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Archive for 2016

22/12/2016 - Briefing Paper: FCA’s Market Study and Brexit: Next Challenges for the UK Asset Management Industry

The UK asset management industry has grown significantly over the past decade, remaining positioned as the largest in Europe by far and second only to the US globally. However, additional challenges and sources of uncertainty are forthcoming: the impact of the UK’s decision to leave the European Union and the publication of the interim findings of the Financial Conduct Authority’s (FCA) asset management market study. In this briefing note we describe their potential effects and provide an overview of the main facts and figures characterising the industry.

21/12/2016 - Briefing Note: Procedural Fees as a Policy Tool

One of our Senior Consultants, Dr Stefano Ficco, has written this briefing note, providing a brief overview of patent fees, their typologies and the economic functions that they can serve.

20/12/2016 - Briefing Note: Pfizer Fine for Excessive Pricing

On 7th December, the Competition and Markets Authority (CMA) fined pharmaceutical company Pfizer £84.2 million for excessive pricing. Sida Yin, Analyst at Europe Economics, has written a briefing note on the recent excessive pricing cases in the pharmaceutical sector and the role of the regulatory framework.

15/12/2016 - Evaluation of Fiscal Measures in the National Policies and Methodologies to Implement Article 7 of the Energy Efficiency Directive

Europe Economics was commissioned to provide technical assistance in the development of the methodology for the evaluation of fiscal measures to implement Article 7 of the Energy Efficiency Directive. This involves assessment of different fiscal policies used in a selection of Member States including the use of price elasticity data and additionality assumptions in arriving at claimed energy efficiency benefits.

22/11/2016 - The Economic Impact of Improved Financial Capability

Europe Economics’ study analysing the economic impact of improving financial capability has been published by the Money Advice Service. The Press Release can be read here. Our work involved the construction of model which combined survey data on 3500 individuals with insights from economics and behavioural finance to estimate the consumer impact of improving financial capability across the UK. Our study also analyses the impact on the supply-side (i.e. the financial services industry). Our model is expected to be used in future policy-making by the MAS in helping to set the UK's financial capability strategy. This work was led by Ross Dawkins, Principal at Europe Economics

26/10/2016 - Patent Assertion Entities in Europe. Their impact on innovation and knowledge transfer in ICT markets

Europe Economics undertook a study of Patent Assertion Entities in Europe for the Joint Research Centre of the European Commission. This study provides an overview of patent assertion practices and of patent assertion entities in Europe, taking into consideration their impact on innovation and technology transfer in European ICT markets. It provides a European perspective on patent assertion entities, which is complementary to the situation in the United States, recently analysed by the US Federal Trade Commission.

21/09/2016 - Different forms of cooperation between insurance companies and their respective impact on competition

Europe Economics was contracted by DG COMP of the European Commission to report on “Different forms of cooperation between insurance companies and their respective impact on competition”. This study compares different forms of cooperative insurance structures, not limited to pools, setting out the advantages and disadvantages of each type of cooperative structures for both insurers and clients. This research also analyses the different competitive dynamics associated with each form of insurance cooperation scheme. The research moreover identifies potentially non-essential features, from the perspective of maximising the efficiency of these schemes. CMS-Hasche Sigle provided legal input to the study, and Prof Dr Martin Eling provided expert insurance and economic input. This work was conducted in the context of DG COMP’s review of the IBER, with further context available here.  Ross Dawkins led this work for Europe Economics.

21/09/2016 - Switching of tangible and intangible assets between different insurance products

Europe Economics was contracted by DG COMP of the European Commission to report on “Switching of tangible and intangible assets between different insurance products”. This study investigates supply-side substitutability in the context of large, unconventional non-life risk, such as nuclear, cyber and natural catastrophe. The study’s focus is on the ability of insurers to switch between different insurance products in the short-term, and on identifying the various constraints that may impede this process. CMS-Hasche Sigle provided legal input to the study. This work was conducted in the context of DG COMP’s review of the IBER, with further context available here.  Ross Dawkins led this work for Europe Economics.

05/09/2016 - The Downstream Economic Impacts of Palm Oil Exports

Report for the Malaysian Palm Oil Council on the impact of Palm Oil imports on the economies of importing countries.

