The aim of this chapter is to analyze recently released reports and policy papers to evaluate whether regulatory interventions reflect the distinctive features of digital markets and their leading players or whether the main thrust of these proposals for regulatory interventions is just to circumvent the burdens imposed by standard antitrust analysis. My findings suggest that the revival of regulation is likely motivated by an alleged antitrust enforcement failure as a result of an alleged gap in the current antitrust rules, rather than by an authentic market failure.
{"title":"Evaluating the Case for Regulation of Digital Platforms","authors":"G. Colangelo","doi":"10.2139/ssrn.3733741","DOIUrl":"https://doi.org/10.2139/ssrn.3733741","url":null,"abstract":"The aim of this chapter is to analyze recently released reports and policy papers to evaluate whether regulatory interventions reflect the distinctive features of digital markets and their leading players or whether the main thrust of these proposals for regulatory interventions is just to circumvent the burdens imposed by standard antitrust analysis. My findings suggest that the revival of regulation is likely motivated by an alleged antitrust enforcement failure as a result of an alleged gap in the current antitrust rules, rather than by an authentic market failure.","PeriodicalId":11797,"journal":{"name":"ERN: Regulation (IO) (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-11-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77851390","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the economics of digital platforms and two-sided markets and discusses the economic conditions that underlie policy assertions by advocates of both interventionist and laissez-faire policies. We include applications to internet search, online advertising, media, data, and privacy. Our goal is to provide a balanced look at the economic assumptions that underlie the many “possibility theorems” policymakers use to rationalize different policies (e.g., regulation, breaking up large companies, subsidizing entry, forced data sharing, or maintaining the status quo). Our discussion of the economics underlying various possibility theorems highlights the type of information and analyses required to determine whether alternative forms of intervention are likely to enhance the welfare of various market participants. While it is relatively easy to identify theoretical conditions under which intervention dominates the status quo (and vice versa), empirical verification is difficult because multi-sided platforms have many interrelated parts and involve complex data. These complexities augment the challenges inherent in implementing welfare-enhancing policies and highlight the importance of evidence-based decision-making.
{"title":"The Economics of Digital Platforms: A Guide for Regulators","authors":"M. Baye, Jeffrey T. Prince","doi":"10.2139/ssrn.3733754","DOIUrl":"https://doi.org/10.2139/ssrn.3733754","url":null,"abstract":"This paper examines the economics of digital platforms and two-sided markets and discusses the economic conditions that underlie policy assertions by advocates of both interventionist and laissez-faire policies. We include applications to internet search, online advertising, media, data, and privacy. Our goal is to provide a balanced look at the economic assumptions that underlie the many “possibility theorems” policymakers use to rationalize different policies (e.g., regulation, breaking up large companies, subsidizing entry, forced data sharing, or maintaining the status quo). Our discussion of the economics underlying various possibility theorems highlights the type of information and analyses required to determine whether alternative forms of intervention are likely to enhance the welfare of various market participants. While it is relatively easy to identify theoretical conditions under which intervention dominates the status quo (and vice versa), empirical verification is difficult because multi-sided platforms have many interrelated parts and involve complex data. These complexities augment the challenges inherent in implementing welfare-enhancing policies and highlight the importance of evidence-based decision-making.","PeriodicalId":11797,"journal":{"name":"ERN: