Regulation

Simonetta Vezzoso weighs in on the policy debate on algorithmic competition.

Michal Gal discusses the regulatory hurdles to deal with the impacts of algorithmic price collusion. In the meantime, she says, market fixes include algorithmic consumers and platform nudges to mitigate price coordination.

Capital markets are central to capitalism and the functioning of the US economy. Yet, short-selling, an integral part of price discovery in capital markets, has been blamed as a contributor to the recent banking crisis. Lawmakers and interest groups have labeled short sellers opportunists who prey on small investors and the public without justification. The authors shed light on this debate and question the merit of the allegations.

To what degree did banks’ equity price declines trigger deposit withdrawals at recently failed banks? To what degree did the withdrawals trigger declining bank equity prices? Hamid Mehran and Chester Spatt note that in either case, short-selling is not to blame and is, in fact, an essential part of a well-functioning market.

Maurice Stucke explains three policy approaches to algorithmic collusion and discrimination, and makes the case for a broader ecosystem approach that addresses not only the shortcomings of current antitrust law and merger review, but extends beyond them for a comprehensive policy response to the many risks associated with artificial intelligence.

Why ban competitive offers in the online world when they’re allowed offline? Big tech wants plain vanilla broadband pricing because it forecloses platform competition.

New research indicates that FinTech lending has not been as ‘disruptive’ in risk-based pricing as claimed. While FinTech has provided increased loan access to some individuals, reliance on traditional credit scoring and spillovers from banking regulations leads to mispricing and cross-subsidization of borrowers. The authors suggest alternatives to allocate capital efficiently and improve financial inclusion.

Anti-ESG rhetoric from conservative states conflates valid financial evaluations of company and industry prospects with the ideological values of political opponents. Politicians that pass legislation preventing businesses and state agencies from working with financial services with ESG standards will only harm their constituents. Instead, states should encourage competition and variety in financial services, writes Jennifer J. Schulp.

What happens when the goals of antitrust enforcers clash with regulators focused on issues of national security and public interest? A forthcoming book by Ioannis Kokkoris, Public Interest Considerations in US Merger Control, explores these tensions in the United States regulatory framework.

Lee Hepner and William J. McGee respond to Clifford Winston’s ProMarket piece asserting that further deregulation of the airline industry would resolve problems in the industry. Instead, the authors claim a return to regulation would produce better results for travelers.