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on Regulation |
| By: | Borenstein, Severin; Bushnell, James |
| Abstract: | Within most developed economies, the general blueprint for reducing greenhouse gas emissions involves decarbonizing the electric sector, followed by significant transitions to electricity within the transportation, commercial, and residential sectors. Recent trends summarized in Figure 1 reveal how early in this process the United States is. Overall US greenhouse gas (GHG) emissions declined from 5, 631 mmTons in 2010 to 5, 298 in 2018 despite a decade of economic growth. However, this drop of 333 mmTons reflected a nearly 500 mmTon/year decline in the electric sector partially offset by increases in all other major sectors, including the residential (958 to 1, 007) and transportation (1, 874 to 1, 935) sectors.Substantial progress has been made in electricity, and the combination of rapidly increasing renewable generation and looming retirements of substantial coal generation capacity suggest this will continue, if not accelerate. The GHG growth in all other sectors during the 2010s indicates just how important decarbonization in these sectors will be to accelerate declines in overall emissions. In this paper, we focus on two of these sectors: residential transportation (i.e., light-duty vehicles) and direct residential emissions. Unlike the decarbonization of electric generation, decarbonizing these sectors will require decisions by millions of individual consumers, who will in turn need to commit to newer technologies capable of providing services powered by electricity. There are a myriad of factors driving such choices, including the relative convenience of using the new technologies, the potential need for upgrading household electrical systems, and the relative costs of the new appliances or vehicles. Another factor is the age of these durable goods. Residential furnaces and water heaters can last more than 20 years, yet according to the Residential Energy Consumption Survey, over two-thirds of these appliances are currently less than 15 years old (Figure 2).One other fundamental factor is the costs of powering an electric vehicle (EV) or appliance relative to their conventional counterparts. While electric vehicles and appliances have been touted as significantly less expensive to use, this is not the case in all locations or circumstances. In a survey of the current electrification landscape, Davis (2021) shows that electricity price relative to other energy sources is the key consideration in consumer choices regarding space heating. Consumer acceptance of electric appliances will be impaired if they are only modestly less expensive, let alone more expensive, to use than their conventional counterparts, given the other challenges confronting a transition to electrification. This challenge is even more daunting when one considers how local environmental and utility regulatory policies affect energy prices. In the next two sections of this paper we characterize the marginal retail prices of the key fuels—electricity, gasoline, and natural gas—relative to the social marginal costs of those fuels. One key takeaway is that gasoline is underpriced relative to its social marginal cost in nearly all of the United States, while electricity is highly overpriced in some of the most populous parts of the country. In section 4 we discuss why the price of electricity, and to a lesser extent natural gas, came to be so much higher than social marginal cost, while gasoline remains underpriced. The main point here is that traditional approaches to utility rate design have created large upward biases in utility prices. While the underpricing of environmental externalities somewhat offsets this upward bias, on both coasts of the United States the externality costs are not sufficient to offset regulatory rate distortions in electricity. In Section 5 we explore options for correcting this situation. Most options involve a rethinking of both the objectives and implementation of utility rate design. In Section 6, we explore how mispricing energy is likely to affect incentives for residential electrification. Section 7 concludes with a list of topics for future research raised by the issues and analysis discussed.To read the full working paper, click "Download" above. |
| Date: | 2021–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-21-35&r=reg |
| By: | Milo Bianchi; Matthieu Bouvard; Renato Gomes; Andrew Rhodes; Vatsala Shreeti |
| Abstract: | We connect various streams of academic literature to analyze how alternative competition and regulatory policies may affect the development of digital financial services, and particularly of mobile payments. Our main objective is to highlight the extent to which existing models, often coming from related industries (such as telecom, payments, and banking) can be applied to study the effects of mobile money interoperability. We focus on four dimensions of interoperability. First, we consider mobile network interoperability (whether clients of one telecom can access another telecom's payment services) in connection with the IO literature on tying. Second, we discuss platform level interoperability (the ability to send money off-network) in light of the literature on compatibility. We also build on the behavioral IO literature to suggest how the effects of interoperability may be very heterogeneous across various types of firms and consumers, or even backfire. Third, we consider interoperability in the cash-in-cash-out agent network, in light of the literature on co-investment in network industries, and of more specific studies on ATMs' interoperability. Fourth, we discuss how the literature in banking and on data ownership can be used to understand interoperability of data. We conclude with some broader remarks on policy implications and on possible directions for future research. |