Regulation (IO) (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-11-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73763823","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The many mechanisms for expanding horizontal ownership and control of economic resources pose ongoing challenges for merger enforcement. This is readily apparent in markets that have undergone profound structural change from horizontal consolidation and rising concentration over the last several decades, including wireless telecommunications, airlines, hospitals, health insurance, meat processing, and others. Horizontal control is a central concept in industrial organization and frequently encountered concern in antitrust enforcement. For example, the vast majority of all merger transactions challenged by the U.S. Department of Justice (DOJ) Antitrust Division and Federal Trade Commission (FTC) involve some form of horizontal control. Horizontal mergers that completely and permanently eliminate an independent competitor receive the most attention. But other forms of horizontal control that do not completely eliminate a rival — including acquisitions of partial ownership stakes and some joint venture agreements — have no less important implications for competition and consumers. For example, production, marketing, and R&D joint ventures (or “competitor collaborations”) can weaken incentives for parties to the agreement to compete independently. Such arrangements have become more common, as we have seen, for example, in the agricultural biotechnology and pharmaceutical sectors. Rivals’ partial ownership stakes in each other, and private equity and institutional investors that acquire stakes in multiple rivals competing in the same product markets, can also weaken competitive incentives. Private equity buyouts raise broader concerns about the damage left behind in the wake of rapid exits and in raising prices to consumers. Yet there remains little transparency around the role of private equity in the broader landscape of horizontal control. Moreover, research indicates that partial ownership can lessen incentives to compete more than under a monopoly. Meanwhile, there is ongoing debate over whether antitrust can reach to competitive issues raised by institutional investor ownership of stock in rivals in sectors such as airlines and banking. As antitrust enforcers try to keep pace with the many forms of horizontal control and their competitive implications, we see indications of weakening merger enforcement under Section 7 of the Clayton Act. For example, the scales have tipped sharply toward merging parties in merely predicting the pro-competitive effects of their deals, while the government bears a nearly insurmountable burden of proving that a merger will harm competition. Research shows that the benefits of mergers are often speculative and never materialize, leaving consumers with higher prices, lower quality, less innovation. Moreover, data on merger enforcement reveals that the antitrust agencies increasingly seek remedies for problematic mergers, rather than moving to block them or to force their abandonment. Yet we see a growing list o
扩大经济资源横向所有权和控制的许多机制对合并的执行构成了持续的挑战。在过去几十年经历了横向整合和集中度上升的深刻结构变化的市场中，这一点很明显，包括无线电信、航空、医院、健康保险、肉类加工等。横向控制是产业组织中的一个核心概念，也是反垄断执法中经常遇到的问题。例如，美国司法部(DOJ)反垄断部门和联邦贸易委员会(FTC)质疑的绝大多数合并交易都涉及某种形式的横向控制。完全和永久消除独立竞争者的横向合并最受关注。但其他没有完全消灭竞争对手的横向控制形式——包括收购部分股权和一些合资协议——对竞争和消费者的影响同样重要。例如，生产、营销和研发合资企业(或“竞争对手合作”)会削弱协议各方独立竞争的动机。正如我们在农业生物技术和制药部门所看到的那样，这种安排已变得更加普遍。竞争对手相互持有部分股权，以及私募股权和机构投资者收购在同一产品市场竞争的多家竞争对手的股权，也会削弱竞争激励。私人股本收购引发了更广泛的担忧，即快速退出和价格上涨给消费者带来的损害。然而，在更广泛的横向控制格局中，私人股本所扮演的角色仍然缺乏透明度。此外，研究表明，部分所有权比垄断更能减少竞争的动力。与此同时，关于反垄断是否可以触及机构投资者持有航空和银行业等行业竞争对手股票所引发的竞争问题，目前仍存在争论。由于反垄断执法者试图跟上多种形式的横向控制及其竞争影响的步伐，我们看到了《克莱顿法》第7条削弱合并执法的迹象。例如，在预测并购交易对竞争有利的影响方面，天平已经急剧向并购方倾斜，而政府则承担着几乎无法逾越的责任，要证明并购会损害竞争。研究表明，并购的好处往往是投机性的，永远不会实现，给消费者带来的是更高的价格、更低的质量和更少的创新。此外，关于合并执行的数据显示，反垄断机构越来越多地为有问题的合并寻求补救措施，而不是采取行动阻止它们或强迫它们放弃。然而，我们看到越来越多失败的并购补救措施，给消费者带来更高的价格、更低的质量和更少的创新。考虑到它的多面性、普遍性以及与市场集中度的必然联系，是时候重新审视横向控制了。本白皮书的分析揭示了在集中度上升、执法力度减弱、合并失败和合并补救的证据以及部分所有权模式的增长的背景下，反垄断执法面临的令人不安的问题。这些结论应该为潜在的反垄断改革建议和重振合并执法和竞争政策的方法提供信息。本文第一部分考察了不同形式的横向控制的竞争动态。第二部分审查了扩大横向控制所引起的主要执法和政策问题，并强调了急需分析的领域。这包括对失败的合并补救措施的分析，提起诉讼的合并是否产生了声称的利益，以及私人股本公司的部分所有权收购如何影响市场集中度。该文件还建议，这些机构在修订《高铁法案》(Hart Scott Rodino Act, HSR)备案要求的提议中，撤销针对部分所有权收购的“安全港”条款。
