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on Regulation |
| By: | Yifan Dai; Andrew Koh |
| Abstract: | We develop a simple framework to analyze how targeted advertising interacts with market power. A designer chooses an advertising plan which allows it to flexibly manipulate the demand curve at some cost. A monopolist prices against this manipulated demand curve. We fully characterize the form and value of producer-optimal and consumer-optimal advertising plans under both ex-ante and ex-post measures of welfare. Flexibility is double-edged: producer-optimal plans substantially reduce consumer surplus vis-a-vis uniform advertising, but consumer-optimal plans can substantially improve consumer surplus. We discuss implications for the regulation of targeted advertising. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.24191 |
| By: | Pérez Urdiales, María; Tojal Ramos Dos Santos, Carolina |
| Abstract: | Latin America and the Caribbean (LAC) countries have made notable progress in reducing income inequality; however, the extent to which water and sanitation may foster inequalities remains unclear. In this sector, disparities emerge as lower-income households may encounter reduced access to clean water, utilize less water, or bear a disproportionately higher financial burden than higher-income households. In this paper, we investigate latter source of inequality in the water and sanitation sector in LAC. We analyze and compare inequality measures for water expenditures and income for Brazil, Colombia, Costa Rica, and Uruguay using survey data from the Americas Barometer of the Latin American Opinion Project (LAPOP). Our descriptive analysis indicates that low-income households allocate a larger proportion of their income to water expenditures compared to high-income households. By comparing the water concentration curve to the Lorenz curve for each country, we find that water expenditures are generally more equitably distributed than income, leading to an unequalizing effect, as households spend similar amounts regardless of income level. Additionally, we demonstrate that total water expenditures, encompassing tap water, bottled water, and water delivered by trucks, align more closely with income distribution than tap water alone in Brazil, Costa Rica, and Uruguay, whereas the opposite is true for Colombia. These disparities may be attributed to water tariff subsidies and the higher consumption of bottled water among wealthier households. |
| Keywords: | water security;sustainable development;tariffs;subsidies;Equality |
| JEL: | Q25 Q21 O54 O13 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13828 |
| By: | Anton Korinek; Jai Vipra |
| Abstract: | This paper examines the evolving structure and competition dynamics of the rapidly growing market for foundation models, with a focus on large language models (LLMs). We describe the technological characteristics that shape the AI industry and have given rise to fierce competition among the leading players. The paper analyzes the cost structure of foundation models, emphasizing the importance of key inputs such as computational resources, data, and talent, and identifies significant economies of scale and scope that may create a tendency towards greater market concentration in the future. We explore two concerns for competition, the risk of market tipping and the implications of vertical integration, and we evaluate policy remedies that aim to maintain a competitive landscape. Looking ahead to increasingly transformative AI systems, we discuss how market concentration could translate into unprecedented accumulation of power, highlighting the broader societal stakes of competition policy. |
| JEL: | D43 K21 L4 L86 O33 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33139 |
| By: | Klaus M. Miller; Karlo Lukic; Bernd Skiera |
| Abstract: | This study explores the impact of the General Data Protection Regulation (GDPR), introduced on May 25th, 2018, on online trackers, vital elements in the online advertising ecosystem. Using a difference-in-differences approach with a balanced panel of 294 publishers, we compare publishers subject to the GDPR with those unaffected (the control group). Drawing on data from WhoTracks.me, which spans 32 months from May 2017 to December 2019, we analyze how the number of trackers used by publishers changed before and after the GDPR. The findings reveal that although online tracking increased for both groups, the rise was less significant for EU-based publishers subject to the GDPR. Specifically, the GDPR reduced about four trackers per publisher, equating to a 14.79% decrease compared to the control group. The GDPR was particularly effective in curbing privacy invasive trackers that collect and share personal data, thereby strengthening user privacy. However, it had a limited impact on advertising trackers and only slightly reduced the presence of analytics trackers. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2411.06862 |
| By: | Souhir Ben Amor; Thomas M\"obius; Felix M\"usgens |
| Abstract: | This paper combines a techno-economic energy system model with an econometric model to maximise electricity price forecasting accuracy. The proposed combination model is tested on the German day-ahead wholesale electricity market. Our paper also benchmarks the results against several econometric alternatives. Lastly, we demonstrate the economic value of improved price estimators maximising the revenue from an electric storage resource. The results demonstrate that our integrated model improves overall forecasting accuracy by 18 %, compared to available literature benchmarks. Furthermore, our robustness checks reveal that a) the Ensemble Deep Neural Network model performs best in our dataset and b) adding output from the techno-economic energy systems model as econometric model input improves the performance of all econometric models. The empirical relevance of the forecast improvement is confirmed by the results of the exemplary storage optimisation, in which the integration of the techno-economic energy system model leads to a revenue increase of up to 10 %. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2411.04880 |