| Keywords: | mobile payments, interoperability, financial inclusion, competition policy |
| JEL: | L51 L96 G23 G28 O16 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:1092&r=reg |
| By: | Bowen, Thomas; Ivanova, Chrissie; Palmer, Karen (Resources for the Future); Shobe, Bill; Domeshek, Maya (Resources for the Future) |
| Abstract: | All over the United States, state governments are pursuing decarbonization on their own and in concert with other states. Much of this effort has focused on the electricity sector, where decarbonization will require investment in clean generation and transmission and a bigger focus on demand management. On April 5, 2022, the University of Virginia, the National Renewable Energy Laboratory, and Resources for the Future gathered experts to discuss the unique barriers that states face as they work toward electricity decarbonization.Three important institutional issues arise when pursuing subnational climate policy: coordination, authority, and expertise. Coordination among a large number of states (and other jurisdictions) is challenging even when the costs and benefits of acting are confined to the jurisdictions involved. For decarbonization, with costs and benefits shared both among and beyond the acting states, the transaction costs of coordination can be expected to rise rapidly. Such problems exist within states as well, as effective decarbonization policies require actions across traditionally independent lines of agency authority. The difficulty of inducing cooperation across agency lines of authority presents a substantial friction that can slow the drive to decarbonization. Add to this the important role of regional Independent System Operators (ISOs) and other nonstate actors, and the coordination problems for state-level action can appear daunting indeed.The federal structure of authority in the US limits the range of state action. US states, as with subnational jurisdictions everywhere, have limited authority, especially in addressing problems that cross state lines, and they are also limited in the ways in which they can cooperate.Finally, large economies of scale exist in developing the expertise and institutional capacity needed to address the challenge of global warming. Once again, coordinating investments in new knowledge and expertise among the states would probably yield large gains, but allocating costs and benefits across jurisdictions poses significant challenges.For clean generation investment, barriers include market structures that disfavor renewable energy resources, backed-up interconnection queues, local siting opposition, policy uncertainty, and challenges in arranging for efficient procurement of clean power. Barriers to needed transmission investment include institutional mismatch between state agencies and Regional Transmission Operators (RTOs) with authority over transmission, difficulty agreeing on cost allocation for interstate and interregional transmission, insufficient state government capacity for studying and engaging with the planning process, and local opposition. Demand management is hampered by lack of access to energy efficiency for low-income households and renters, inadequate metrics for energy efficiency, inadequate price incentives for consumers, incomplete incentives for utilities and transmission investors, and inequitable and confusing rate structures. Workshop participants suggested ways that states can engage with the Federal Energy Regulatory Commission, RTOs, state public utilities commissions, other state agencies, regulated utilities, independent power producers, and local governments to address these barriers. Participants also suggested many promising areas for future research that academics, state and federal agencies, national labs, and independent research organizations can address to help states move toward electricity decarbonization. |
| Date: | 2022–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-22-10&r=reg |
| By: | Drake, Samielle (Department of Economics, Umeå University); Xu, Fei (Department of Economics, Umeå University) |
| Abstract: | We examine, theoretically and empirically, the impacts of regulation on optimal bids and competition in public procurement depending on whom the regulation is imposed on. We show that regulation imposed solely on the winner of a procurement contract increases competition whereas regulation imposed on all potential bidders reduces competition. Both types of regulation raise bids in equilibrium. Furthermore, the expected outcomes of regulation depend on its enforceability as bidders adjust their optimal bids and the delivery of the contracts accordingly. Finally, the model’s theoretical implications are supported by behaviours observed in public procurement of cleaning services in Sweden. |
| Keywords: | Public Procurement; Regulation; Competition; Optimal Bids |
| JEL: | D44 H57 L51 |
