Oxera

Inspiring better decisions through economics and finance

Articles
Depiction of Hidden talent: the economic benefits of social mobility
2 minute read

Hidden talent: the economic benefits of social mobility

Social mobility is widely considered to be intrinsically good: decoupling an individual’s prospects from their social status or family background is a key pillar of fairness and social justice. This perspective has filled philosophy textbooks and opinion columns, but what is less well understood is the role that social mobility plays in boosting productivity and economic output. Read More

Articles
Depiction of Causality and natural experiments: the 2021 Nobel Prize in Economic Sciences
8 minute read

Causality and natural experiments: the 2021 Nobel Prize in Economic Sciences

The Royal Swedish Academy of Sciences awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2021 to three economists—Joshua Angrist, David Card, and Guido Imbens. Their contributions to the economics literature shaped economists’ understanding of when causal relationships can be established, especially using non-experimental data, and what kinds of methods and assumptions allow us to uncover the true causal effect of one variable on another. Today, businesses, courts and policymakers rely on causal empirical evidence to make their decisions. Read More

Articles
Depiction of Bits of advice: the true colours of dark patterns
13 minute read

Bits of advice: the true colours of dark patterns

Dark patterns are deceptive online interface designs that are used to trick people into making decisions that are in the interests of the online business, but at the expense of the user. In this second article of our ‘bits of advice’ series on digital regulation, we dive into the economics behind dark patterns: what are they; what can economics teach us about how they work; how is digitalisation changing their costs and benefits in the eyes of businesses; and how can competition and consumer protection authorities respond? Read More

Articles
Depiction of COVID-19, the Olympics and Belarus: using new data to understand the aviation sector
9 minute read

COVID-19, the Olympics and Belarus: using new data to understand the aviation sector

While the aviation sector is still in the early stages of its recovery from the COVID-19 pandemic, there are signs that it is also rapidly changing. Airlines are experimenting with their networks, and it is predicted that there will be consolidation.1 Some airlines that have made substantial cuts to their crew and fleet now face the challenge of ramping back up to meet demand. There have also been events such as the Tokyo Olympics and the ban on flights in Belarusian airspace that have had significant effects on specific route markets. This article examines aviation data that Oxera has collected to better understand how fares and frequencies are evolving as a result of the pandemic and these recent events. Read More

Articles
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 Tipping: should regulators intervene before or after? A policy dilemma
11 minute read

Tipping: should regulators intervene before or after? A policy dilemma

In digital markets, platforms often reach a tipping point. When network effects are sufficiently strong, users are drawn towards the network with the highest number of other users, making it more attractive, until the market eventually tips in its favour. While there are benefits to market tipping, concerns regarding abuse of dominance may also arise, which, as discussed in this article, can present a dilemma for policymakers. Read More

Articles
Depiction of Data-enabled learning: policy implications
8 minute read

Data-enabled learning: policy implications

Despite superficial similarities, data-enabled learning does not necessarily create network effects, and when it does, data network effects are usually weaker and less conducive to lock-in than standard network effects. In this article, Andrei Hagiu, Associate Professor of Information Systems at Boston University, and Julian Wright, Oxera Associate and… Read More

Articles
Depiction of Is knowledge power? Data-enabled learning and competitive advantage
8 minute read

Is knowledge power? Data-enabled learning and competitive advantage

New technologies make data-enabled learning much more powerful than the customer insights produced by such techniques in the past. They do not, however, guarantee long-lasting barriers that prevent entry by rivals. In this article, Andrei Hagiu, Associate Professor of Information Systems at Boston University, and Julian Wright, Oxera Associate and Professor of Economics at the National University of Singapore, discuss seven factors that determine whether data-enabled learning creates a sustainable competitive advantage Read More

Articles
Depiction of Social discount rates: inequality and the long term
10 minute read

Social discount rates: inequality and the long term

The second article in this two-part series on Social Discount Rates (SDRs), as used in project and policy appraisal, discusses new evidence on how the rate at which the SDR declines could change, and how it could be adjusted to take inequality into account. Adjusting for inequality can reduce the discount rate even further than highlighted in our first article—to below 2%. The SDR could also decline more slowly than currently assumed. This would increase the benefit–cost ratio (BCR) of almost all projects seeking approval for government funding Read More

Articles
Depiction of The risks of using algorithms in business: artificial price collusion
11 minute read

The risks of using algorithms in business: artificial price collusion

Increasingly, prices are set by algorithms rather than humans. Many competition authorities have voiced their concerns that this may enable firms (knowingly or otherwise) to avoid competitive pressure and collude. Exactly how would such algorithmic collusion work? And what can businesses and other organisations that use pricing algorithms expect from competition authorities in the future? Read More

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