{"title":"What Does Expanding Horizontal Control Mean for Antitrust Enforcement? A Look at Mergers, Partial Ownership, and Joint Ventures","authors":"Diana L. Moss","doi":"10.2139/ssrn.3730310","DOIUrl":"https://doi.org/10.2139/ssrn.3730310","url":null,"abstract":"The many mechanisms for expanding horizontal ownership and control of economic resources pose ongoing challenges for merger enforcement. This is readily apparent in markets that have undergone profound structural change from horizontal consolidation and rising concentration over the last several decades, including wireless telecommunications, airlines, hospitals, health insurance, meat processing, and others. Horizontal control is a central concept in industrial organization and frequently encountered concern in antitrust enforcement. For example, the vast majority of all merger transactions challenged by the U.S. Department of Justice (DOJ) Antitrust Division and Federal Trade Commission (FTC) involve some form of horizontal control. Horizontal mergers that completely and permanently eliminate an independent competitor receive the most attention. But other forms of horizontal control that do not completely eliminate a rival — including acquisitions of partial ownership stakes and some joint venture agreements — have no less important implications for competition and consumers. \u0000 \u0000For example, production, marketing, and R&D joint ventures (or “competitor collaborations”) can weaken incentives for parties to the agreement to compete independently. Such arrangements have become more common, as we have seen, for example, in the agricultural biotechnology and pharmaceutical sectors. Rivals’ partial ownership stakes in each other, and private equity and institutional investors that acquire stakes in multiple rivals competing in the same product markets, can also weaken competitive incentives. Private equity buyouts raise broader concerns about the damage left behind in the wake of rapid exits and in raising prices to consumers. Yet there remains little transparency around the role of private equity in the broader landscape of horizontal control. Moreover, research indicates that partial ownership can lessen incentives to compete more than under a monopoly. Meanwhile, there is ongoing debate over whether antitrust can reach to competitive issues raised by institutional investor ownership of stock in rivals in sectors such as airlines and banking. \u0000 \u0000As antitrust enforcers try to keep pace with the many forms of horizontal control and their competitive implications, we see indications of weakening merger enforcement under Section 7 of the Clayton Act. For example, the scales have tipped sharply toward merging parties in merely predicting the pro-competitive effects of their deals, while the government bears a nearly insurmountable burden of proving that a merger will harm competition. Research shows that the benefits of mergers are often speculative and never materialize, leaving consumers with higher prices, lower quality, less innovation. Moreover, data on merger enforcement reveals that the antitrust agencies increasingly seek remedies for problematic mergers, rather than moving to block them or to force their abandonment. Yet we see a growing list o","PeriodicalId":11797,"journal":{"name":"ERN: Regulation (IO) (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-11-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74606726","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Under the production approach to markup estimation, any exible input should recover the markup. I test this implication using manufacturing datasets from Chile, Colombia, India, Indonesia, the US, and Southern Europe, as well as store-level data from a major US retailer, and overwhelmingly reject that markups estimated using labor and materials have the same distribution. For every dataset, markups estimated using labor are negatively correlated with markups estimated using materials, exhibit greater dispersion, and have opposite time trends. I continue to find stark differences in markups estimated using energy and non-energy raw materials. Non-neutral pro-ductivity differences across firms can explain these findings.