| Date: | 2023–05–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:1013&r=reg |
| By: | Lílian Santos Severino (Conselho Administrativo de Defesa Econômica (Cade), Departamento de Estudos Econômicos); Guilherme Mendes Resende (Conselho Administrativo de Defesa Econômica (Cade), Departamento de Estudos Econômicos); Ricardo Carvalho de Andrade Lima (Ministério Público Federal) |
| Abstract: | Competition policy aims to preserve market competition by, for example, preventingmergers that harm consumers. Mergers can diminish competition by facilitating either tacit orexplicit collusion or may creating a unilateral incentive to increase price. While thesepossibilities provide an economic rationale for merger enforcement, mergers might be relatedto improving how markets function. Maldonado and Severino (2019) show that moreproductive firms acquire target firms that are more productive, which indicates the synergythat M&A can bring. Generally, Antitrust Authorities (AAs) analyze cases of M&A and potentialanticompetitive conducts, such as collusion. In this study, we will focus on the decisionscarried out by the Brazilian Antitrust Authority, the Administrative Council for EconomicDefense (CADE), regarding M&A's in the Brazilian airline sector in recent years. The Brazilianairline sector has a fundamental role in the economic development. In 2019, it representedapproximately 1% of the global GDP and faced a growth of 3.3% in air transport expensesregarding to the previous year (IATA, 2019b). In Brazil, Section 88 of the Law 12529/2011 regulates the M&A cases which must bereviewed by Cade. During reviews, the Antitrust Authority studies the impacts that theoperation can have on the market. Some well-known international methodologies, such asthe Upward Pricing Pressure (UPP) and mergersimulations, are commonly used to identify thelikelihood of a merging firm raising prices after the operation – which can be widespread tothe entire market. If prices are expected to rise, consumers will be adversely affected by themerger; thus, to prevent it, CADE can clear a transaction subject to remedies, or block it. Onthe other hand, if the deal does not pose any competition issues, Cade may clear thetransaction unconditionally. Nowadays, many studies indicate the importance of evaluating mergers outcome, especially within the Antitrust Authorities, since "ex-post evaluations can help to determine ifan intervention (or non-intervention) has achieved its objectives and, if not, the reasons itfailed to do so" (OECD, 2016). In response to this demand, the Competition Division of theOECD published a Guide for ex post evaluation to advise authorities on the importance ofmonitoring the outcome of their decisions, which can help to better design futureinterventions. Furthermore, it is worth noting that by carrying out and disclosing ex postmerger evaluations, the antitrust authorities present more transparency towards society and highlight the importance of competition enforcement. In 2019, for instance, Cade publishedits first ex post merger evaluation, which analyzed the impact on products prices of a mergerbetween two firms of the food industry – namely the Sadia-Perdigão case (Severino, Resende, Bispo, 2019). The present study aims to analyze the effects on the average airfare on domestic routesby two mergers cleared by Cade in this sector (GOL and Webjet; and Azul and Trip). This studycontributes to monitoring the competition policy in Brazil in the airline industry, a key sectorfor the country's economic development, by estimating difference in differences (DID) modelsconsidering as dependent variables fare prices and seats sold from July 2010 to December2019. The results indicate a reduction of about 8% in GOL's fare on routes in which GOL andWebjet operated before the merger (overlap routes) and an increase of approximately 38% inthe number of seats sold by GOL in those same routes after the merger. On the other hand, in the merger case of Azul and Trip, we did not find a statistically significant effect on the fare, but we found an increase of nearly 27% in the number of seats sold by Azul on overlap routesafter the transaction. These results present relevant implications. First, we cannot find anticompetitive effectsresulting from these mergers in the Brazilian airline sector; at the international field, similarresults were found by Carlton et al. (2019) during the analysis of three legacy mergers in theUnited States (namely Delta-Northwest, The United-Continental, and The American-USAirways). Secondly, these two mergers were cleared by the Brazilian authority subject toconditions related to the efficiency of the Santos Dumont airport; thus, it is possible to statethat Cade achieved its purpose of protecting competition for the benefit of consumers. Finally, we must take into consideration that these were e specific mergers in a particular period, whichdoes not indicate that these results should be found in every transaction in the airline sector. |
| Keywords: | Fusões e Aquisições, Política de defesa da concorrência, Avaliações ex post |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:atg:wpaper:202103&r=reg |
| By: | Susana Moreno Sánchez (Banco de España) |
