|
on Regulation |
| By: | Tirole, Jean; Bisceglia, Michele |
| Abstract: | Do users receive their fair contribution to digital ecosystems? The frequent accusations of excessive platform fees and self-preferencing leveled at dominant gatekeepers raise the issue of the standard gatekeepers should be held to. The paper provides a framework to explain business strategies and assess regulatory proposals. It stresses the key role played by the zero lower bounds on core and app prices in the setting of privately and socially optimal platform fees. Finally, it derives a simple rule for regulating access conditions and analyses its implementation. |
| Keywords: | Platforms; ecosystems; fair access; price and non-price foreclosure; zero lower bounds |
| JEL: | L12 L4 |
| Date: | 2023–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:128185&r=reg |
| By: | Daron Acemoglu; Todd Lensman |
| Abstract: | Transformative technologies like generative artificial intelligence promise to accelerate productivity growth across many sectors, but they also present new risks from potential misuse. We develop a multi-sector technology adoption model to study the optimal regulation of transformative technologies when society can learn about these risks over time. Socially optimal adoption is gradual and convex. If social damages are proportional to the productivity gains from the new technology, a higher growth rate leads to slower optimal adoption. Equilibrium adoption is inefficient when firms do not internalize all social damages, and sector-independent regulation is helpful but generally not sufficient to restore optimality. |
| JEL: | H21 O33 O41 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31461&r=reg |
| By: | Alena V. Pivavarava; Christel Koop |
| Abstract: | This study bridges two emerging areas in the literature of economic regulation: the adoption of digital practices by national regulatory agencies (NRAs) and the empowerment of consumers for e-participation in regulatory processes through digitally enhanced consumer-facing platforms created by NRAs. With an aim to re-connect the regulatory state with citizens, we designed a novel framework, which comprehensively captures the digital capacity of NRAs and disentangles the multiple channels for consumer digital engagement with NRAs across the key regulatory procedures, including information provision, communication, education, and decision-making. To measure the extent of digitalisation of regulatory functions, we derived a composite index of digital adoption for 236 individual NRAs from a newly collected cross-sectional dataset, which spans across 42 geographically disperse EU and OECD countries with distinct regulatory and institutional pressures and public proactiveness in digitalisation. We analyse the cross country and cross-sectoral variation in the adoption of digital regulatory practices among the agencies with sole- and multi-sectoral competencies in five economic markets from utilities to financial services. Through modelling the impact of organisational-, industry-, and country level factors on the digital scores of NRAs, we address an overlooked question of whether the borderless nature of digital technologies allows to overcome the gap in adoption of consumer oriented regulatory practices. With these insights, this study offers implications for both improving the effectiveness of regulatory procedures through consumer-oriented digital transformation, as well as government initiatives for enhancing digital trust and e-participation in economic regulation among consumers. |
| Date: | 2023–07–27 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:1013&r=reg |
| By: | Houngbonon, Georges Vivien; Ivaldi, Marc; Palikot, Emil; Strusani, Davide |
| Abstract: | A substantial number of individuals remains unconnected to the Internet despite an increasing emphasis on infrastructure-based competition. This paper investigates the impact of shared telecom infrastructure on digital connectivity and inclusion using a new dataset on mobile tower sharing transactions between 2008 and 2020, i.e., acquisitions of towers by independent companies from mobile network operators to be rented back to all operators. Estimates based on difference-in-differences with different timing of treatment suggest that these transactions resulted in a significant drop in the price of mobile connectivity as well as an increase in availability and uptake of mobile Internet, especially by rural households and women. Our findings suggest that increased competition intensity through reduced market concentration appears to be the main driver of these outcomes. |
| Keywords: | Mobile Telecommunications; Vertical Integration; Digital Technology Adoption |
| JEL: | L96 L14 O14 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:128042&r=reg |
| By: | Martin Peitz; Susumu Sato |
| Abstract: | We propose a tractable model of asymmetric platform oligopoly in which users from two distinct groups are subject to within-group and cross-group network effects and decide which platform to join. We characterize the equilibrium when platforms manage user access by setting participation fees. We explore the effects of platform entry, change of incumbent platforms’ quality under free entry, and partial compatibility on market outcomes. We show how the analysis can be extended to partial user participation and zero fees for one of the user groups. |
| Keywords: | oligopoly theory, aggregative games, network effects, two-sided markets, two-sided single-homing, free entry, compatibility |
| JEL: | L13 L41 D43 |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_428v2&r=reg |