{"title":"Testing the Production Approach to Markup Estimation","authors":"D. Raval","doi":"10.2139/ssrn.3324849","DOIUrl":"https://doi.org/10.2139/ssrn.3324849","url":null,"abstract":"\u0000 Under the production approach to markup estimation, any exible input should recover the markup. I test this implication using manufacturing datasets from Chile, Colombia, India, Indonesia, the US, and Southern Europe, as well as store-level data from a major US retailer, and overwhelmingly reject that markups estimated using labor and materials have the same distribution. For every dataset, markups estimated using labor are negatively correlated with markups estimated using materials, exhibit greater dispersion, and have opposite time trends. I continue to find stark differences in markups estimated using energy and non-energy raw materials. Non-neutral pro-ductivity differences across firms can explain these findings.","PeriodicalId":11797,"journal":{"name":"ERN: Regulation (IO) (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-10-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86051866","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The scathing report of the American Congress in September 2020 on the Boeing 737 Max crashes and regulatory fiasco underlines the risks and dangers that result from governments and their regulatory authorities, regulated entities, the academic community and the media focusing solely on the business costs of regulatory compliance – while ignoring the costs of regulatory non-compliance for firms, the national economy and society. The purpose of the author’s research program and this working paper is to bring a behavioral economics lens to identifying the true and full opportunity costs of non-compliance by corporations and other regulated entities.
The paper argues that the conventional economics, and law and economics, approaches badly underestimate the net economic and social benefits from compliance and the true and full opportunity costs of non-compliance with laws, regulations and social norms. These more conventional approaches do not meet the interests and requirements of: governments and their regulatory authorities, civil society groups, potential and actual victims, and the overall society and national economy. Most importantly, this narrow benefit-cost approach and related metrics fall far short of satisfying the longer term regulatory requirements of regulated entities and their senior executives, managers, and employees, their compliance and corporate social responsibility advisors and divisions, and their supply chain and other business partners.
The working paper employs recent advances in the social psychology, behavioral economics, behavioral ethics, neuroscience, behavioral benefit-cost, and related less conventional economics literatures in order to identify twenty quite diverse but still interrelated sources and drivers of the true and full opportunity costs of non-compliance. These behaviorally informed sources and drivers are divided into three categories: (i) bounded rationality, cognitive scarcity, cognitive misers, and other system 1 attributes of the human brain; (ii) the financial, economic and social costs incurred and generated by non-compliant regulated entities; and, (iii) transaction, relationship and networking costs and related negative externalities.
The paper as well offers proposals on how: (i) state and non-state regulators can apply these behavioral insights on the opportunity costs of non-compliance when designing, implementing and framing their enforcement, deterrence, compliance promotion, communication, outreach and other activities; (ii) regulated entities can employ these insights when designing and implementing their corporate strategies on innovation, product development, marketing, voluntary compliance, and corporate social responsibility; (iii) consumers associations, environmental groups and other civil society groups as well as the academic and consulting communities can employ these insights in their analytical, advisory and advocacy functions; and (iv) more principles and
{"title":"The 'True and Full' Opportunity Costs Of Non-Compliance For Regulated Entities","authors":"D. Ireland","doi":"10.2139/ssrn.3715026","DOIUrl":"https://doi.org/10.2139/ssrn.3715026","url":null,"abstract":"The scathing report of the American Congress in September 2020 on the Boeing 737 Max crashes and regulatory fiasco underlines the risks and dangers that result from governments and their regulatory authorities, regulated entities, the academic community and the media focusing solely on the business costs of regulatory compliance – while ignoring the costs of regulatory non-compliance for firms, the national economy and society. The purpose of the author’s research program and this working paper is to bring a behavioral economics lens to identifying the true and full opportunity costs of non-compliance by corporations and other regulated entities. <br><br>The paper argues that the conventional economics, and law and economics, approaches badly underestimate the net economic and social benefits from compliance and the true and full opportunity costs of non-compliance with laws, regulations and social norms. These more conventional approaches do not meet the interests and requirements of: governments and their regulatory authorities, civil society groups, potential and actual victims, and the overall society and national economy. Most importantly, this narrow benefit-cost approach and related metrics fall far short of satisfying the longer term regulatory requirements of regulated entities and their senior executives, managers, and employees, their compliance and corporate social responsibility advisors and divisions, and their supply chain and other business partners. <br><br>The working paper employs recent advances in the social psychology, behavioral economics, behavioral ethics, neuroscience, behavioral benefit-cost, and related less conventional economics literatures in order to identify twenty quite diverse but still interrelated sources and drivers of the true and full opportunity costs of non-compliance. These behaviorally informed sources and drivers are divided into three categories: (i) bounded rationality, cognitive scarcity, cognitive misers, and other system 1 attributes of the human brain; (ii) the financial, economic and social costs incurred and generated by non-compliant regulated entities; and, (iii) transaction, relationship and networking costs and related negative externalities. <br><br>The paper as well offers proposals on how: (i) state and non-state regulators can apply these behavioral insights on the opportunity costs