| Abstract: | Since the United Kingdom’s departure from the EU, policy decisions made by both the UK and the EU will, over time, lead to regulatory divergence and create barriers to trade between the two separate regulatory and legal spaces. The UK government has already undertaken a comprehensive review of all retained EU law, to reap the benefits of its regulatory autonomy, and specific regulatory reforms have been identified in high-growth sectors. Yet there are some constraints. The UK has committed to respecting certain EU and international standards provided for in the Trade and Cooperation Agreement concluded with the EU. Most notably, a common level of protection is secured in certain areas deemed relevant for the level playing field, such as subsidy control, taxation, labour and social standards and environment and climate, although the strength of the level playing field safeguards differs considerably by area. Moreover, regulatory divergence would come at the expense of single market access. In this setting, certain regulatory measures and subsidies granted to economic operators could be a potential source of political friction between the EU and the United Kingdom and could lead to future legal disputes under the Trade and Cooperation Agreement. At the first meeting of the Trade Specialised Committee on Level Playing Field for Open and Fair Competition and Sustainable Development held on 12 October 2021, EU and UK representatives addressed issues related to subsidy control (the UK’s Subsidy Control Bill and the EU’s proposed Regulation on foreign subsidies), specific subsidies (the UK’s renewable energy schemes and the EU’s Brexit Adjustment Reserve) and several regulatory initiatives on labour and social standards and environment and climate. These technical discussions could prove crucial in limiting the risk of EU-UK disputes arising in level playing field issues. |
| Keywords: | Brexit, EU-UK relationship, Trade and Cooperation Agreement (TCA), level playing field (LPF), regulatory autonomy, regulatory divergence |
| JEL: | F53 K33 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:bde:opaper:2221&r=reg |
| By: | Bimpikis, Kostas (Stanford U); Morgenstern, Ilan (Stanford U); Saban, Daniela (Stanford U) |
| Abstract: | We explore the welfare implications of data-tracking technologies that enable firms to collect consumer data and use it for price discrimination. The model we develop centers around two features: competition between firms and consumers' level of sophistication. Our baseline environment features a firm that can collect information about the consumers it transacts with in a duopoly market, which it can then use in a second, monopoly market. We characterize and compare the equilibrium outcomes in three settings: (i) an economy with myopic consumers, who, when making purchase decisions, do not internalize the fact that firms track their behavior and use this information in future transactions, (ii) an economy with forward-looking consumers, who take into account the implications of data tracking when determining their actions, and (iii) an economy where no data-tracking technologies are used due to technological or regulatory constraints. We find that the absence of data tracking may lead to a decrease in consumer surplus, even when consumers are myopic. Importantly, this result relies critically on competition: consumer surplus may be higher when data-tracking technologies are used only when multiple firms offer substitutable products. |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:4061&r=reg |
| By: | Bioret, Lucie (Resources for the Future); Shih, Jhih-Shyang (Resources for the Future); Krupnick, Alan (Resources for the Future) |
| Abstract: | In 2022, the Department of Energy’s (DOE) issued a request for information on the design and implementation of a possible clean hydrogen hubs program as a part of the Infrastructure Investment and Jobs Act (IIJA). The IIJA has a goal of “accelerating research, development, demonstration, and deployment of hydrogen from clean energy sources, †primarily by allocating 8 billion dollars for the development of clean hydrogen hubs (H2Hubs) around the United States. On June 6, after receiving over three hundred responses to a detailed list of questions in its request for information, DOE released a Notice of Intent (NOI) on the implementation of a new H2Hubs program. The NOI alerts all potential bidders to the Funding Opportunity Announcement (FOA) to come in the Fall.To get started, under the IIJA, the hubs are to:“Demonstrably aid achievement of the clean hydrogen production standard developed under section 822(a) [of the Energy Policy Act of 2005 (42 USC 16166a)];Demonstrate the production, processing, delivery, storage, and end use of clean hydrogen; andCan be developed into a national clean hydrogen network to facilitate a clean hydrogen economy.†The first point is a requirement for every funded hub to meet the minimum clean hydrogen production standard: Less than 2kg of CO2e emissions per kilogram of hydrogen produced at the site of production. The second point concerns the development of a full clean hydrogen value chain within the H2Hubs. The last point is more vague, since neither the NOI nor the IIJA seems to detail the meaning of a “national clean hydrogen network.