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on Regulation |
| By: | Gregor Schwerhoff |
| Abstract: | Electricity production is the sector with the largest share of global emissions and there are many options for decarbonizing it. Identifying the lowest cost option for achieving decarbonization (and full reliability) is a complex optimization problem at the intersection of economics and engineering. Key determinants are the cost of individual technologies, the geographical potential, the complementarities between energy sources and supporting infrastructure like electricity grids and energy storage. This paper reviews the literature on the subject and draws high-level conclusions from the abundance of specialized analyses. It finds that energy-economy models have strongly changed projections of the optimal electricity mix in recent years. While the models differ in detail, models project that the share of renewable energy, mostly solar and wind power, increases steadily in a “below 2°C” scenario and becomes the dominant source of energy by 2050. An electricity system based on solar and wind power can use flexibility options as a complement instead of baseload energy. Models vary by the degree to which renewable energy is supported by carbon capture and storage, bioenergy, and nuclear energy. |
| Keywords: | energy transition; energy economy modeling; climate policy |
| Date: | 2024–10–04 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/213 |
| By: | OECD |
| Abstract: | This paper explores the role of competition and regulation in shaping the outcomes and consumer experiences of the care industry (early childhood care and long-term care). Both services are vital to economic and social well-being, particularly in light of demographic change and the cross-cutting implications for other aspects of the economy, such as women’s participation in the labour market. This paper analyses how competition and regulation can drive quality and market outcomes, whilst addressing market failures and equity concerns within the industry, to arrive at a conclusion on the role competition authorities can play. |
| Date: | 2024–10–30 |
| URL: | https://d.repec.org/n?u=RePEc:oec:dafaac:315-en |
| By: | Langinier, Corinne (University of Alberta, Department of Economics); Ray Chaudhuri, Amrita (University of Winnipeg) |
| Abstract: | When the antitrust authority has imperfect information about firms' costs, we show that all firms (including firms not participating in a merger) can influence the antitrust authority's merger decision by manipulating pre-merger quantities. As long as the antitrust authority engages in Bayesian updating, we find that there exists a clear relationship between the level of synergy generated by a given merger and the type of error in the merger decision that is more likely to occur. The larger the level of merger-induced synergy, the greater the likelihood of a Type II error whereby a consumer surplus-decreasing merger is allowed. The smaller the level of synergy, the greater the likelihood of a Type I error whereby a consumer surplus increasing merger is rejected. |
| Keywords: | Horizontal mergers; Asymmetric information; Competition policy; Cournot competition |
| JEL: | L13 L40 L41 |
| Date: | 2024–10–31 |
| URL: | https://d.repec.org/n?u=RePEc:ris:albaec:2024_009 |
| By: | OECD |
| Abstract: | In an increasingly globalised and digitised world economy, the number of mergers transactions that impact more than one country has also increased. For competition authorities responsible for reviewing merger transactions, this has created new challenges and introduced more complexity to their merger review procedures and analyses. This paper surveys these challenges, explains the reasons why competition authorities may arrive at different decisions, and discusses the role that international co-operation plays in each phase of a cross-border merger review. Drawing from a range of case studies across both OECD and non-OECD member countries, the paper highlights practical tools competition authorities can use to improve the effectiveness of their cross-border mergers. |
| Date: | 2024–10–25 |
| URL: | https://d.repec.org/n?u=RePEc:oec:dafaac:314-en |
| By: | Zachary Bethune; Joaquín Saldain; Eric R. Young |
| Abstract: | We investigate the welfare consequences of consumer credit regulation in a dynamic, heterogeneous-agent model with endogenous lender market power. We incorporate a decentralized credit market with search and incomplete information frictions into an off-the-shelf Eaton–Gersovitz model of consumer credit and default. Lenders post credit offers and borrowers apply for credit. Some borrowers are informed and direct their application toward the lowest offers while others are uninformed and apply randomly. Equilibrium features price dispersion — controlling for a borrower’s default risk, both high- and low-cost lending exist. Importantly, the distribution of loan prices and the extent of lenders’ market power are disciplined by borrowers’ outside options. We calibrate the model to match characteristics of the unsecured consumer credit market, including high-cost options such as payday loans. We use the calibrated model to evaluate interest rate ceilings. In a model with a competitive financial market, ceilings can only harm borrower welfare. In contrast, with lender market power, interest rate ceilings can raise borrower welfare by reducing markups, but that requires households to have some degree of financial illiteracy (lack of information about interest rates). |
