Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Friday, February 24, 2017

Developing Behavioural Economics as a Practical Tool for Market Authorities: Lessons learned from the first era of behavioural case work

Benjamin J.R. Nunez has a paper on Developing Behavioural Economics as a Practical Tool for Market Authorities: Lessons learned from the first era of behavioural case work.

ABSTRACT: Market authorities in the UK now have almost a decade of collective experience in interpreting and applying the principles of behavioural economics. Those entities have sought to use insights from the field that show why consumer behaviour sometimes diverges from wealth-maximising predictions as a tool to improve their abilities to diagnose and address problematic market features. This paper reviews the first era of behaviourally-informed case work to derive a series of lessons learned that should inform future applications of the theory. This review begins with a discussion of how authorities have interpreted the findings of behavioural research to be of relevance for their strategic approach to case work. The centrepiece is a survey of recent case work in which the analysis has been driven by the application of behavioural theory. A major lesson that emerges is that behavioural research has facilitated authorities to undertake more nuanced and comprehensive examinations of possible demand-side issues. Currently, however, behavioural theory is not capable of providing robust a priori predictions for the purposes of remedy design; therefore, adequate testing of behavioural remedies is likely to prove crucial for their effectiveness.

February 24, 2017 | Permalink | Comments (0)

Effectiveness of Judicial Review in the Polish Competition Law System and the Place for Judicial Deference

Maciej Bernatt University of Warsaw, discusses Effectiveness of Judicial Review in the Polish Competition Law System and the Place for Judicial Deference.

ABSTRACT: The article discusses the effectiveness and the intensity of judicial review in the Polish competition law system. First, it studies whether the judicial review offered by the 1st instance Court of Competition and Consumer Protection in Warsaw (SOKiK) is effective in practice. Next, the article analyzes whether Polish courts tend to defer to the findings of the Polish competition authority, UOKiK. Judgments of the Supreme Court concerning relevant market definition serve as case studies. Finally, the article discusses whether proceedings before the Polish competition authority ensure sufficient due process guarantees, the impartiality of decisionmakers, and the overall expert character of UOKiK’s decision-making process.On this basis the article examines whether there are grounds for the reviewing courts to defer to UOKiK’s findings. The article concludes that currently the review undertaken by SOKiK happens to be superficial and thus ineffective. At the same time, the Supreme Court’s review of the determination of the relevant market is not deferential towards UOKiK’s findings. The Supreme Court substitutes its own definition of the relevant market for that of UOKiK and that of the lower courts. However, the article shows that there are no grounds at the moment for arguing for greater judicial deference. Proceedings held before UOKiK, despite recently introduced improvements, still do not offer sufficient due process guarantees or a division between investigatory and decision-making functions. In addition, UOKiK’s expertise is not sufficient for both institutional and practical reasons.

 

February 24, 2017 | Permalink | Comments (0)

U.S. / EU Antitrust Friction In The Time Of Brexit: Toward A Rosier Scenario?

Tad Lipsky (FTC) asks U.S. / EU Antitrust Friction In The Time Of Brexit: Toward A Rosier Scenario?

ABSTRACT: Although U.S. and EU antitrust rules share many elements, their historical roots are distinct and a variety of important tensions and inconsistencies persist between the two systems. Firms with operations in both jurisdictions are typically required to follow different legal advice and to operate differently in each. In many circumstances such firms can tolerate the added expense and business limitations without significant effects on their fundamental business models. Where there are important complementarities and cross-influences between U.S. and EU business conduct, however, the clash in antitrust rules can alter the fate of a business enterprise or an entire industry.

February 24, 2017 | Permalink | Comments (0)

Strategic Incentives When Supplying to Rivals With an Application to Vertical Firm Structure

Serge Moresi, Charles River Associates (CRA) and Marius Schwartz, Georgetown University have a paper on Strategic Incentives When Supplying to Rivals With an Application to Vertical Firm Structure.

ABSTRACT: We consider a vertically integrated input monopolist supplying to a differentiated downstream rival. With linear input pricing, at the margin the firm unambiguously wants the rival to expand — unlike standard oligopoly with no supply relationship — for either Cournot or Bertrand competition. With a two‐part tariff for the input, the same result holds if downstream choices are strategic complements, but is reversed for Cournot with strategic substitutes. We analyze vertical delegation as one mechanism for inducing expansion or contraction by the rival/customer.