| By: | Griffith, Rachel; Van Reenen, John |
| Abstract: | We examine the economic analysis of the relationship between innovation and product market competition. First, we give a brief tour of the intellectual history of the area. Second, we examine how the Aghion-Howitt framework has influenced the development of the literature theoretically and (especially) empirically, with an emphasis on the “inverted U”: the idea that innovation rises and then eventually falls as the intensity of competition increases. Thirdly, we look at recent applications and development of the framework in the areas of competition policy, international trade and structural Industrial Organization. |
| Keywords: | competition; innovation; creative destruction |
| JEL: | O31 L13 O32 B20 L40 |
| Date: | 2021–11–29 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:119779&r=reg |
| By: | Haucap, Justus; Stiebale, Joel |
| Abstract: | In this paper, we summarize the economic literature on non-price effects of mergers and acquisitions (M&As). Specifically, we discuss the effects of M&As on innovation, product variety, and sustainability. Although the relationship is theoretically ambiguous, the vast majority of ex-post evaluations of horizontal M&As finds large negative effects on innovation inputs and outputs. Results are mixed for outcomes related to variety and product quality. Literature on merger effects on sustainability is still scarce and not conclusive so far. Overall, the existing literature indicates that non-price effects of horizontal mergers seem to amplify negative consequences for consumers from price increases through reduced competition. We derive a number of ideas and options for merger policy. |
| Keywords: | Merger, Competition Policy, Innovation, R&D, Product Variety, Sustainability |
| JEL: | L10 L11 L13 L19 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:402&r=reg |
| By: | Joshua S. Gans; Hanna Halaburda |
| Abstract: | Permissionless blockchains were constructed with a view to being sustainably secure. At the heart of blockchain consensus mechanisms was an explicit cost (whether it be work or stake) for participation in the network and the opportunity to propose blocks that would be added to the blockchain. A key rationale for that cost was to make attacks on the network, which could be theoretically carried out if a majority of nodes were controlled by a single entity, too expensive to be worthwhile. Here we demonstrate that a majority attacker can successfully attack with a negative cost, which shows that explicit participation requirements do not necessarily result in a sustainably secure network. This suggests that any benefits of an attack that drive sustainable security are regulated from outside the network itself. |
| JEL: | D42 D82 E42 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31473&r=reg |
| By: | Fischer, Kai; Martin, Simon; Schmidt-Dengler, Philipp |
| Abstract: | We study the effect of entry on the price distribution in the German retail gasoline market. Exploiting more than 700 entries over five years in an event study design, we find that entry causes a persistent first-order stochastic shift in the price distribution. Prices at the top of the distribution change moderately only, but prices at the left tail decrease by up to 12% of stations' gross margins. Consumers with easy access to information on prices gain the most from entry. The reduction in transaction prices is 32-44% stronger for fully informed consumers than for uninformed consumers. |
| Keywords: | Entry, information frictions, price distribution, (unconditional) quantile treatment effects |
| JEL: | D22 L11 D83 L81 R32 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:404&r=reg |
| By: | Mr. Itai Agur; Mr. Anil Ari; Mr. Giovanni Dell'Ariccia |
| Abstract: | Lenders can exploit households' payment data to infer their creditworthiness. When households value privacy, they then face a tradeoff between protecting such privacy and credit conditions. We study how the introduction of an informationally more intrusive digital payment vehicle affects households' cash use, credit access, and welfare. A tech monopolist controls the intrusiveness of the new payment method and manipulates information asymmetries among households and oligopolistic banks to extract data contracts that are more lucrative than lending on its own. The laissez-faire equilibrium entails a digital payment vehicle that is more intrusive than socially optimal, providing a rationale for regulation. |
| Keywords: | Privacy; Financial intermediation; Big Tech; Data regulation; data contract; payment vehicle; DC issuer; tech monopolist; bank competition; monopolist digital currency issuer; Credit; Digital financial services; Loans; Consumer credit; Data collection |
| Date: | 2023–06–09 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2023/121&r=reg |
| By: | Tsuyoshi Toshimitsu (School of Economics, Kwansei Gakuin University) |
| Abstract: | Based on a horizontal product differentiation model associated with network externalities, we consider the impact of compatibility (interconnectivity) on incentives to innovate in a network goods industry in the cases of Cournot quantity and Bertrand price duopoly. We demonstrate that the effect of compatibility on incentives to innovate depends on network externalities and product substitutability. In particular, an increase in the degree of compatibility increases the incentives to innovate if the degree of network externalities is relatively large and if the degree of product differentiation is sufficiently large, irrespective of the mode of competition. Then, we then examine the same problem in a Hotelling-type unit-linear market and show that an increase in the degree of compatibility reduces the incentives to innovate. |
