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Lobbying in the EU
No full textWhile we know a lot about how lobbying works in the United States, we know much less about how it operates in the European Union (EU), despite the EU's major global influence. The EU's complex system of governance creates unique challenges and opportunities for corporate lobbying, with important implications for policymaking. This paper helps fill that gap by building a new dataset on lobbying activities in the EU and documenting how companies engage with key institutions like the European Commission and the European Parliament. We also compare lobbying in the EU and the U.S. and examine what drives companies to lobby. Our findings raise important questions about corporate influence in EU policymaking and provide a foundation for future research
Cap and Trade with Imperfect Hedging
No full textWe thank Richard Bateman for excellent research assistance.In a cap-and-trade system, emitters face transition risk, to the extent that emission caps and permit prices are volatile. We show, theoretically, and empirically for the EU Emissions Trading System, that i) emitters hedge with emission permits futures bought from financials, ii) financial constraints limit hedging, in particular by limiting and delaying emitters' purchases of permits in the spot market, implying iii) permit prices are below the prices of replicating derivatives portfolios. Moreover, we show theoretically that constrained Pareto optima are implemented in equilibrium with cap-and-trade systems, in which the variance of emission caps is set lower than in the unconstrained case
Takeover Restrictions, Informational Externalities, and Analyst Coverage of Peer Firms
No full textThis study examines the impact of heightened demand for information after a takeover restriction on analyst coverage of peer firms. In the United States, the government’s Committee on Foreign Investment (CFIUS) has the authority to restrict foreign takeovers based on national security grounds. These takeover restrictions increase operational and financial uncertainty for both the target firm and its industry peers, resulting in a greater investor demand for information. Using a sample of CFIUS denials from 2008 to 2019, we find that a denial of a foreign takeover is followed by an increase in the number of existing and new sell-side analysts covering a target firm’s industry peers, consistent with an increase in the demand for information. We also show that this increased coverage is more pronounced for peer firms with a higher degree of information asymmetry and that the coverage leads to an improvement in the information environment of peer firms. Our results are robust to differential trends in analyst coverage of peer firms, changes in disclosure practices, and alternative industry classifications. Our study provides novel evidence that informational externalities from a firm-specific shock, such as a takeover restriction, can affect analyst coverage decisions for peer firms
To Engage or Not to Engage with the Far Right? How to Navigate the Shifting Political Landscape in Europe
No full textAs civil society strives to navigate a new political landscape dominated by radical, mostly far-right, representatives, this policy analysis offers an analytical framework capable of assisting its organisations in making informed decisions and balancing the risks and opportunities stemming from such engagement. It highlights critical questions to help organisations assess whether and how to engage with far-right actors, notably contextual factors (what influence does the far-right representative actually wield, and how does it impact your organisation's goals?), ethical concerns (Are the views of these actors compatible with democratic principles and human rights?), and strategic gains (Are there tangible benefits to engagement that outweigh potential reputational and ideological risks?). If much of civil society has historically refused to engage with the far right, it did so because of incompatible values but also due to these parties’ previously marginal or limited role. To maintain such an ideological stance may reveal more challenges in the 2024-2029 political cycle. This legislature may force civil society to reconsider its traditional stance and determine whether to engage with the far right based on the risks and perceived opportunities stemming from such an engagement. This appears inevitable insofar as far-right representatives do chair EP parliamentary committees, sit in the EU College of Commissioners or are part of the government at the national level, to name a few examples. This guidance document balances the pragmatic need to engage with controversial political representatives and parties and remain true to the organisations’ core values
Shaping collective action in financial markets through popular expertise: An analysis of Due Diligence posts on WallStreetBets
No full textIn 2021, a social movement rallying retail investors unexpectedly shocked Wall Street, forcing a prominent multi-billion-dollar hedge fund to shut down one year later, after incurring massive financial losses. Social movements in financial markets have significantly developed in the wake of the 2007–09 financial crisis, resulting in the emergence of various collective actions. We analyze one recent example of such action undertaken by the r/WallStreetBets (WSB) community on Reddit, which disrupted the stock prices of several “meme stocks” (e.g., GameStop) by disseminating influential investment narratives. We analyze the 150 most upvoted Due Diligence posts on WSB and interview eight members of its community. We find that a popular expertise in investment narratives emerged, developed, and was propagated on this digital platform. WSB authors’ claim to popular expertise is made in a hybrid language combining traditional financial expertise with an accessible and entertaining writing style, complemented by references to pop culture. Our analysis brings out a growing resentment among retail investors about the unfairness of financial markets, and its role in mobilizing them for collective action that challenged the existing order of things. Yet this widespread resentment did not spontaneously translate into a meaningful, sustainable collective action initiative. Our thesis is that the development of popular expertise played an instrumental role in the formation of WSB’s collective action initiative targeting several perceived investment opportunities