28/06/2016 - Briefing note: Interest free microfinance and impact on poverty alleviation

Poverty alleviation and sustainable development are amongst the main concerns of the developing world. In the most recent study conducted in 2012, 12.7 percent of the world's population still lived below the poverty line (at or below $1.90 a day). In the light of this, one of our Analysts, Summayah Leghari, has written a note on the role of interest free microfinance in poverty alleviation, with a particular focus on a unique micro finance model of voluntary contributions and zero interest, practiced in Pakistan.

28/06/2016 - Briefing note: The beginning of the end for RPI indexation of price controls?

Stephen Topping, a Managing Consultant at Europe Economics, has written a briefing note on the regulatory precedent set by Ofwat’s decision to move from RPI to CPI indexation at PR19.   Ofwat’s decision to begin a transition to either CPI or CPIH indexation from 1 April 2020 increases the likelihood that other regulators will follow suit in future price reviews.

28/06/2016 - Research Paper: Restricting investment choice - what are the costs, and how they can be measured

This research paper illustrates a methodology to measure the costs arising from restrictions on the range of investment options available to investors. The main conceptual aspects of the approach are explained, and a concrete example of its application is also provided.  The paper concludes by presenting a number of business questions that could be addressed through the implementation this cost-assessment methodology.

26/06/2016 - The Cost of Non-Schengen: the Impact of Border Controls within Schengen on the Single Market

The Europe Economics research paper on The Cost of Non-Schengen has been published. The study has been written at the request of the European Added Value Unit of the Directorate for Impact Assessment and European Added Value, within the Directorate General for Parliamentary Research Services (DG EPRS) for the European Parliament’s Internal Market and Consumer Protection Committee. This paper considers the costs of four scenarios for the reintroduction of border controls within the Schengen area: for two years for seven countries; for two years across the Schengen area; indefinitely for seven countries; and indefinitely across the Schengen area. It identifies how a reintroduction of borders would create costs of \'non-Schengen\' and estimates that cost quantitatively. For the highest-cost scenario — indefinite suspension of the whole Schengen area – the cost is 0.06-0.14 per cent of EU GDP, or some €100 billion to €230 billion over ten years.

09/06/2016 - Study on the State of the Credit Rating Market

Europe Economics’ study on the state of the credit rating market has been published by DG FISMA. The report describes the current extent of competition and of competitiveness in the different segments of the credit rating market (such as sovereigns, corporate and covered bonds, structured finance instruments). We also assessed the current and anticipated impact of the Regulation on credit rating agencies (CRAR3) on competition. We identified and assessed the feasibility of potential additional measures to further promote competition and quality in credit rating. We worked with three academic collaborators: Dr Dion Bongaerts, Dr Nelson Camanho and Dr Sandra Einig. The project was led by Ross Dawkins.

23/03/2016 - Analysis of Public Spending and Local Taxation in Scotland compared to the rest of the UK

Europe Economics was commissioned by Scotland in Union to perform an analysis of Scotland's expenditure and revenue compared to the rest of the UK. Our research showed that Scotland enjoys higher spending on public services, more capital investment and lower taxes as a result of being in the UK. Analysis of the latest GERS figures showed that being part of the UK is worth around £8.8bn to Scotland.

15/03/2016 - The Uses (and Abuses) of Modelling Adjustments

Our report on “The uses (and abuses) of Modelling Adjustments in Internal-Ratings Based Models” has been published by the Association for Financial Markets in Europe.

26/02/2016 - The Contribution made by Beer to the European Economy

Europe Economics was commissioned by the Brewers of Europe to update and extend their analysis of the direct, indirect and induced economic impact of the European beer industry, both across the EU as a whole and in individual Member States.

25/01/2016 - The Cost of Non-Europe in the Sharing Economy

Europe Economics was commissioned by the European Parliament to study the potential of the Sharing Economy in the EU, the obstacles to that potential being realised and how changes to regulatory policy might address some of those obstacles. Our report has been published as part of a somewhat larger report from the European Parliamentary Research Service, with our contribution starting at page 33.

13/01/2016 - Proof of Flow under Market Coupling

Ofgem has published a report written by our Consultant Benjamin Tannenbaum on “Proof of flow under market coupling”, which includes an economic analysis of the trading arrangements and the barriers to entry in wholesale power trades in Europe. The report assesses the economic impact on power market participants of a range of different options for estimating the path of power in an interconnected system where power price and cross-border capacity allocation are determined simultaneously and anonymously.