lawmakers and competition authorities believe that the growth of these platforms is a threat to competition. To remedy this perceived threat, some lawmakers in the House of Representatives and the Senate introduced several bills that would effectively subject certain companies to common carrier, structural separation, and line of business restrictions. The proposed bills differ in several important aspects, but they all seek to regulate online platforms and marketplaces larger than a certain size threshold. Although there is extensive media coverage and public debate on these bills, no one has addressed the actual scope and economic impact on consumers, businesses, and the overall US economy. Our analysis demonstrates that if the bills are enacted they would impose $319 billion in costs on Google, Apple, Facebook, Amazon, and Microsoft. These companies, in turn, would pass these costs through to consumers and business users via higher retail prices and reduced service offerings. Consumer effects are analyzed using a consumer survey to measure the lost consumer welfare for one illustrative service, Amazon Prime membership. We find that consumers would lose $22 billion in consumer welfare per year if Amazon would be forced to discontinue or reduce the services presently included in the Amazon Prime membership to comply with the bills. Our analysis also demonstrates that the bills impact far more companies than the primary targets-Google, Apple, Facebook, Amazon, and Microsoft. Rather, the bills would directly constrain at least 13 additional companies that operate online platforms in the short term. The proposed legislation would impact foreign companies doing business in the United States significantly less than US companies given the US-specific nature of the bills' primary size thresholds. Thus, the total economic costs of the bills stand to far exceed the numbers we calculated for the primary targets. Moreover, we find that adjusting the size threshold for inflation does not reduce the bills' economic costs. The market capitalization of the largest US publicly traded companies has historically grown much faster than inflation, which largely obviates any adjustment, and implies that over the next decade there could be well over 100 US companies that must change their strategies and business models because of these bills. The bills would not achieve the stated goals of their proponents as they would have no beneficial effect on inflation and likely deleterious effects on innovation. With regards to inflation, 96 percent of the most influential economists at leading US universities do not agree with the claim that antitrust interventions could successfully reduce US inflation over the next 12 months. The overwhelming consensus among economists is that regulatory measures in the proposed bills would be a poor substitute for fiscal and monetary policy and therefore unlikely to have any significant effect on inflation. |
| Keywords: | online platform regulation,competition analysis,international competitiveness,regulation |
| JEL: | L11 L12 L41 O31 J18 L86 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse22:265621&r=reg |
| By: | Forge, Simon |
| Abstract: | The global scale web platforms coming to dominate key parts of the world economy seem to be a phenomenon that is less than a decade old, or perhaps slightly more, really starting from 2000-2005. In reality their origins in terms of their business models can be traced to the evolution of the software and computing industries more generally, over the three preceding decades1 2 3. But it does not stop there. Going further back to the late 1890's, useful regulatory models can be drawn today from the prior anti-trust regulation against what was "big tech" then - and was used throughout the first parts of the twentieth century. For example, the concept of reversing acquisitions in the past has been standard practice under the USA's original anti-trust law and has been proposed in the USA Senate recently, by Senator Elizabeth Warren. The paper briefly sketches the relevant directions in anti-trust regulation today, today with the return to the earlier views of terminating abuses of significant market power (SMP) in oligopoly and monopoly. It contrasts today's perspective with the regulatory climate that the "digital tech giants" grew up in, shaped by the monetarist Chicago School (of Friedman's 1970 paper and Judge Bork's 1978 thesis) that USA anti-trust principles should consider large (dominant) enterprises as beneficial for consumer price protection. Essentially it is a regulatory theory which argues for preserving monopolies. Combined with corporate lobbying and its politics, it has reduced anti-trust use over 1998 - 2018 to effectively screen the USA's web platform owners from regulatory oversight, preserving global market dominance. So the new problems are to some extent old problems often with some new malpractices for an online marketplace. However, unfortunately regulators and especially governments have been slow to recognise this and so shape effective action. This raises two key research questions in this area. The first question is practical - what do recent major tech