| Keywords: | Interest rates; Credit and credit aggregates; Financial markets |
| JEL: | D15 D43 D60 D83 E21 G51 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:bca:bocawp:24-36 |
| By: | Bonetti, Pietro; Leuz, Christian; Michelon, Giovanna |
| Abstract: | The rise of shale gas and tight oil development has triggered a major debate about hydraulic fracturing (HF). In an effort to bring light to HF practices and their potential risks to water quality, many U.S. states have mandated disclosure for HF wells and the fluids used. We employ this setting to study whether targeting corporate activities that have dispersed externalities with transparency reduces their environmental impact. Examining salt concentrations that are considered signatures for HF impact, we find significant and lasting improvements in surface water quality between 9-14% after the mandates. Most of the improvement comes from the intensive margin. We document that operators pollute less per unit of production, cause fewer spills of HF fluids and wastewater and use fewer hazardous chemicals. Turning to how transparency regulation works, we show that it increases public pressure and enables social movements, which facilitates internalization. |
| Keywords: | Environmental regulation, Fracking, Real effects, Disclosure, Water pollution, Sustainability, Corporate social responsibility, Externalities, Unconventional oil & gas development |
| JEL: | D62 G38 K22 K32 L71 L72 M41 M48 Q53 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cfswop:304316 |
| By: | Kessing, Sebastian |
| JEL: | H41 D60 Q54 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc24:302336 |
| By: | Moll, Ben; Schularick, Moritz; Zachmann, Georg |
| JEL: | J1 |
| Date: | 2023–09–27 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:120515 |
| By: | Luis Aguiar; Joel Waldfogel; Axel Zeijen |
| Abstract: | Digitization has facilitated the emergence of large distribution platforms downstream from traditionally powerful suppliers. Digital platforms can carry many suppliers’ products, test the products’ consumer appeal, and choose which products to promote, potentially shifting power from the suppliers to the platforms. We study these forces in the recorded music industry, which was traditionally dominated by a few “major” record labels distributing their products through fragmented radio stations and retailers. Now, the majors receive most of their promotion and distribution through platforms like Spotify, which carry millions of songs from both major and “independent” suppliers. We study Spotify’s use of playlists using data covering 2017-2020. First, Spotify used their expanded playlist capacity to test – and discover – proportionately more independent songs to promote on their playlists. Second, at least relative to major-label playlists, Spotify-operated playlists promoted new independent songs more than was indicated by their subsequent success. Third, placement on Spotify new-music playlists has a large causal impact on streams. The independent-label share of new-music promotion rose from 38 percent in late 2017 to 55 percent in early 2020, which helps to explain the reported decline in the share of Spotify royalty payments to major-label suppliers over the same period. |
| JEL: | L13 L82 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33048 |
| By: | Lenhard, Severin |
| JEL: | D41 C43 K21 L40 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc24:302361 |
| By: | Chlond, Bettina; Goeschl, Timo; Kesternich, Martin; Werthschulte, Madeline |
| Abstract: | Many industrialized countries have recognized the need to mitigate energy cost increases faced by low-income households by fostering the adoption of energy-efficient technologies. How to meet this need is an open question, but “behavioral insights” are likely components of future policy designs. Applying well-established behavioral insights to low-income households raises questions of transportability as they are typically underrepresented in the existing evidence base. We illustrate this problem by conducting a randomized field experiment on scalable, low-cost design elements to improve program take-up in one of the world’s largest energy efficiency assistance programs. Observing investment decisions of over 1, 800 low-income households in Germany’s “Refrigerator Replacement Program”, we find that the transportability problem is real and consequential: First, the most effective policy design would not have been chosen based on existing behavioral insights. Second, design elements favored by these insights either prove ineffective or even backfire, violating ‘do no harm’ principles of policy advice. Systematic testing remains crucial for addressing the transportability problem, particularly for policies targeting vulnerable groups. |
| Keywords: | Transportability; low-income households; field experiment; randomized controlled trial; governmental welfare programs; energy efficiency; technology adoption |