 

February 24, 2017 | Permalink | Comments (0)

Thursday, February 23, 2017

Competition Infringements and Procurement Blacklisting

Albert Sanchez-Graells, University of Bristol Law School has written Competition Infringements and Procurement Blacklisting.

ABSTRACT: In this article I explore the rules for the blacklisting of competition infringers under relevant EU and UK public procurement law, including their interpretation by the European Court of Justice. I also consider the practical difficulties for their enforcement by procurement professionals in the UK and suggest additional roles that the Competition and Markets Authority (CMA) and Crown Commercial Service (CCS) could have in order to facilitate their effectiveness. Finally, I also stress the existence of a trade-off between a more active enforcement of procurement blacklisting rules and the attractiveness of the CMA’s leniency policy. By way of concluding remarks, I set out a blueprint for targeted policy reform. I submit that this should include the development of mechanisms for the provision of CMA support to procurement professionals that identify indicia of bid rigging, the development of a policy on the imposition of procurement blacklisting as a sanction for competition law infringers, and the creation of a UK-wide blacklisting register operated by CCS.

 

February 23, 2017 | Permalink | Comments (0)

EU Competition Law Analysis of FRAND Disputes

Nicolas Petit, U Liege offers a EU Competition Law Analysis of FRAND Disputes.

ABSTRACT: This paper describes the degree of obligation created by a FRAND commitment on the holders of a Standard Essential Patent (“SEP”) from an EU competition law perspective. It shows that the EU courts case-law does not seem supportive of the reading of FRAND as a distributional, pricing commitment. Instead, it views FRAND as a soft commitment device, designed to promote cooperation and exchange amongst independent firms. This is apparent in the Huawei v ZTE judgment, which conveys an invitation on both SEP holders and unlicensed implementers to follow basic procedural requirements in licensing talks. In addition, the paper contributes to the debate on the legal applicability of Article 102 TFEU to SEP holders other than practicing entities. Last, the paper discusses if Standard Setting Organizations (“SSOs”) ex ante specifications of FRAND terms can constrain the conduct of SEP holders under EU competition law.

 

February 23, 2017 | Permalink | Comments (0)

Call for papers: 12th International Conference on Advances in the Analysis of Competition Policy and Regulation (CRESSE) June 30th to July 2nd 2017

We invite submissions of papers to the 12th International Conference on Advances in the Analysis of Competition Policy and Regulation (CRESSE) that will take place in the island of Crete, near Heraklion city (GREECE), from June 30th to July 2nd 2017, at the Venue Out of the Blue Capsis Elite Resort.

 

The CRESSE Scientific Committee consists of: Prof. Joseph Harrington (Business Economics and Public Policy Department, The Wharton School, University of Pennsylvania), Prof. Yannis Katsoulacos (Athens University of Economics and Business), Dr. Pierre Régibeau (Charles River Associates), Prof. Patrick Rey (Toulouse School of Economics) Prof. Thomas Ross (Sauder School of Business, University of British Columbia) and Prof. David Ulph (University of St. Andrews).

 

CRESSE 2017 Keynote Speakers will be:

        Prof. Louis Kaplow (Harvard Law School). Title of presentation: “Price-Fixing Policy”

        Prof Carl Shapiro (University of California at Berkeley). Title of presentation: "Antitrust in a Time of Populism"

 

Special Keynote Lawyers’ Lecturer will be:

        Prof. William Kovacic (The George Washington University Law School). Title of presentation: TBA

 

Invited Speakers will be:

        Prof. Volker Nocke (UCLA and University of Mannheim). Title of presentation: "Multiproduct-Firm Oligopoly: An Aggregative Games Approach"

    Prof. Massimo Motta (Barcelona Graduate School of Economics). Title of presentation “Investment, Innovation and Merger Assessment”

 

Other confirmed speakers include: Prof. Heski Bar-Issac, Prof. Neil Gandal, Prof. Joe Harrington, Prof. Marc Ivaldi, Prof. Frederic Jenny, Prof. Bruno Jullien, Prof. Fiona Scott Morton, Prof. Patrick Rey, Prof. Howard Shelanski, Prof. Tommaso Valletti and Prof. Frank Verboven Topics: 

We welcome submissions of theoretical, policy oriented or empirical papers related to any one of the main aspects of Competition Policy (dominance, collusion or mergers) or Sectoral Regulation or to issues of policy implementation, enforcement and State-Aid. Submissions by legal experts are also encouraged.

