A lack of transparency about policy performance can pose a major obstacle to welfare-enhancing policy competition across jurisdictions. In parallel surveys with German citizens and state parliamentarians, we document that both groups misperceive the performance of their state's education system....

Since its introduction, the European Emissions Trading Scheme (EU ETS) has been struggling with an oversupply of emission allowances and a highly volatile allowance price. One reason for the price decline is technological progress and ist demand-reducing effect, which is only partially taken...

We develop a numerical model that simulates the evolution of a virtual population with an incentive and ability-based wage, capital yield from savings, social welfare system, and total income subject to taxation and political turnovers. Meta-heuristics, particle swarm optimization (PSO) in...

The paper analyzes under what circumstances policymakers experiment with policies with uncertain outcomes, when they prefer to imitate policies initiated in other countries, and when they prefer to coordinate policies internationally. Policymakers have private costs of active policies and...

The paper analyzes under what circumstances policymakers experiment with policies with uncertain outcomes, when they prefer to imitate policies initiated in other countries, and when they prefer to coordinate policies internationally. Policymakers have private costs of active policies and...

The family of optimization models of Data Envelopment Analysis (DEA) has been shown to be very useful performance analytics tools that support benchmarking systems in measuring, comparing, and enhancing various notations of efficiency. It has also been extensively used as an advanced analytical...

A coordinated roll-out of energy-demand reduction would create large external benefits in Europe. Lowering the price cap to €1,000 /MWh in the harmonized EU electricity market would save on costs for users, would not harm supply, and would substantially reduce the need for redistribution...

This paper presents a theoretical and empirical investigation of tax competition when voters use the tax policy of neighboring jurisdictions as information to evaluate the performance of their incumbent politicians. We show that this has implications both for voter tolerance of high taxes and...

We study the impact of government-led incentive systems by examining a staggered reform in the Chinese state-owned enterprise (SOE) performance evaluation policy. To improve capital allocative efficiency, in 2010, regulators switched from using return on equity (ROE) to economic value added...

Successful innovation is essential for the survival and growth of organizations but how best to incentivize innovation is poorly understood. We compare how two common incentive schemes affect innovative performance in a field experiment run in partnership with a large life sciences company. We...

The analysis reveals that price cap regulation (PCR) as commonly implemented closely approximates atomistic Cournot competition in terms of the pass-through of both industry and firm-specific cost-reducing innovation when the invariance property holds. A key finding is that the aggregate...

Successful innovation is essential for the survival and growth of organizations but how best to incentivize innovation is poorly understood. We compare how two common incentive schemes affect innovative per- formance in a field experiment run in partnership with a large life sciences company. We...

The roam-like-at-home regulation (RLAH) eliminated all mobile roaming surcharges to Eu-ropean consumers travelling within the European Economic Area (EEA). We measure the causal impact of the regulation on EEA roaming traffic, using the Rest of the World as a control group. We find large and...

Cap and trade mechanisms enjoy increasing importance in environmental legislations worldwide. One of the important aspects of designing cap and trade mechanisms is the possibility of authorities to grant emission permits for free. Unlike analyzed in the seminal contributions on cap and trade...

Owners of multi-sided platforms typically possess strong power over complementors. Such power asymmetry gives platform owners the edge on setting high platform fees to capture most of the surplus created on their platforms. While there is a heated debate on regulating these powerful platforms,...

The roam-like-at-home regulation (RLAH) eliminated all mobile roaming surcharges to Eu-ropean consumers travelling within the European Economic Area (EEA). We measure the causal impact of the regulation on EEA roaming traffic, using the Rest of the World as a control group. We find large and...

Despite all of the talk about deregulation' of the electricity sector, a large number of non-market mechanisms have been imposed on emerging competitive wholesale and retail markets. These mechanisms include spot market price caps, operating reserve requirements, non-price rationing protocols,...