| By: | Jack Fisher |
| Abstract: | Many workers provide services for customers via digital platforms that may exert monopsony power. Typical expositions of this phenomenon are inapplicable because platforms post prices to both sides of a two-sided market, and platform-specific labor supply is hard to measure when workers multi-app. This paper develops a model of a typical gig labor market that deals with these issues. Platforms exploit monopsony power to markup their commission rate and reduce equilibrium wages. A worker union sets the first-best commission rate when the customer market is competitive. I estimate the model using public data, including causal estimates from the literature on Uber’s US ridesharing marketplace. The results imply the platform exploits labor market power to depress drivers’ earnings but faces competition for passengers. An optimally set commission cap raises wages by 14 percent, but minimum wages on utilized hours harm workers. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11444 |
| By: | Matthias Wrede |
| Abstract: | Housing cooperatives have a significant share in some countries, particularly in urban housing markets, and are supported by municipalities through tax breaks and preferential access to land. We examine the contribution of housing cooperatives to the provision of affordable housing and how they are affected by rent control. For Germany, we find that residents of cooperative housing pay lower rents than for-profit owners, but are still affected by rent control. In particular, we show that stricter limits on rent increases for existing residential leases in tight housing markets have the effect of lowering rents for housing cooperatives, while we find no such effect of rent regulation for for-profit landlords. |
| Keywords: | housing affordability, housing cooperatives, housing tenure, rent control |
| JEL: | P13 R21 R31 R38 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11452 |
| By: | Nicola Stalder; Lukas Hauck; Simon Buechler; Maximilian von Ehrlich |
| Abstract: | This paper examines the distributional consequences of rent regulation. We estimate counterfactual free market rents for households benefiting from rent control in their current tenancy. The gap between the paid rent and free market rent represents the benefit that a household draws from the rent control policy. We document how this measure is allocated along various household characteristics, providing novel evidence on the distributional consequences of rent control policies. Our results show that rent control mainly benefits older renters at the expense of younger ones. |
| Keywords: | Distributional Consequences; Housing demand; Rent Regulation; Residential Real Estate Market |
| JEL: | R3 |
| Date: | 2024–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:arz:wpaper:eres2024-253 |
| By: | Teevrat Garg; Ryan Hanna; Jeffrey Myers; Sebastian Tebbe; David G. Victor |
| Abstract: | To minimize the environmental costs of electric vehicles (EVs) and support decarbonizing electric grids, drivers must charge their EVs when renewable energy generation is abundant. To induce a shift in charging behavior toward daytime hours with ample solar energy, we conducted a field experiment (n = 629) at a large workplace to measure the influence of environmental nudges and financial incentives on the usage and timing of workplace charging. Environmental nudges led drivers to shift from early to later morning charging, whereas discounts to charge at work increased total workplace charging and prompted a shift from daytime to early morning and overnight charging. We identify three clusters of mechanisms explaining these temporal shifts: the utilization and reliability of the charging network, concerns about charger scarcity, and driver characteristics. Finally, we compute the societal effects of CO2 emissions and marginal electricity costs of these shifts in workplace charging sessions. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11445 |
| By: | O'Connell, Martin; Smith, Kate |
| Abstract: | We study how market power impacts the efficiency and redistributive properties of sin taxation, with an empirical application to sugar-sweetened beverage taxation. We estimate an equilibrium model of the UK drinks market, which we embed in a tax design framework to solve for optimal sugar-sweetened beverage tax policy. Positive price-cost margins for drinks create inefficiencies that lower the optimal rate compared with a perfectly competitive setting. Since profits mainly accrue to the rich, this is partially mitigated under social preferences for equity. Overall, ignoring market power when setting tax policy leads to welfare gains 40% below those at the optimum. |
| Keywords: | externality; corrective tax; market power; profits; redistribution |
| JEL: | D12 D43 D61 D62 H21 H23 L13 |
| Date: | 2024–10–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:122263 |
| By: | Victor Cardenas |
| Abstract: | The document addresses the essential role of financial regulatory frameworks in mitigating climate-related risks within the financial sector. The assessment evaluates Canada's efforts to establish a regulatory framework for financial climate risk disclosure, compares it to international standards, and identifies areas for improvement. The regulatory framework, fiscal impact, and incentives to relinquish investments in fossil fuel projects and transition to renewable energies swiftly and seamlessly are the primary challenges that Canada faces in achieving energy net zero targets. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2411.02668 |