Deadline for paper submission: 1st April, 2017 Acceptance of papers by 8th May, 2017.  Those who wish to present should send their papers electronically to katsoul@aueb.gr.

 

Registration:

The Conference registration fee is 400.00 euros. Conference Speakers, Discussants and PhD Students get a 50% discount. CRESSE Summer School Students may participate in the Conference free of charge.

Registration fees cover participation in the Conference, the Conference bags with the articles that will be presented, participation to the coffee breaks, the (three) Conference lunches as well as participation to the Conference dinner (Sunday July 2nd).

 

February 23, 2017 | Permalink | Comments (0)

John Kwoka's Mergers, Merger Control, and Remedies: A Critical Review

Michael Vita, U.S. Federal Trade Commission - Bureau of Economics and F David Osinski, Federal Trade Commission have an attack on John Kwoka's Mergers, Merger Control, and Remedies: A Critical Review.

ABSTRACT: John Kwoka’s recently published Mergers, Merger Control, and Remedies (2015) has received considerable attention from both antitrust practitioners and academics. The book features a meta-analysis of retrospective studies of consummated mergers, joint ventures, and other horizontal arrangements. Based on summary statistics derived from these studies, Kwoka concludes that domestic antitrust agencies are excessively tolerant in their merger enforcement; that merger remedies are ineffective at mitigating market power; and that merger enforcement has become increasingly lax over time. We review both his evidence and his empirical methods, and conclude that serious deficiencies in both undermine the basis for these conclusions.

February 23, 2017 | Permalink | Comments (0)

The Rule of Reason

Herb Hovenkamp, Iowa discusses The Rule of Reason.

ABSTRACT: Antitrust’s rule of reason was born out of a thirty year (1897-1927) division among Supreme Court Justices about the proper way to assess multi-firm restraints on competition. By the late 1920s the basic contours of the rule for restraints among competitors was roughly established. Antitrust policy toward vertical restraints remained much more unstable, however, largely because their effects were so poorly understood.

This article provides a litigation field guide for antitrust claims under the rule of reason – or more precisely, for situations when application of the rule of reason is likely. At the time pleadings are drafted and even up to the point of summary judgment, the parties are often uncertain whether a court will apply the rule of reason. Because the choice of rule presents a question of law, it is generally established prior to trial. The first section examines pleading and summary judgment rules, including the role of stare decisis, arguing that stare decisis should apply to a mode of analysis rather than to a specific class of restraints. Then it discusses numerous problems surrounding the burden of proof and the quality of evidence needed to shift the burden or get to a jury. I argue that the plaintiff’s burden for a prima facie case should be relatively stringent for the market power requirement, but relatively light for proof of an anticompetitive act.

I also show why a consumer welfare standard for antitrust violations is the only manageable one for evaluating practices under the rule of reason. The alternative, general welfare standard requires that all consumer losses be quantified and compared with producer efficiency gains, as well as likely effects on others. Aside from any substantive reasons for preferring a consumer welfare standard, a general welfare standard is impossible to apply in any but the most obvious cases. The consumer welfare standard queries only whether output will be higher or lower (or prices lower or higher) under the restraint. This query can be difficult enough but is nevertheless much simpler than the proof requirements for a general welfare standard. Finally, this section examines the possibility of truncated, or “quick look,” analysis as an alternative to both the rule of reason and the per se rule, arguing against recognition of any categorical “quick look.” I conclude with a brief discussion of “balancing,” and why the rule of reason’s staged set of queries is designed so that courts can avoid balancing whenever possible.