Beyond EU Law Heroes Unleashing Strategic Litigation as a Form of Participation in the Union's Democratic Life
No full textThis article discusses the emerging strategic litigation practice in the European Union through the lens of participatory democracy. After situating such a practice within the specificities of the EU legal order, it explores whether and extent to which strategic litigationunderstood as an additional form of participation in the Union's democratic lifemay contribute to EU participatory democracy and under which conditions. It unveils that while strategic litigation carries the potential to enhance democratic participation in the EU, it also risksdue to limited judicial literacy and unequal access to justiceempowering those already powerful. For strategic litigation to unleash its democratic potential at scale, EU courts mustas required by the 'Provisions on Democratic Principles' of the Treaty of Lisbonensure a participatory enabling environment capable of pro-actively catalysing and facilitating the ability of ordinary citizensas well as diffuse, under-resourced and traditionally overlooked groupsto be better able to contribute to the Union's democratic life. Ultimately, no legal order worth of its name should rely on the heroism of its citizens and residents to keep its legal system in check
Measuring natural source dependence
No full textInternational audienceThe consequences of most economic decisions are uncertain; they are conditional on events with unknown probabilities that decision makers evaluate based on their beliefs. In addition to consequences and beliefs, the context that generates events-the source of uncertainty-can also impact preferences, a pattern called source dependence. Despite its importance, there is currently no definition of source dependence that allows for comparisons across individuals and sources. This paper presents a tractable definition of source dependence by introducing a function that matches the subjective probabilities of events generated by two sources. It also presents methods for estimating such functions from a limited number of observations that are compatible with commonly-used choice-based approaches for separating attitudes from beliefs. As an illustration, we implement these methods on three datasets, including two original experiments, and show that they consistently capture clear, albeit heterogeneous, patterns of source dependence between natural sources. Our approach provides a framework for future research to explore how source dependence varies across individuals and situations
Consumers’ Perceived Privacy Violations in Online Advertising
No full textIn response to privacy concerns about personal data collection and use, the online advertising industry has developed privacy-enhancing technologies (PETs), of which Google’s Privacy Sandbox is a prominent example. In this research, we apply dual-privacy theory, which postulates consumers have intrinsic and instrumental preferences for privacy, to understand perceived privacy violations (PPVs) for current practices and proposals. The key idea is that different practices and proposals differ in whether individual data leaves the consumer’s machine or not and in how they track and target consumers; these affect, respectively, the intrinsic and instrumental components of privacy preferences differently, leading to different PPVs for different practices.We conducted online studies with U.S. consumers to elicit PPVs for various advertising practices. Our findings confirm the intuition that tracking and targeting consumers under the industry status quo of behavioral targeting results in high PPVs. While new technologies that keep data on users’ devices reduce PPV compared to behavioral targeting, the reduction is minimal. Group-level targeting does not significantly reduce PPV compared to individual-level targeting. However, contextual targeting, which involves no tracking, significantly lowers PPV. Notably, when tracking is absent, consumers show similar preferences for seeing untargeted ads and no ads.Our results indicate that consumer perceptions of privacy violations may differ from technical definitions. A consumer-centric approach, based on, for instance, the dual-privacy theory, is essential for understanding privacy concerns. At a time of significant privacy-related developments, these insights are crucial for industry practitioners and policymakers
The Economics of Computational Reproducibility
No full textWe investigate why economics displays a relatively low level of computational reproducibility. We first study the benefits and costs of reproducibility for readers, authors, and academic journals. Second, we show that the equilibrium level of reproducibility may be suboptimally low due to three market failures: a competitive bottleneck effect due to the competition among journals to attract authors, the public good dimension of reproducibility, and the positive externalities of reproducibility outside academia. Third, we discuss different policies to address these market failures and move out of a low reproducibility equilibrium. In particular, we show that coordination among journals could reduce by half the cost of verifying the reproducibility of accepted papers
Advertising's Impact on Brand Price Elasticity
No full textManagers often count on advertising to create and reinforce brand differentiation, which should, in theory at least, translate into lower price sensitivity for their brands. But to what extent does it do so, what is the route through which this effect of advertising materializes, and what are the boundary conditions? The authors develop a Dynamic Linear Model that links advertising to brand price elasticity directly and indirectly through consideration and main brand preference mindset metrics. Model estimation on six and a half years of data, on average, for 350 brands in 39 categories of fast-moving consumer goods shows that advertising indeed decreases the magnitude of price elasticity. The effect is mainly direct (97.5%) and partly indirect (2.5%), through brand preference. The direct effect shows that advertising predominantly decreases price sensitivity among the consumers who already consider the brand and among the consumers who already prefer it. When converted into incremental revenue impact, monetary gains from this increased pricing power are especially pronounced for expensive brands in complex and frequently purchased categories. The findings thus help managers demonstrate the benefits of advertising in sustaining brand performance