of non-compliance when designing, implementing and framing their enforcement, deterrence, compliance promotion, communication, outreach and other activities; (ii) regulated entities can employ these insights when designing and implementing their corporate strategies on innovation, product development, marketing, voluntary compliance, and corporate social responsibility; (iii) consumers associations, environmental groups and other civil society groups as well as the academic and consulting communities can employ these insights in their analytical, advisory and advocacy functions; and (iv) more principles and ","PeriodicalId":11797,"journal":{"name":"ERN: Regulation (IO) (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-10-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88412903","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In the first decades of the twenty-first century – more than 150 years after the earliest franchise contracts were negotiated between Canadian governments and privately owned utility companies, and 30 years after the Economic Council of Canada published John R. Baldwin’s "Regulatory Failure and Renewal: The Evolution of the Natural Monopoly Contract" in 1989 – the federal government still holds a controlling interest in more than 40 crown corporations. The provinces and territories in Canada own at least 150 more firms. These public enterprises typically operate in industries prone to the formation of what economists call “natural monopolies”, including pipelines, power generation, municipal water systems, transportation, broadcasting and telecommunications. A wide range of policy instruments can be used to regulate natural monopolies, and these instruments lead to different redistributive patterns, and different levels and forms of inefficiency. In general, the social, political and economic environments in Canada have been institutionally secure, mature and sophisticated. However, the division of power that defines the federal system of governance in Canada has opened the door for idiosyncratic provincial (and therefore municipal) policy making, which has lead to the adoption of a wide range of regionally distinct regulatory responses to the formation of natural monopolies.
In this introduction to Baldwin's classic work, the history of Canada's efforts to regulate natural monopolies is surveyed, and the lessons learned from a theoretical framework founded on a transactions cost approach are articulated. Questions about privatization and public ownership still swirl around Canada’s pipelines, telecommunication networks and transport systems. In pursuit of answers to these questions, this introduction explains how Baldwin’s work helps us to make sense of policy heterogeneity by describing how transactions costs have shifted across time and space, how courts have constrained government opportunism and defined property rights, how local industrial, economic and technological environments have interacted with political pressures, and how private and public stakeholders have strategically engaged with the policy making process in pursuit of influence and control.
{"title":"Regulating Natural Monopolies in Canada: An Introduction to 'Regulatory Failure and Renewal: The Evolution of the Natural Monopoly Contract', by John R. Baldwin","authors":"I. Keay","doi":"10.2139/ssrn.3716335","DOIUrl":"https://doi.org/10.2139/ssrn.3716335","url":null,"abstract":"In the first decades of the twenty-first century – more than 150 years after the earliest franchise contracts were negotiated between Canadian governments and privately owned utility companies, and 30 years after the Economic Council of Canada published John R. Baldwin’s \"Regulatory Failure and Renewal: The Evolution of the Natural Monopoly Contract\" in 1989 – the federal government still holds a controlling interest in more than 40 crown corporations. The provinces and territories in Canada own at least 150 more firms. These public enterprises typically operate in industries prone to the formation of what economists call “natural monopolies”, including pipelines, power generation, municipal water systems, transportation, broadcasting and telecommunications. A wide range of policy instruments can be used to regulate natural monopolies, and these instruments lead to different redistributive patterns, and different levels and forms of inefficiency. In general, the social, political and economic environments in Canada have been institutionally secure, mature and sophisticated. However, the division of power that defines the federal system of governance in Canada has opened the door for idiosyncratic provincial (and therefore municipal) policy making, which has lead to the adoption of a wide range of regionally distinct regulatory responses to the formation of natural monopolies. <br><br>In this introduction to Baldwin's classic work, the history of Canada's efforts to regulate natural monopolies is surveyed, and the lessons learned from a theoretical framework founded on a transactions cost approach are articulated. Questions about privatization and public ownership still swirl around Canada’s pipelines, telecommunication networks and transport systems. In pursuit of answers to these questions, this introduction explains how Baldwin’s work helps us to make sense of policy heterogeneity by describing how transactions costs have shifted across time and space, how courts have constrained government opportunism and defined property rights, how local industrial, economic and technological environments have interacted with political pressures, and how private and public stakeholders have strategically engaged with the policy making process in pursuit of influence and control.","PeriodicalId":11797,"journal":{"name":"ERN: Regulation (IO) (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-10-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74242638","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Economic theory predicts that outsourcing public services to private firms will reduce costs, but the effect on quality is ambiguous. We explore quality differences between publicly and privately owned ambulances in a setting where patients are as good as randomly assigned to ambulances of different ownership statuses. We find that privately owned ambulances are better at responding to contracted quality measures but perform worse on noncontracted measures, such as mortality. In fact, a randomly allocated patient has a significantly higher risk of death if a private ambulance is dispatched. We also present suggestive evidence on the mechanism, supporting that private firms cost innovate at the expense of ambulance staff quality.