†A few possible definitions exist for this network:A physical network linking the various hubs;Hubs that learn from one another about technologies and best practicesEconomic, environmental and social impacts that are optimized at a national scale rather than at an individual hub level; andThe establishment of a mature national clean hydrogen market with sufficient producers and end-users and stable prices competitive with carbon intensive hydrogen and substitute fossil fuels. It would be useful for DOE to clarify this term, perhaps in the Funding Opportunity Announcement (FOA) and/or the expected national clean hydrogen strategy and roadmap.However these objectives are defined, this program faces a daunting task. Achieving these goals will require dramatic reductions in the cost of creating low greenhouse gas (GHG) hydrogen and the generation of enough demand to buy the production at a price necessary to cover costs and a reasonable profit, irrespective of the subsidies provided by the H2Hubs program. Production will need to be large to take advantage of economies of scale. New technologies on the supply and demand sides will be needed to aid achievement of the clean hydrogen standard and reach the Hydrogen shot goal of decreasing the cost of clean hydrogen production to $1 per kg in a decade. In addition, the applicants must navigate multiple requirements involving production inputs, specific targeted end-uses, varied locations, as well as environmental justice considerations and jobs growth, all under timeline and budget constraints. On the latter constraint, the risk of having an unsuccessful hub has to be low enough to attract at least 50 percent of the financing from private sources.In this issue brief, we offer our comments on the DOE’s outline of the H2Hubs program. |
| Date: | 2022–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-22-04&r=reg |
| By: | Fraas, Arthur G. (Resources for the Future); Kopits, Elizabeth; Wolverton, Ann |
| Abstract: | Every administration since President Carter has initiated efforts urging agencies to reassess existing regulations. However, these reviews rarely involve ex post benefit-cost analysis of the original regulation and for the most part have not become institutionalized practice. Nevertheless, retrospective review can play an important role in revealing insights about the realized costs and benefits of rules, which may lead to modification, elimination, or strengthening of some regulations.In this paper, we identify the main factors that drive differences between ex ante and ex post cost estimates. The paper reviews evidence from peer-reviewed studies of the realized costs of 13 significant EPA regulations to develop lessons for the design of future ex ante and ex post analyses of rules. Most of the retrospective studies address realized compliance strategies, though some also offer insights into specific elements of per-unit compliance costs. Only a few shed light on the total cost of the regulation studied. All the studies have data limitations, but in general, more insight was obtained when detailed facility-level data (e.g., power plants) were available. In spite of data and methodological limitations, as well as the narrow focus of some studies, we identify several common sources of differences between ex ante and ex post estimates. For example, these studies reveal that firms adopted substantially different compliance strategies than anticipated in ex ante analysis for nearly 70 percent of the regulations. Other key drivers of differences include reliance on engineering models, misspecification of the baseline, and failure to anticipate the role of new technologies.To improve future ex ante cost analysis, we recommend better characterization of baseline conditions, sensitivity analysis of highly uncertain parameters, greater use of economic models of the regulated sector to better reflect firm decisionmaking, and analysis of phase-in periods. For ex post analyses, we recommend developing plans for future study at the time the regulation is adopted. Aside from opportunistic cases, it will be difficult to conduct thorough retrospective evaluations without a plan in place ex ante that identifies endpoints of interest, methods of analysis, and data needs.Click "Download" above to read the full paper. |
| Date: | 2021–09–14 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-21-29&r=reg |
| By: | Daniel M A Barreto (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Alexis Ghersengorin (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Victor Augias (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Consumer data can be used to sort consumers into different market segments, allowing a monopolist to charge different prices at each segment. We study consumer-optimal segmentations with redistributive concerns, i.e., that prioritize poorer consumers. Such segmentations are efficient but may grant additional profits to the monopolist, compared to consumer-optimal segmentations with no redistributive concerns. We characterize the markets for which this is the case and provide a procedure for constructing optimal segmentations given a strong redistributive motive. For the remaining markets, we show that the optimal segmentation is surprisingly simple: it generates one segment with a discount price and one segment with the same price that would be charged if there were no segmentation. |
| Keywords: | Third-degree price discrimination, Information design, Redistribution, Inequality, Welfare |
| Date: | 2022–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:spmain:hal-04067226&r=reg |
| By: | Linn, Joshua (Resources for the Future); Liang, Jing; Qiu, Yueming |