Despite the popularity of price cap regulation in practice, the economic literature provides relatively little guidance on how to determine the X factor, which is the rate at which inflation -adjusted output prices must fall under price cap plans. We review the standard principles that inform...

Proposals to create a national health care plan such as "Medicare for All" rely heavily on reducing the prices that insurers pay for health care. These changes affect physicians' short-run incentives for care provision and may also change health care providers' incentives to invest in capacity,...

We develop a new spatial inefficiency stochastic frontier model. Our spatial inefficiency stochastic frontier model meets the following conditions: (a) It can detect not only positive, but also negative spatial autocorrelation of inefficiency; (b)The inefficiency follows a truncated normal...

Based on an idiosyncratic reading of the literature I propose intermediate (rather than tight or soft) regulation for balancing investment incentives with allocative efficiency and competition objectives. Intermediate regulation is compatible with incentive regulation and helps lengthening the...

Do citizens engage in comparative performance evaluation across local governments? And if they do, how can we disentangle this behavior from other forms of strategic interactions among local governments or simple spatial correlation across neighboring jurisdictions? We use spatial econometrics...

This paper investigates the behavior of rent-seeking politicians in an environment of increasing economic integration. The focus of the paper is on the implications of globalization-induced political yardstick competition for constitutional design with a view to the current discussion in the...

We study the relationship between regulatory regimes and pharmaceutical firms' pricing strategies using a unique policy experiment from Norway, which in 2003 introduced a reference price (RP) system called "index pricing" for a sub-sample of off-patent pharmaceuticals, replacing the existing...

The COVID-19 pandemic has dramatically shown that a localized disease can be transmitted to the broader population, nationally and worldwide. This Article analyzes how to design regulation to help control that transmission. To that end, we first observe that existing healthcare regulation...

Applying the theory of yardstick competition to the schooling system, we show that it is optimal to have central tests of student achievement and to engage in benchmarking because it raises the quality of teaching. This is true even if teachers' pay (defined in monetary terms) is not performance...

This paper investigates whether national evaluation of decentralised government performance tends, by lessening local information spill-overs, to reduce the scope for local performance comparisons and consequently to lower the extent of spatial auto-correlation among local government...

This paper finds that coherent regulatory policies can boost investment in network industries of OECD economies. Rate-of-return regulation is generally thought to result in overinvestment, while incentive regulation is believed to entail underinvestment. Yet, previous empirical work has...

We study three multi-unit, pay-as-bid procurement auction formats where there is one buyer, N sellers, and the buyer has access to a signal of each seller’s opportunity cost. We begin with an analysis of the simple pay-as-bid format, for which we derive a closed-form solution. We then study a...

We evaluate the impact of a price cap regulation implemented in the Colombian pharmaceutical market between 2011 and 2014. To do so, we take advantage of a unique data set where we observe three sources of variation: i) differences across eighteen groups in the Anatomical Therapeutic Chemical...

Recycling and the recovery of waste are crucial waste management strategies. In light of the new EU circular economy approach, these strategies remain core pillars of a competitive and sustainable waste value chain. Local governments have an important role in controlling and checking the...

This paper reports on the Israeli experience with a high-occupancy toll (HOT) lane between Jerusalem and Tel Aviv. It highlights the integration of a park-and-ride service with the HOT lane and the provision of free parking to encourage carpooling. The paper also analyses Israel's pilot "Going...

Dieser Bericht greift mit der output-orientierten Regulierung (OOR) eine aktuelle Entwicklung in der Regulierungspraxis auf, die insbesondere durch die Energiewende an Relevanz gewinnt. Ziel der OOR ist die gezielte Beanreizung vorgegebener Leistungsziele (Outputs), die im Rahmen einer ansonsten...

Successful innovation is essential for the survival and growth of organizations but how best to incentivize innovation is poorly understood. We compare how two common incentive schemes affect innovative performance in a field experiment run in partnership with a large life sciences company. We...