The next section considers how to identify the types of conduct to which antitrust’s rule of reason should be applied. It also examines the question of appropriate remedies, particularly when the basic features of joint activity are either unchallenged or conceded to be competitive, but a specific provision or practice threatens competition. Then it turns briefly to the special case of antitrust restraints in markets for intellectual property rights. A final section examines the market structure requirements for antitrust rule of reason cases, including vertical agreements as well as agreements that have both horizontal and vertical elements. For rule of reason cases involving collaborative conduct generally, market power requirements should be less than those for single firm conduct. The principal exception is vertical exclusionary agreements (mainly, tying and exclusive dealing), where power requirements should be equivalent to those used in monopolization cases.

February 23, 2017 | Permalink | Comments (0)

Wednesday, February 22, 2017

Competition Soft Law in National Courts: Quo Vadis?

Zlatina Rumenova Georgieva, Tilburg Law and Economics Center ask Competition Soft Law in National Courts: Quo Vadis?

ABSTRACT: This paper is based on an empirical dataset of 103 national competition cases of EU Member States, which contain judicial reasoning on supranational, Commission-issued competition soft law. The paper enquires into the possible reasons for detected national judicial attitudes to supranational soft competition instruments – namely – endorsement, rejection, persuasion, and neglect.

In particular, the empirical data suggests that the overwhelming majority of judicial endorsement of soft law happens with regard to the so-called Guidelines on Vertical Restraints, which are also the most cited supranational competition soft instrument in the courts of the jurisdictions under observation (Germany, France, the Netherlands and the United Kingdom). A staggering 62 per cent of all judicial soft law references are references to the said guidelines. By contrast, the so-called Article 82 Guidance Paper receives the lowest amount of references – a mere 8 per cent – and is also more often than not either rejected or neglected by the national judiciaries. The other two soft instruments under observation in this study – the Guidelines on Horizontal Cooperation Agreements and the Article 81(3) Guidelines – are engaged with sparingly (they comprise 13 and 16 per cent of the total cases, respectively) and with varying success. The thus summarized results offer fruitful ground for analysis, which this paper performs in its Section 4. Several factors that could explain the above observations are therefore discussed in detail.

Firstly, it is hypothesized that observed outcomes are determined by interactions between the national and supranational (EU) level. Those interactions comprise of informational exchanges with regard to the judicial endorse-ability of said soft law instruments. With their competition judgments, the CJEU and the GC show their position on Commission-issued competition soft law and thus send a signal to the national judiciary, which – in turn – absorbs/transforms the signal and sends it back to the supranational level.

Secondly, it is hypothesized that the peculiarities of competition enforcement and – even more generally – the legal systems of each Member State under observation, influence judicial engagement with supranational soft law. The particular peculiarities examined in this study are: 1) intensity of judicial review for public enforcement cases, 2) type of court handling the case (specialized or not) for both public and private enforcement cases and 3) the existence or not of a national soft law instrument that is equivalent or identical to its supranational counterpart. All of the above-enumerated factors, it is argued, can influence the ability of national courts to engage with supranational competition soft law and/or their attitude towards it.

February 22, 2017 | Permalink | Comments (0)

Exit, Tweets, and Loyalty

Joshua S. Gans, University of Toronto - Rotman School of Management; NBER, Avi Goldfarb, University of Toronto - Rotman School of Management, and Mara Lederman, University of Toronto - Rotman School of Management have a fascinating paper on Exit, Tweets, and Loyalty.

ABSTRACT: Hirschman’s Exit, Voice, and Loyalty highlights the role of “voice” in disciplining firms for low quality. We develop a formal model of voice as a relational contact between firms and consumers and show that voice is more likely to emerge in concentrated markets. We test this model using data on tweets to major U.S. airlines. We find that tweet volume increases when quality – measured by on-time performance – deteriorates, especially when the airline operates a large share of the flights in a market. We also find that airlines are more likely to respond to tweets from consumers in such markets.

February 22, 2017 | Permalink | Comments (0)

The Antitrust of Foreign Direct Investments vis-à-vis Energy and Sustainability Patents

Parham Farhang Vesal, Graduate Institute, Geneva (IHEID) describes The Antitrust of Foreign Direct Investments vis-à-vis Energy and Sustainability Patents.

