Oxera

Inspiring better decisions through economics and finance

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Depiction of Zombie firms: how can new assessment tools effectively direct credit supply?
10 minute read

Zombie firms: how can new assessment tools effectively direct credit supply?

While the post-pandemic economic recovery continues, governments and credit institutions will need to decide where to direct their financial support, selecting companies with a strong potential for growth rather than those that are destined to decline. This is not a straightforward task, since post-COVID-19 events are influencing the business models of entire industries and affecting companies’ short-term economic performance. As Oxera Associate Fabio Menghini explains, the effectiveness of traditional credit risk assessment tools may need to be re-evaluated. Read More

Articles
Depiction of How do policymakers make the climate transition just?
11 minute read

How do policymakers make the climate transition just?

Many different organisations, including the European Commission, the United Nations and the International Labour Organization (ILO), have expressed a desire to ensure that decarbonisation involves a ‘just transition’. The organisations have often focused on the ‘workers’ rights’ element of the transition, without giving other aspects of a just transition the same level of consideration. In this article, we identify these other aspects and, in particular, we explain why current methods of funding decarbonisation are often ‘regressive’ rather than ‘progressive’. Read More

Articles
Depiction of System failure: a problem for behavioural economists?
10 minute read

System failure: a problem for behavioural economists?

Recent developments in neuroscience show that decision-making is more complex than the (basic) model of System 1 and System 2 that was formulated for use in behavioural economics by the Nobel Prize-winning psychologist Daniel Kahneman. Recognising the substantial impact of the discipline on public policy and regulation, Peter Andrews—Oxera Senior Adviser and former Chief Economist at the UK Financial Conduct Authority—considers the implications of Kahneman’s model and the emerging critique of behavioural economics. He shows that behavioural economists’ empirical work does not, in fact, rely on the model, and flags the success of many behavioural interventions. Insights from neuroscience are found to have improved the design and impacts of behavioural remedies. Read More

Articles
Depiction of Bits of advice: how to regulate data access
11 minute read

Bits of advice: how to regulate data access

Recent policy reports point towards differential access to data as a source of market power and a barrier to competition, especially (but not exclusively) in markets for digital services. One controversial policy solution currently being debated is mandated data-sharing. If this is the way forward, how should the regulation be designed? In this first article of a new series, we explore the merits and pitfalls of two classic regulatory approaches—rules-based and goals-based regulation—and what the best of both worlds might look like in the case of digital markets. Read More

Articles
Depiction of When to give the green light to green agreements
16 minute read

When to give the green light to green agreements

Should companies be allowed to cooperate—or ‘collude’—on socially beneficial environmental behaviour? Do companies even have the incentive to cooperate on socially beneficial behaviour? In this article, we reconcile apparently divergent views concerning the law and economics of the value of sustainability agreements, by illustrating how the presence of sustainability spillovers between firms can generate both socially and privately beneficial cooperation. Read More

Articles
Depiction of New game, new rules: the draft guidelines for ‘green’ state aid measures
8 minute read

New game, new rules: the draft guidelines for ‘green’ state aid measures

On 7 June, the European Commission published its draft climate, energy and environmental aid guidelines (CEEAG). More comprehensive than the previous version, these guidelines cover new technologies (such as hydrogen) and state aid for the phasing out of coal. We explore the role of economic and financial analysis in assessing the compatibility of ‘green’ aid measures under the guidelines. Read More

Articles
Depiction of Mobile network-sharing agreements: opportunity or threat?
10 minute read

Mobile network-sharing agreements: opportunity or threat?

Mobile network-sharing agreements (NSAs) can support investment by relieving capital constraints, lowering the unit costs of expanding networks, and generating network cost savings that reduce both the scale of the investment and operating costs. However, concerns have been expressed about the anticompetitive effects of such cooperation between competitors. Given the importance of examining NSAs case by case, how can one assess their potential anticompetitive effects, and analyse and verify their benefits? Read More

Articles
Depiction of Penalty design: punishment and deterrence
9 minute read

Penalty design: punishment and deterrence

How should penalties be set so as to punish breaches of rules while deterring any future breaches? Oxera provided advice to the Irish Commission for Communications Regulation (ComReg) on how financial penalties might be calculated for breaches of regulatory obligations in the Irish electronic communications sector. We concluded that a turnover-based approach would be appropriate, and proposed an alternative ‘tariff-based’ approach for less serious breaches. How did we arrive at our conclusions? Read More

Articles
Depiction of App’y hour—German energy law put to test
9 minute read

App’y hour—German energy law put to test

In a ruling due this September, the European Court of Justice (ECJ) is expected to grant the German energy regulator, the Bundesnetzagentur, greater powers and independence in its decision-making—but what will this mean for German energy networks? In this article, we will review key elements of the Bundesnetzagentur’s efficiency… Read More

Articles
Depiction of RIIO-2 appeals—CMA provisional findings
8 minute read

RIIO-2 appeals—CMA provisional findings

The Competition and Markets Authority (CMA) has published a summary of its Provisional Determination of the appeals in respect of Ofgem’s RIIO-GD2 and RIIO-T2 price control review. Out of 12 grounds of appeal, it provisionally upheld, partially or fully, five. In many instances, the CMA did not find Ofgem’s… Read More

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