platform anti-trust cases indicate on which legal arguments and approaches are successful and what fails today in recent judgements. Many cases have not been successful and so reasons and context for any positive results are of vital interest. If there is a failure, where does the problem lie - is it with the regulation itself, confusion over the defendant's market position or infringement of consumer or competitor rights and /or with the relevant court's interpretation of that, including a flawed presentation of arguments. Key areas in forming a successful action need to be identified, especially for the more recent cases over the last year or so, to provide guidance in the current climate in which much uncertainty reigns. Analysis here would also anticipate the possible impacts of new legislation, especially that from the EU in the DMA and DSA and the possibilities presented by six different proposals before the USA Congress. The second key question draws on how to form a reasonable solution for reducing SMP abuse through spin-offs, and/or demergers, both vertically and horizontally - ie just how to shape future regulation today. However there are some significant new factors with the march of globalisation since 2000 that were not present in previous decades. They are especially challenging for the effectiveness of the current and proposed regulation in the EU and the USA. Thus, the latest crop of dominant firms harvest and depend on success from what may be termed a 'trialogue' of more novel economic factors. These feed the phenomenal financial and market success for the half dozen main players across today's major economic vertical sectors, leading to Apple's breakthrough to the level of a US$3 Trillion market capitalisation in early 2022. How these platforms may be treated in terms of regulatory ex ante, or ex post, legislation is of key interest. It is in this direction that solutions for SMP abuse lie, with the new generation of European antitrust Acts. Hopefully the paper will offer practical inputs on the fundamental question of the comparative chances of long term success for a regulatory action at all and thus in increasing competition in the subject market. The methodology used is based on drawing together evidence from the markets and judicial procedures to produce the analysis for the two research questions, with insights, including those economic factors in reconfiguration of the firm for increasing digital markets competition. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse22:265627&r=reg |
| By: | Deshpande, Advait; Lechardoy, Lucie; Lupiáñez-Villanueva, Francisco |
| Abstract: | As the online advertising market has grown, issues such as high volume of ads, highly personalised and targeted ads, the role of algorithmic biases, lack of transparency of ad placement, and complex financial flows in the ad tech supply chain have received increased attention in academic and popular literature. Despite concerted efforts within the industry and legislative action at national and international levels, available measures to monitor and detect these challenges are often perceived to lag behind increasing layers of intermediation and ever-increasing footprint of the online platforms. The aim of this paper is to discuss how a comparative and integrative framework for regulatory oversight of online advertising could be assembled. For this purpose, the paper draws on a literature review of peer-reviewed articles and grey literature to identify the challenges in online advertising, known mitigation strategies, and possible outcomes of the strategies. As part of the initial specification of the framework developed, the paper covers broad categories of market players, type of challenges, mitigation strategies, and intended outcomes for regulatory oversight of online advertising. Additional areas for investigation and potential improvement of the draft framework are also identified. The ideas discussed in this paper are expected to be of interest to digital economy researchers, policy researchers and policy makers, various players in the online advertising supply chain, public and private sector stakeholders monitoring and investigating the online advertising ecosystem, and anyone interested in balancing the economic gains of online advertising against the challenges it poses to the platform end-users and the wider online platform economy. |
| Keywords: | Online advertising,Online platforms,Platform regulation,Technology policy |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse22:265620&r=reg |
| By: | Dalvi, Manoj; Gadkari, Ahan |
