Microeconomic regulation

[field_auth], 18 July 2016

Growth in the number of publicly quoted companies is a key driver of economic development, so the apparent decline in the number of company listings, at least in developed markets, is naturally worrying for investors, exchanges, and regulators alike. This column provides a framework to address this decline, and proposes possible remedies that could be taken to encourage more listings. The listings ecosystem must establish a new equilibrium to address the evolving conflicts of interest between founders, early investors, underwriters, and future shareholders.

[field_auth], 17 July 2016

Evidence of the ‘endowment effect’ – ownership of an asset changing one’s valuation of it – runs counter to standard microeconomic theory. This column uses evidence from the Indian stock market’s random allocation of shares in IPOs to show that endowment effects do occur in even outside of controlled experiments, and correlate highly with measures of market experience. This evidence suggests that agents’ inertial behaviour explains endowment effects better than standard explanations.

[field_auth], 26 January 2016

Prices of cable TV services are rising, leading to calls for the introduction of cable TV à la carte. This column argues against the proposal. Some would win while others would lose, but on average households would be no better off. Given the tremendous uncertainty associated with such a regulatory intervention, more convincing evidence of the consumer benefits is needed.

[field_auth], 22 January 2016

Nudges are modifications of people’s choice architecture that impact their behaviour but don’t change their incentives or coerce them. As a policy instrument, nudges have been shown to be effective in changing certain kinds of behaviours. This column explores the ethical issues that arise in employing such potentially manipulative policies. An evaluation programme is outlined that explores a potential policy’s impact on people’s wellbeing, autonomy, and integrity, along with its practical implications.

[field_auth], 07 January 2016

Economists take a keen interest in patent rights and their effect on innovation. The primary argument for the existence of patents is, after all, that they incentivise entrepreneurs to seek profit through innovating. This column looks at how patent rights affect innovation by small and large firms, finding that the results vary greatly depending on size. 

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