ABSTRACT: This study analyzes the feasibility of optimal equilibrium between antitrust exigencies and patent law necessities, when it comes to transnational investments in energy and sustainability global market. In doing so, the study first briefs on the ambits encircling the several interconnected subject-matters of law and economy associated with its general topic. Having scrutinized the current state of antitrust-patent intersection at WTO forum, the study moves on towards landmark literature and national practices and precedents regarding the interactivity of antitrust policy and patent law. With that backset, the specific antitrust problems of foreign direct investment in the global market of energy and sustainability products are explored in details. Based on all the argumentations and analyses provided, the study proposes a solution to the antitrust problem of foreign direct investment vis-à-vis energy and sustainability patents. Using mathematical schemes for decision-making, the proposed solution aims at introducing a fuzzjective efficiency test implementation for energy and sustainability patents. Lastly, the study portrays the orbits, components, and participants of a functional constitutive structure in which such decision-makings are to be carried out.

 

February 22, 2017 | Permalink | Comments (0)

From Economic Recession to Legal Opportunity: The Case for Cartel Criminalisation in Europe

Anna Tzanaki, University College London, Centre for Law, Economics and Society, has written on From Economic Recession to Legal Opportunity: The Case for Cartel Criminalisation in Europe.

ABSTRACT: In the aftermath of the global financial meltdown and ensuing EU crisis, the European Union still tries to agree on the causes and fine-tune its regulatory responses. Among the policy tools employed, once unimagined but now the new mainstream, have been high-powered EU state-aid laws, bank bail-in rules and aggressive intervention away from market fundamentals. Yet the crucial question remains looming upon EU policymakers: can the next crisis be prevented? Perhaps an affirmative answer partly lies with enhancing individual liability that goes beyond macro and reactive approaches and promotes deterrence of the actual wrongdoers. After all, it is people behind financial and private organisations making the actual decisions that impact our lives.

In the area of EU competition law, the time is ripe to seriously think about criminalising cartels. Despite details of implementation – EU harmonisation or decentralised enforcement, the price of another missed opportunity is too high and the challenges posed by the EU supranational structure can no longer serve as an excuse. More importantly, counter to claims that such a move is not in line with the European tradition, there is ample evidence that several Member States criminalise hard-core anticompetitive behaviour in their national laws, and the EU itself is moving to that direction in other areas (e.g. criminal sanctions for market abuse offences). In the age of corporate elites, managerial capitalism, financial and industrial globalisation the most effective way to hold accountable those at the top of the ladder is by raising the threat of criminal liability. In this way we make sure that their incentives are closely aligned with those of society as a whole. In the process we also address major problems such as agency costs, moral hazard and reinforce the effectiveness of existing leniency programmes aiming to undermine cartel stability.

What Europe mostly needs is more competition and to that goal we must make market players realise that they cannot rig the rules, as they shall have “skin in the game”. By having individuals bear at least some of the consequences of their actions, not only do we foster competition on the merits and help restore public confidence in markets but we also relieve companies and their parents from exorbitant monetary sanctions which have proved ineffectual and counterproductive and hence set the path for the natural selection of value creating firms in a healthy business environment. Criminalising hard-core cartels is the right thing to do and is also good economic policy that sets the tone for more thriving EU business and more law-abiding corporate employees. No question many challenges lie ahead and one needs to proceeds with great care in designing and implementing criminal law policy, yet the direction is clear.

This essay attempts to answer three questions: i) why illegal cartels persist given the existing liability regime in Europe; ii) why criminal sanctions against hard-core cartelists are a necessary supplement to the antitrust enforcement toolbox; iii) why criminal sanctions are desirable from a normative perspective. Accordingly, the analysis proceeds as follows. Part II sheds light on two prominent but underappreciated problems in the intersection of EU antitrust law and corporate governance that underlie the failures and inadequacy of the existing liability regime. Part III analyses the advantages of moving towards a mixed regime that combines corporate and individual criminal liability. Part IV explores the normative, economic and moral, arguments for cartel criminalisation. Part V concludes with some thoughts on lessons to be learnt from the crisis and the way forward for Europe.

 

 

February 22, 2017 | Permalink | Comments (0)

Tuesday, February 21, 2017

Securing the Legitimacy of Individual Sanctions in UK Competition Law

Jonathan Galloway, Newcastle Law School has written on Securing the Legitimacy of Individual Sanctions in UK Competition Law.

