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- Can Access Price Indexation
Promote Efficient Investment in Next Generation Networks?
The existing literature on access price and
investment has pointed out that networks underinvest under a regime of mandatory
access provision with a fixed access price per end-user. In this paper we
propose a new access pricing rule, the indexation approach, i.e., the access
price, per end-user, that network i pays to network j is function of the
investment levels set by both networks. We show that the indexation can enhance
economic efficiency beyond what is achieved with a fixed access price. In
particular, the access price indexation can simultaneously induce lower retail
prices and higher investment and social welfare, compared to both the fixed
access pricing and the regulatory holidays. Furthermore, we show that the
indexation can implement the socially efficient investment, which would be
impossible to obtain under a fixed access pricing. Our results contradict the
notion that investment efficiency must be sacrificed for gains in pricing
- To Surcharge or Not to
Surcharge? A Two-Sided Market Perspective of the No-Surcharge Rule, with
In Electronic Payment Networks (EPNs) the
No-Surcharge Rule (NSR) requires that merchants charge the same final good price
regardless of the means of payment chosen by the customer. In this paper, we
analyze a three-party model (consumers, merchants, and proprietary EPNs) to
assess the impact of a NSR on the electronic payments system, in particular, on
competition among EPNs, network pricing to merchants and consumers, EPNs'
profits, and social welfare.
We show that imposing a NSR has a number of effects. First, it softens
competition among EPNs and rebalances the fee structure in favor of cardholders
and to the detriment of merchants. Second, we show that the NSR is a profitable
strategy for EPNs if and only if the network effect from merchants to
cardholders is sufficiently weak. Third, the NSR is socially (un)desirable if
the network externalities from merchants to cardholders are sufficiently weak (strong)
and the merchants' market power in the goods market is sufficiently high (low).
Our policy advice is that regulators should decide on whether the NSR is
appropriate on a market-by-market basis instead of imposing a uniform regulation
for all markets.
- How Does Advertising Influence Media Competition?
A Two-Sided Market Perspective.
Presentation (available upon request)
This paper presents a three-party model considering:
content subscribers that differ in their sensibility towards advertisements,
advertising firms that may invest in ads quality and, media platforms competing
simultaneously and non-cooperatively in the prices of contents and advertising
We investigate the determinants of advertising
quality and the implications that the proportion of ad-sensitive consumers has
on platforms' profits, pricing structure and agent's payoffs, in the symmetric
market equilibrium. We compare the market equilibrium levels of ad-airtime and
quality to the socially efficient levels.
We show first that the proportion of ad-sensitive
consumers and the number of competing media platforms are two relevant factors
to determine advertising quality. Second, under some conditions, as the
proportion of ad-sensitive consumers expands: i) advertisers (subscribers) price
increases (decreases), ii) platforms reach higher profit levels, iii)
subscribers are better-off and, iv) advertiser surplus will increase iff
ad-quality is sufficiently high. Third, we show that i) the market solution
under-provides ads quality, but it might under- or over-provide ad-airtime and,
ii) ad-quality regulation may work implicitly as ad-airtime regulation.
- Turning on the lights: How to remodel electricity
in a greener, price-competitive and consumer-oriented market?
Paper | Presentation
This paper emphasizes three current regulatory issues in
electricity markets and presents for each a theoretical solution. The analyzed
regulatory concerns are (i) the reduction of pollution emission at the
generation level; (ii) the market dominance and lack of investment/ power
quality at the transportation level; and (iii) the service quality and final
price at the supply level.
I show that the regulatory implementation of (i) the polluter-competitor
principle presses power generators to invest in less polluting technologies; (ii)
a rate-of-return regulation, at the transportation level, indexed to
inconveniences cost to consumers induces to the social optimal investment at
this stage in the network; and (iii) a wholesale price, at the supply level,
indexed to service quality together with a end-user price cap enhances cost
efficiency and better service quality provided.
Innovative products and financial incentives: balancing present and future
consumption. (Portuguese and English Languages)
Paper | Presentation
- Regional Wage
Structure: A Panel Data Approach.
Paper | Presentation
Spatial wage disparities can result from spatial
differences in the skill composition of the workforce, in non-human endowments,
and in local interactions, namely the distance to the economic centre. In this
paper, the main equation to be estimated is the wage of a region relatively to
the economic centre. Central to this equation is the idea that wages will be
higher in those regions that have easy access to economic centers because for
those regions demand linkages are relatively strong. I test this hypothesis
using data on regional economic activities from the portuguese database Quadros
de Pessoal (QP).
markets: a dynamic approach, with
- Mistaken Perceptions of Market Rewards, Entry and
- Network Competition and Net Neutrality
Regulation in the Age of Digital Convergence.
Since its inception the Internet has been
categorized by its net neutrality (NN), i.e. there has been non-price
discrimination of transmitting packets based on the identity of the transmitter
or receiver, application or type of content. Networks have been converging in
such a way that each one offers all types of services (Voice, TV and Internet),
and content providers (e.g. Google, Yahoo, YouTube) have been increasingly using
networks to distribute their contents pushing Next Generation Networks (NGNs) to
make significant investments that have to be financed. In the absence of
regulation, NGNs might break the NN considering a multiplicity of discriminatory
pricing schemes to increase revenues and allegedly finance the new investments.
Though, allowing for discrimination may bring social perverse effects.
This paper proposes a two-stage regulatory guide using both competition policy
and net neutrality regulation with the goal to boost the digital convergence
process while minimizing the discrimination perverse effects. First, NN should
be preserved to maximize network effects. In order to spur and finance the
convergence investments under NN, the regulator may use competition policy: i)
imposing the incumbent to open the network to entrant operators and, ii) setting
the access price such that it increases (decreases) in incumbent's (entrant's)
investment in the network. iii) If two networks co-exist the regulator may
impose a cost-sharing rule, i.e., operators pay an access price proportional do
the investment made by the competitor. Second, if competition policy is
insufficient to generate the socially optimal investment, i) the regulator
should set a minimum quality standard and ii) allow for NN departure.
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