| Abstract: | India's choice to control its markets was executed in two stages: one for each phase of the country's industrial strategy and philosophy towards resource allocation and market functioning. Between 1950 and 1991, the first phase was defined by a socialist ideology exhibited via a mixed economy and a propensity for government engagement in economic activities. During this time, policymakers were more concerned with avoiding economic power concentration than with stimulating competition. As the Indian economy modernised policymakers moved from preventing concentration of economic power as symbolised by the Monopolies and Restrictive Trade Practices Act (MRTP) of 1969 to the Competition Act 2002 ("Act"), to regulate anti-competitive agreements that have the potential to have a material adverse effect on competition in the Indian economy. In the modern Indian economy, the Competition Commission of India (CCI) has shown inconsistency in its enforcement on platform dominance; this inconsistency may now extend to blockchain as well. The purpose of this paper is to evaluate the necessity of new antitrust tools in the evolving economy of an emergent market and to push for more certainty in the CCI's enforcement of anti-competition laws in India. The increasing digitization of global and Indian markets in recent years, facilitated by the emergence of platforms such as Amazon, Apple, Google, and Facebook have raised questions about the Act's appropriateness and its applications. The CCI has received several complaints over the past few years about creative, technology-driven, two-sided marketplaces that have become a vital element of the Indian economy. In such situations, it becomes easier for certain platforms to practice deep discounting, cash-back offers and other schemes to constantly attract newer users. There is widespread agreement that CCI's reaction to these dynamic markets leaves much to be desired. Since technology has now evolved from the "platform" to "blockchain"; new challenges arise and it has also raised questions if the Act itself needs to be suitably updated to meet the challenges unique to these markets. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse22:265617&r=reg |
| By: | Read, Oliver; Diefenbach, Carolin |
| Abstract: | This paper provides background to the upcoming EU regulation on Markets in Crypto-Assets (MiCA). The first step to regulate crypto-assets at EU level was taken by including virtual currencies in the revision of the Anti-Money Laundering Directive (5AMLD) which came into force 2018. Initial coin offerings fueled growth to a market with a variety of crypto-assets (payment, investment/security, utility and hybrid tokens). In principle, MiFID II should cover investment/security tokens by treating these as financial instruments. In January 2019, EBA and ESMA identified regulatory gaps at EU level. The announcement on the stablecoin project Libra in June 2019 sent shockwaves and led to defensive reaction against global stablecoins by regulators in light of significant risks and challenges posed. The EU institutions adopted strict positions against global stablecoins taken by the G7 and the G20. In September 2020, the European Commission launched the MiCA draft legislation to plug regulatory gaps concerning payment (including stablecoins) and utility tokens. Issuers, offerors and service providers of crypto-assets that are not financial instruments would be regulated under MiCA at EU level. Stricter rules should apply for stablecoins. After negotiations between the EU institutions, the final agreed MiCA text will go to plenary vote soon. The EU regulation will come into force in the EU member states in 2024. Many additional areas of action (Decentralized Finance, non-fungible tokens, EU taxonomy for sustainable activities) had to be left out from the MiCA scope for the sake of finalising the legislation. |
| Keywords: | Bitcoin,crypto-assets,crypto-asset service providers,cryptocurrencies,distributed ledger technology (DLT),Diem,electronic money,initial coin offering (ICO),Libra,Meta,Markets in Cryptoassets (MiCA),non-fungible token (NFT),payment tokens,security tokens,stablecoins,TerraUSD,Transfer of Funds Regulation (ToFR),utility tokens |
| JEL: | E42 G15 G28 O33 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wifinw:132022&r=reg |
| By: | Ahmed S. Alahmed; Lang Tong |
| Abstract: | We propose a social welfare maximizing mechanism for an energy community that aggregates individual and shared community resources under a general net energy metering (NEM) policy. Referred to as Dynamic NEM, the proposed mechanism adopts the standard NEM tariff model and sets NEM prices dynamically based on the total shared renewables within the community. We show that Dynamic NEM guarantees a higher benefit to each community member than possible outside the community. We further show that Dynamic NEM aligns the individual member's incentive with that of the overall community; each member optimizing individual surplus under Dynamic NEM results in maximum community's social welfare. Dynamic NEM is also shown to satisfy the cost-causation principle. Empirical studies using real data on a hypothetical energy community demonstrate the benefits to community members and grid operators. |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2211.09360&r=reg |
| By: | Lehr, William |