| Abstract: | After growing steadily for decades, in the mid-2000s, average US household energy consumption began declining. Using household-level data from the Residential Energy Consumption Survey and Current Population Survey between 1990 and 2020, we decompose overall changes in per-household consumption into three components: a) average income; b) cross-household income and geographic distribution; and c) consumption habits, which includes energy efficiency. Growth of average income caused consumption to increase by 11 percent, and rising income inequality reduced consumption by 9 percent, nearly entirely offsetting the effect of income growth. If inequality had remained at 1990 levels, average consumption would have continued growing steadily through 2020. After controlling for average income and the income distribution, changes in habits reduced consumption by a similar amount as rising income inequality. Back-of-the-envelope calculations indicate an unexpected effect of rising income inequality: climate and air quality improvements valued at $3.14 billion in 2020 due to lower electricity consumption. The results indicate the importance of coordinating inequality and pollution policies. |
| Date: | 2022–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-22-09&r=reg |
| By: | Frédéric Marty (Université Côte d'Azur, France; GREDEG CNRS) |
| Abstract: | Même si la Loi sur les Marchés Numériques est construite sur la base de la pratique décisionnelle en matière de droit de la concurrence, son objet et ses règles de fonctionnement diffèrent très sensiblement du droit antitrust. Il ne s’agit pas de sanctionner des pratiques après démonstration d’un effet net négatif sur le bien-être du consommateur mais d’imposer des règles ex ante à certains opérateurs économiques pour garantir la contestabilité des positions acquises par les grands écosystèmes numériques et garantir une concurrence loyale au sein de ces derniers. Cette contribution propose de mettre en perspective la genèse de cette loi avec le FTC Act américain de 1914 et d’envisager à cette aune l’articulation entre les règles qu’elle introduit avec l’application des règles de concurrence. |
| Keywords: | Loi sur les marchés numériques, droit de la concurrence, critère du bien-être du consommateur, régulation, contestabilité, loyauté de la concurrence |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2022-16&r=reg |
| By: | Hannes Wallimann; Silvio Sticher |
| Abstract: | In railway infrastructure, construction and maintenance is typically procured using competitive procedures such as auctions. However, these procedures only fulfill their purpose - using (taxpayers') money efficiently - if bidders do not collude. Employing a unique dataset of the Swiss Federal Railways, we present two methods in order to detect potential collusion: First, we apply machine learning to screen tender databases for suspicious patterns. Second, we establish a novel category-managers' tool, which allows for sequential and decentralized screening. To the best of our knowledge, we pioneer illustrating the adaption and application of machine-learning based price screens to a railway-infrastructure market. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2304.11888&r=reg |
| By: | Cordoba, Juan Carlos; Liu, Xiying |
| Abstract: | We develop a tractable general equilibrium model of oligopolistic competition that allows for endogenous product differentiation and exhibits various forms of competition, ranging from perfect to monopolistic competition, simultaneously. Our unified framework provides a novel way to integrate industrial organization with other fields, such as macroeconomics and trade. Our key contribution is the introduction of ex-ante heterogeneity, in contrast to the ex-post heterogeneity typically assumed in the literature (Metlitz, 2003). As a result, most firms in our model prefer to engage in face-to-face competition rather than creating their own variety, in contrast to monopolistic models. We characterize the free entry Cournot equilibrium, as well as the efficient and constrained efficient allocations. Our unified approach enables us to generalize existing results, challenge others, andshed new light on several long-standing economic issues, such as the Kaldor-Chamberlin controversy, the competitive effects of trade, and the strengths and weaknesses of monopolistically competitive models. |
| Date: | 2023–03–23 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genstf:202303231249420000&r=reg |
| By: | Mary Chen; Seung Jung Lee; Daniel Neuhann; Farzad Saidi |
| Abstract: | Bank deregulation in the form of the repeal of the Glass-Steagall Act facilitated the entry of non-bank lenders into the market for syndicated loans during the pre-2008 credit boom. Institutional investors disproportionately purchase tranches of loans originated by universal banks able to cross-sell loans and underwriting services to firms (as permitted by the repeal). A shock to cross-selling intensity increases loan liquidity at origination and over time. The mechanism is that non-loan exposures ensure monitoring even when banks retain small loan shares. Our findings complement the conventional view that regulatory arbitrage caused the rise of non-bank lenders. |
| Keywords: | Non-bank lending, bank deregulation, credit supply, loan liquidity, industrial organization of financial markets |
| JEL: | G20 G21 G23 G28 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_418&r=reg |