{"title":"Quality and Efficiency Between Public and Private Firms: Evidence From Ambulance Services","authors":"Daniel Knutsson, Björn Tyrefors","doi":"10.2139/ssrn.3713065","DOIUrl":"https://doi.org/10.2139/ssrn.3713065","url":null,"abstract":"Economic theory predicts that outsourcing public services to private firms will reduce costs, but the effect on quality is ambiguous. We explore quality differences between publicly and privately owned ambulances in a setting where patients are as good as randomly assigned to ambulances of different ownership statuses. We find that privately owned ambulances are better at responding to contracted quality measures but perform worse on noncontracted measures, such as mortality. In fact, a randomly allocated patient has a significantly higher risk of death if a private ambulance is dispatched. We also present suggestive evidence on the mechanism, supporting that private firms cost innovate at the expense of ambulance staff quality.","PeriodicalId":11797,"journal":{"name":"ERN: Regulation (IO) (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-10-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87450622","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Jakub Kastl, Jorge Padilla, S. Piccolo, Helder Vasconcelos
We characterize and compare the private and social incentives to collect consumer data by a vertically-integrated online intermediary who competes with third-party sellers listed on its platform and is required by regulation to share with rivals all the information it gathers. With linear intermediation fees and price competition, the intermediary over-invests in accuracy compared to the social optimum when the intra-platform competition is sufficiently weak and when demand is not too responsive to quality. By contrast, the intermediary tends to under-invest in accuracy when the intra-platform competition is strong enough, and demand is sufficiently responsive to quality. With quantity competition, the intermediary always over-invests in accuracy. Importantly, when consumers exhibit privacy concerns, the over-investment problem worsens, whereas the under-investment problem mitigates. We also investigate the impact of alternative (non-linear) contractual arrangements.
{"title":"On the Private and Social Value of Consumer Data in Vertically-Integrated Platform Markets","authors":"Jakub Kastl, Jorge Padilla, S. Piccolo, Helder Vasconcelos","doi":"10.2139/ssrn.3709115","DOIUrl":"https://doi.org/10.2139/ssrn.3709115","url":null,"abstract":"We characterize and compare the private and social incentives to collect consumer data by a vertically-integrated online intermediary who competes with third-party sellers listed on its platform and is required by regulation to share with rivals all the information it gathers. With linear intermediation fees and price competition, the intermediary over-invests in accuracy compared to the social optimum when the intra-platform competition is sufficiently weak and when demand is not too responsive to quality. By contrast, the intermediary tends to under-invest in accuracy when the intra-platform competition is strong enough, and demand is sufficiently responsive to quality. With quantity competition, the intermediary always over-invests in accuracy. Importantly, when consumers exhibit privacy concerns, the over-investment problem worsens, whereas the under-investment problem mitigates. We also investigate the impact of alternative (non-linear) contractual arrangements.","PeriodicalId":11797,"journal":{"name":"ERN: Regulation (IO) (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-10-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85420132","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-10-07DOI: 10.1093/ACREFORE/9780190625979.013.617
Daniel Greene, Omesh Kini, Mo Shen, Jaideep Shenoy
A large body of work has examined the impact of corporate takeovers on the financial stakeholders (shareholders and bondholders) of the merging firms. Since the late 2000s, empirical research has increasingly highlighted the crucial role played by the non-financial stakeholders (labor, suppliers, customers, government, and communities) in these transactions. This article surveys studies that examine the interplay between corporate takeovers and the non-financial stakeholders of the firm. Financial economists have long viewed the firm as a nexus of contracts between various stakeholders connected to the firm. Corporate takeovers not only play an important role in redefining the broad boundaries of the firm, they also result in major changes to corporate ownership and structure. In the process, takeovers can significantly alter the contractual relationships with non-financial stakeholders. Because the