| Abstract: | This paper seeks to situate an understanding of the long-term implications of Smart Contract (SC) technologies as a cluster of technologies that together with AI (shorthand for software applications) and 5G (shorthand for networked ICTs) will prove important for enabling a future wherein any task may be automated. Although the "any task can be automated" future is far off and AI, 5G, and SC technologies are still evolving rapidly, this paper argues for timely consideration of the policy implications for SCs. Like those other technologies and to a perhaps even greater extent, SC technologies (which include cryptocurrencies, blockchain, and smart contracts as distinct elements) have been the focus of excessive hype that has given rise in the academic and mass media press to misconceptions about what is important about SCs that this paper seeks to identify and dispel. In an effort to start to understand the challenges and likely trajectory for SC regulation, this paper focuses on FINTECH and the policy challenges that are emerging there related to SCs. The overall conclusion is that lots more needs to be done, and while it is clear that SCs will play an important role in FINTECH's future and the regulation of that future will require significant focused research attention, it is unclear how useful such research will be as a template for addressing the challenges that will emerge as SCs migrate to other sectors where the economic implications are expected to be much larger. The paper concludes with speculations about where key trends in SC technologies seem to be going. |
| Keywords: | Blockchain,5G,Smart Contracts,Digital Markets,Cryptocurrencies,Regulation,FINTECH |
| JEL: | D86 K12 L14 O3 D51 D52 D4 G2 P00 P48 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse22:265650&r=reg |
| By: | Siboni, Gabi; Sivan-Sevilla, Ido (University of Maryland) |
| Abstract: | Regulation in cyberspace is an emerging challenge. It is a complex and dynamic domain that is largely driven by the business-civilian sector and has the potential to cause significant damage to national security. This essay surveys the unique characteristics of cyberspace and the various strategies adopted in other countries in order to manage cyber risk. It proposes a multilayered regulatory model together with concrete recommendations for the regulation of the business-civilian sector in cyberspace. The resilience of the private sector in cyberspace is directly related to national security. The private sector usually constitutes the weak point where a cyber-attack develops. Nonetheless, the survey of regulation in cyberspace in Western countries, including Israel, points to the lack of an appropriate response to this weakness. This essay attempts to fill that gap and, in order to do so, it makes use of the regulatory principles used by other countries— the United States, Britain, France, Germany, and the European Union—and also learns from other regulated domains, namely environmental protection and nuclear energy. National approaches, the variety of regulatory tools, and the systems of incentives used in the attempts to regulate cyberspace worldwide, together with models for collaboration between the public and private sectors and state compensation mechanisms that were observed in environmental protection and nuclear energy domains, have contributed to the development of an innovative regulatory model for cyberspace in the business-civilian sector in Israel. |
| Date: | 2022–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:zeqpk&r=reg |
| By: | Afia Malik (Pakistan Institute of Development Economics, Islamabad) |
| Abstract: | The power sector in Pakistan needs effective regulation and not a regulatory burden. A single power sector regulatory authority, i.e., NEPRA with adequate and effective regulatory powers, itself monitored by the government will_ send consistent signals to company operators, overcome the issue of insufficient professional capacity, and strengthen the authority’s vulnerability to political interference. |
| Keywords: | Power Sector, Regulation, Regulatory, |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:pid:pviewp:2022:35&r=reg |
| By: | Matúš Bilka (University of Economics in Bratislava, Faculty of Economics, Department of National Economy); António Portugal Duarte (Univ of Coimbra, CeBER, Faculty of Economics); Martin Lábaj (University of Economics in Bratislava, Faculty of Economics, Department of National Economy) |
| Abstract: | This paper provides new empirical evidence on entry and competition in the Portuguese market of retail pharmacies after its deregulation in 2004. We estimate the market-size thresholds required for pharmacies to enter the market and analyse the toughness of competition in the market. There are three main findings in the paper. First, entry thresholds decreased over the years, which led to better coverage and availability of pharmaceutical services. Second, the toughness of competition among pharmacies increased and the deregulation of over-the-counter drug sales contributed to the expansion of services provided by pharmacies. Third, population restrictions that prevailed in the market were too restrictive and should be reconsidered by regulation authorities.. |
| Keywords: | Entry model, market competition, regulation, retail pharmacy. |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:gmf:papers:2022-07&r=reg |
| By: | Nam, Sangjun; Kwon, Youngsun |