| Keywords: | innovation; network externality; compatibility; a fulfilled expectation; cost-reducing |
| JEL: | D43 L13 L15 O31 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:253&r=reg |
| By: | Rekha Jain (Indian Council for Research on International Economic Relations (ICRIER)) |
| Abstract: | Satellite communication is integral to Digital India, enabling ubiquitous broadband for the uncovered population and supporting satellite TV, the dominant source of infotainment. An enabling policy environment would help increase the market share of Indian satellite service providers from the current 2 per cent of the global market. Satellite spectrum is a shared resource, in contrast to mobile and broadcast terrestrial services, that require exclusive assignment. It is imperative that the spectrum assignment policy leverages this aspect. This paper develops criteria for assessment of the two possible policies - exclusive assignments through auctions and shared assignments administratively. We find that the latter meets the above stated policy objectives better, is in tune with global best practices and supports multiplicity of satellite TV channels providing plurality of content, critical for a functioning democracy. It suggests an administered price model for allocation of satellite spectrum with a one-time payment of license fee and a revenue share of aggregate gross revenue, annually. |
| Keywords: | satellite communications, space, spectrum management, auctions |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:bdc:wpaper:417&r=reg |
| By: | Tetsuya Shinkai (School of Economics, Kwansei Gakuin University); Naoshi Doi (Otaru University of Commerce- Economics) |
| Abstract: | This paper theoretically examines pricing and quality decisions of a monopoly platform facilitating transactions that involve physical shipping. In our model, the platform provides two types of transaction services (a standard service and a "premium" service with high-quality delivery of a transacted item) and decides a membership fee, transaction fees, and the quality of the premium service. We conduct comparative statics with respect to shipping costs. It is shown that when shipping costs are increased, the directions of changes in the platform's decision variables are ambiguous, depending on the nature of the increased shipping costs. For example, an increase in shipping costs may increase the quality and decrease the membership fee. |
| Keywords: | Platform monopoly; Menu-pricing; Quality decisions; Two-sided market. |
| JEL: | D21 D43 L13 L15 |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:252-2&r=reg |
| By: | Hüther, Michael; Küper, Malte; Schaefer, Thilo |
| Abstract: | Erdgas ist für Deutschland in den letzten drei Dekaden immer wichtiger geworden, sei es für das Heizen von Gebäuden, die Bereitstellung von Prozesswärme in der Industrie oder die Stromerzeugung. Dabei ist die Importabhängigkeit bei Erdgas in den vergangenen Jahrzehnten auf fast 100 Prozent angestiegen, wobei der größte Teil der Importe aus Russland kam. Dementsprechend schwer wurde die deutsche Energieversorgung im vergangenen Jahr durch den Ausfall seines größten Gaslieferanten getroffen. Ein Teil davon kann inzwischen durch den vermehrten Import von Flüssiggas kompensiert werden. Vor allem die USA schickten LNG-Tanker in Richtung Europa. Die geringere LNG-Nachfrage aus China, dem größten LNG-Käufer, kam aus EU-Sicht zur richtigen Zeit und schaffte auf dem Weltmarkt die freien Kapazitäten, die in Europa dringend benötigt wurden. Damit trug LNG ebenso wie die Gaseinsparungen von Haushalten und Industrie sowie zusätzliche Pipelineimporte aus Norwegen ganz entscheidend zur Sicherung der Versorgungslage bei. Deutschland, das erst seit Ende letzten Jahres ein eigenes LNG-Terminal betreibt, profitierte 2022 von LNG-Terminals in Belgien und den Niederlanden. Bis Sommer 2024 werden an der deutschen Nord- und Ostseeküste weitere schwimmende LNG-Terminals entstehen und schrittweise die Gasversorgung in Deutschland sicherstellen. |
| JEL: | F15 O13 Q41 Q43 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwkpps:52023&r=reg |
| By: | Iryna Kosse |
| Abstract: | Ukraine is a big country with a developed multimodal transport infrastructure that includes a network of roads, railways, airports and seaports, as well as pipelines. In addition, the country has significant infrastructure for electricity generation and distribution, and for gas transportation. Ukraine is an urbanised country, with 46% of its population living in an apartment. The ongoing armed aggression by the Russian Federation has had a significant impact on Ukrainian infrastructure, leading to the destruction of roads, rail tracks, power stations and housing units. Over the next few years, the infrastructure sector will require significant financing, prioritisation and coordination between the Ukrainian government and international actors, based on the principles of multimodality, flexibility, connectivity and sustainable urban mobility. Energy and housing infrastructure should rely on renewable energy sources, distributed generation and energy-efficient housing. In addition, domestic infrastructure policies should be combined with EU infrastructure initiatives. |
| Keywords: | Ukraine, multimodal transport infrastructure, electricity generation, electricity distribution, gas transportation, Russian Federation, infrastructure destruction, EU infrastructure initiatives |
| JEL: | R4 Q4 O1 O4 R1 H7 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:wii:pnotes:pn:72&r=reg |