firm’s relationships with these stakeholders are governed by implicit and explicit contracts, circumstances can arise that allow acquiring firms to, fully or partially, abrogate these contracts and extract rents from non-financial stakeholders after deal completion. In contrast, non-financial stakeholders can also potentially benefit from a takeover if they get to share in any efficiency gains that are generated in the deal. Given this framework, the ex ante importance of these contractual relationships can have a bearing on the efficacy of takeovers. The ability to alter contractual relationships ex post can affect the propensity of a takeover and merging firms’ shareholders, and, in turn, impact non-financial stakeholders. Non-financial stakeholders will be more vested in post-takeover success if they can trust the acquiring firm to not take actions that are detrimental to them. The big picture that emerges from the surveyed literature is that non-financial stakeholder considerations affect takeover decisions and post-takeover outcomes. Moreover, takeovers also have an impact on non-financial stakeholders. The directions of all these effects, however, are dependent on the economic environment in which the merging firms operate.
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Indian electricity distribution sector remains elusive of competition and market principles; and past reforms have failed to produce the desired outcomes. A denovo rethink on the distribution reform programs is needed and for this purpose, we undertake a within country analysis of India and cross-country analysis in select countries having pioneered electricity distribution reforms through application of the Standard Reform Model. Countries surveyed include European nations such as Norway and United Kingdom; Latin American countries namely, Argentina, Brazil, Chile and Peru; and Asia-Pacific countries like Japan, New Zealand and Philippines. In a novel contribution to literature, the paper identifies specific lessons from global electricity reform experiences of these countries for successful application in Indian settings. Several key lessons emerge: first, decoupling network business from retail supply along with expeditious privatization of retail supply business to ensure accountability; second, moving away from rate of return regulation to incentive regulation framework to reward efficiency; and third, dissociation from political interference for ensuring cost reflective tariffs to enable long-term financial sustainability. The policy implications outlined by our study could rightly guide the ongoing debates on the distribution provisions in Draft Electricity (Amendment) Bill 2020 which seeks to metamorphosize the Indian electricity sector.
{"title":"Lessons From Global Reform Experiences for Revival of Indian Electricity Distribution Sector","authors":"Suraj Santosh, A. Jindal","doi":"10.2139/ssrn.3705476","DOIUrl":"https://doi.org/10.2139/ssrn.3705476","url":null,"abstract":"Indian electricity distribution sector remains elusive of competition and market principles; and past reforms have failed to produce the desired outcomes. A denovo rethink on the distribution reform programs is needed and for this purpose, we undertake a within country analysis of India and cross-country analysis in select countries having pioneered electricity distribution reforms through application of the Standard Reform Model. Countries surveyed include European nations such as Norway and United Kingdom; Latin American countries namely, Argentina, Brazil, Chile and Peru; and Asia-Pacific countries like Japan, New Zealand and Philippines. In a novel contribution to literature, the paper identifies specific lessons from global electricity reform experiences of these countries for successful application in Indian settings. Several key lessons emerge: first, decoupling network business from retail supply along with expeditious privatization of retail supply business to ensure accountability; second, moving away from rate of return regulation to incentive regulation framework to reward efficiency; and third, dissociation from political interference for ensuring cost reflective tariffs to enable long-term financial sustainability. The policy implications outlined by our study could rightly guide the ongoing debates on the distribution provisions in Draft Electricity (Amendment) Bill 2020 which seeks to metamorphosize the Indian electricity sector.","PeriodicalId":11797,"journal":{"name":"ERN: Regulation (IO) (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-10-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81378514","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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