| Abstract: | Take-it-or-leave-it, in which users have to provide personal information as required by service providers, has been a dominant form of agreement between online service providers and users. The regulators recently began to prohibit dominant online platforms from collecting personal data based on the 'take-it-or-leave-it' basis because this clause is likely to harm consumer welfare without giving users choices for using the service. In order to improve regulatory efficiency, we need to devise more flexible alternative service provisions balancing privacy concerns and enhanced service based on personal preference. To accomplish this goal, we need to understand the users' attitudes related to personal behavioral data collection for both regulators and online platforms. In this context, we aim to estimate the psychological costs that users bear when they need to exchange personal data for service use. Quantifying the perceived cost of personal data collection with monetary reward was common. However, it is not easy to determine whether the perceived cost is high or not because the monetized value of personal data is not self-evident. To address this issue, we consider attention cost, one of the representative inconvenience costs of using free online services in the analysis. This study collects the data using a conjoint survey and estimates the psychological costs of personal data collection using the mixed logit model and latent-class logit model. Our results show that the respondents' perceived cost for overcoming the 'take-it-or-leave-it' condition is heterogeneous, and only one of four respondent segments (around 30% of respondents) perceived it as significant. Moreover, the results suggest that the perceived risks and benefits of personal data collection affect the psychological cost. It implies that privacy calculus theory can be a meaningful framework for understanding users' attitudes toward behavioral data collection on online platforms. |
| Keywords: | Personal data,Online platform,Privacy calculus theory,Information disclosure,Attention cost |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse22:265662&r=reg |
| By: | Tobias König; Renke Schmacker |
| Abstract: | Sin taxes have become a widely suggested policy instrument to discourage the consumption of goods deemed harmful to individuals and society. Using surveys and experiments on a representative sample of the US population, we provide evidence on how individuals think and reason about such corrective policies. We reveal that preferences for taxes on sugar-sweetened beverages (SSBs) are driven by normative considerations, including efficiency-related ideas and distributional concerns. In contrast, self-interested motives play only a minor role. Among the efficiency arguments, people place relatively large weight on externality correction, and motives to correct health cost misperceptions matter more than motives to correct a lack of self-control. However, anti-paternalistic attitudes and regressivity concerns are also prevalent, which helps to explain why the majority of respondents oppose SSB taxes, even though they agree that behavioral biases and externalities are relevant. Preferences for SSB taxes turn out to be malleable. Explaining to individuals the idea behind corrective taxation yields significant increases in the support for SSB taxes and the general openness to paternalistic intervention. |
| Keywords: | sin tax, internality, externality, soda tax, self-control |
| JEL: | H23 I18 D12 D78 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10046&r=reg |
| By: | Marco de Pinto; Laszlo Goerke; Alberto Palermo |
| Abstract: | We consider a principal-agent relationship with adverse selection. Principals pay informational rents due to asymmetric information and sell their output in a homogeneous Cournot-oligopoly. We find that asymmetric information may mitigate or more than compensate the welfare reducing impact of market power, irrespective of whether the number of firms is given exogenously or determined endogenously by a profit constraint. We further show that welfare in a setting with adverse selection may be higher than the maximized welfare level attainable in a world with perfect observability. |
| Keywords: | adverse selection, oligopoly, welfare |
| JEL: | D43 D82 L51 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10003&r=reg |
| By: | Anselm Hager; Moritz Hennicke; Werner Krause; Lukas Mergele |
| Abstract: | The fall of the Berlin Wall in 1989 brought the end of socialism, yet pro-socialist sentiment regained momentum surprisingly quickly across Eastern Europe. Why did voters move back to an ideology that was associated with unfree elections and lackluster economic performance? This paper points to the rushed privatization of East European economies as one plausible driver of the revival of socialist voting. Using micro-level data from East Germany, we show that firm privatizations led to a marked resurgence of the former Socialist Unity Party. We argue that this effect is likely due to perceived inequity: Socialist voting thrived whenever firms were sold to Western elites, which East Germans took as a sign that capitalism was not meritocratic. |
| Keywords: | privatization, socialist backlash, structural change, democratization |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10030&r=reg |