| Date: | 2024–10–22 |
| URL: | https://d.repec.org/n?u=RePEc:awi:wpaper:0755 |
| By: | Beate Fischer (University of Kassel, Institute of Economics); Tom Schütte (University of Kassel, Institute of Economics); Heike Wetzel (University of Kassel, Institute of Economics) |
| Abstract: | This study evaluates whether a residential solar mandate in the case of roof renovation is a useful complement to economic incentives for further photovoltaics (PV) adoption. Analyzing determinants affecting PV ownership and installation intentions among single-family homeowners, as well as factors influencing support for a solar mandate and perceptions of its effectiveness, our empirical results, based on a survey of German utility customers, show that a residential solar mandate is a rather unpopular policy measure among homeowners. However, a solar mandate addresses two important factors which increase the willingness to install PV: firstly, the perception that the personal environment expects more PV, and secondly, an upcoming roof renovation. Both social desirability and a favorable time window can be institutionalized through a solar mandate. In terms of support for a solar mandate, we find that the perceived effectiveness of such a mandate has a strong influence on homeowner support. Perceived effectiveness, in turn, is closely related to perceived cost savings and perceived environmental benefits of PV. Based on these results, we conclude that an active information policy regarding the environmental and cost implications of PV expansion is essential to increase the acceptance of a solar mandate. |
| Keywords: | Photovoltaics, solar mandate, public support, empirical analysis |
| JEL: | D12 Q42 Q48 Q58 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:mar:magkse:202402 |
| By: | Lucas Gomes; Jannis Kueck; Mara Mattes; Martin Spindler; Alexey Zaytsev |
| Abstract: | Collusion is a complex phenomenon in which companies secretly collaborate to engage in fraudulent practices. This paper presents an innovative methodology for detecting and predicting collusion patterns in different national markets using neural networks (NNs) and graph neural networks (GNNs). GNNs are particularly well suited to this task because they can exploit the inherent network structures present in collusion and many other economic problems. Our approach consists of two phases: In Phase I, we develop and train models on individual market datasets from Japan, the United States, two regions in Switzerland, Italy, and Brazil, focusing on predicting collusion in single markets. In Phase II, we extend the models' applicability through zero-shot learning, employing a transfer learning approach that can detect collusion in markets in which training data is unavailable. This phase also incorporates out-of-distribution (OOD) generalization to evaluate the models' performance on unseen datasets from other countries and regions. In our empirical study, we show that GNNs outperform NNs in detecting complex collusive patterns. This research contributes to the ongoing discourse on preventing collusion and optimizing detection methodologies, providing valuable guidance on the use of NNs and GNNs in economic applications to enhance market fairness and economic welfare. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.07091 |
| By: | Bonthala, Ram; Purohit, Advaith; Haile, Dagim; Munipalle, Pravith; Krishnan, Pranav |
| Abstract: | This paper explores the evolution of private equity (PE), tracing its origins to early investment models and analyzing its modern developments. The focus is on understanding the dynamics of PE performance during downturns, the role of dry powder, and the challenges of regulation and transparency. Additionally, insights from interviews with local private equity professionals shed light on decision-making, risk management, and valuation methods in the private equity industry today. |
| Date: | 2024–10–08 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:8t7rx |
| By: | Jacques Bughin |
| Abstract: | Responsible Artificial Intelligence (RAI) is a subset of the ethics associated with the use of artificial intelligence, which will only increase with the recent advent of new regulatory frameworks. However, if many firms have announced the establishment of AI governance rules, there is currently an important gap in understanding whether and why these announcements are being implemented or remain “decoupled” from operations. We assess how large global firms have so far implemented RAI, and the antecedents to RAI implementation across a wide range of RAI initiatives. We find that the operationalization of RAI practices is scattered across firms, with only a fringe of companies extensively industrializing RAI. Social pressure pushes RAI design (”saying”) rather than implementation but the reverse is true for competitive pressure. AI capabilities as a bundle of data quality AI architecture, and talents are strongly associated with RAI design to scaling. |
| Keywords: | Artificial intelligence · Ethics · Responsible AI · AI governance · Adoption patterns |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:ict:wpaper:2013/378351 |