ABSTRACT: Traditional deterrence theory relies on a combination of probability and severity of punishment to impose a perception of sufficiently high costs to deter wrongdoing. Yet when a very high severity of punishment counters a low probability, disproportionate outcomes give rise to societal concerns about procedural fairness and justice, such that the law loses legitimacy. Any loss of legitimacy undermines would-be offenders’ normative commitment to, and voluntary compliance with, the law. The UK has encountered significant obstacles in efforts to enhance the deterrence of competition law. The Enterprise Act 2002 and the Enterprise and Regulatory Reform Act 2013 introduced individual sanctions, consisting of a criminal cartel offence and director disqualification orders, to deter anti-competitive behaviour. This article argues that poor drafting and prosecutorial failure are responsible for the failure to earn and secure the legitimacy of the cartel offence. Yet the greatest regulatory failure is not making fuller use of the disqualification powers, which have greater legitimacy. By following the approach suggested in this article the deterrent value and legitimacy of UK competition law would increase, and we would be closer to achieving the goals of the individual sanctions when they were introduced over 13 years ago.

 

February 21, 2017 | Permalink | Comments (0)

Big Data, Open Data, Privacy Regulations, Intellectual Property and Competition Law in an Internet of Things World

Bjorn Lundqvist, Stockholm University - Faculty of Law analyzes Big Data, Open Data, Privacy Regulations, Intellectual Property and Competition Law in an Internet of Things World.

ABSTRACT: The interface between the legal systems triggered by the creation, distribution and consumption of Data is difficult to grasp, and this paper therefore tries to dissect this interface by following information, i.e. ‘the data’ from its sources, to users and re-users and ultimately to its consumers in an ‘Internet of Things’, or Industrial Internet, setting. The paper starts with the attempt to identify what legal systems are applicable this process, with special focus on when competition law may be useful for accessing data. The paper conclude that general competition law may not be readily available for accessing generic (personal or non-personal) Data, except for the situation where the Data set is indispensable to access an industry or a relevant market; while sector specific regulations seem to emerge as a tool for accessing Data held by competitors and third parties. However, the main issue under general competition law in the Data industry, at its current stage of development, is to create a levelled playing field by trying to facilitate the implementation of Internet of Things.

February 21, 2017 | Permalink | Comments (0)

A Theory of Bundling Advertisements in Media Markets

Kevin M. Murphy and Ignacio Palacios-Huerta offer A Theory of Bundling Advertisements in Media Markets.

ABSTRACT: Watching TV and other forms of media consumption represent, after sleeping and working, the main activity that adults perform in developed countries. We present a dynamic theory of commercial broadcasting where the media trade utility-raising goods (programs, information, and services) with audiences in exchange for their exposure to advertisements (utility-decreasing bads), and where goods are otherwise free to the audience except for their opportunity cost of time. Goods and bads are dynamically arranged, and as such traded in an intertemporal bundle. No monetary transfers take place between media and audiences, and this barter exchange is not contractually sustained. We study this dynamic problem in a model that captures the central characteristics of how commercial media markets operate. The model is rich enough to account for a variety of disparate evidence in television, radio, print media and the web.

February 21, 2017 | Permalink | Comments (0)

Publishing Retail Prices in an Inflationary Context: Evidence from Argentina

Horacio Larreguy; Robert Rodriguez and Laura Trucco have written up Publishing Retail Prices in an Inflationary Context: Evidence from Argentina.

ABSTRACT: When inflation is high, the dispersion of prices across sellers of the same good increases, and both sellers and consumers lose sight of reference prices. As a result, the degree of competition in the market weakens. The government of Argentina, a country with a current 35% annual inflation rate, has recently launched a program that provides consumers with store-level daily-updated information on prices for goods sold in major supermarkets across the entire nation. In this project, we use a unique dataset with this rich information on daily geolocated prices in order to study the effect of publishing prices on competition across stores, and its consequences on price dispersion.

February 21, 2017 | Permalink | Comments (0)

Monday, February 20, 2017

Characterization of the relevant market in the media industry: some new evidence!

Bardey, David ; Santos, Nicolas and Tovar, Jorge offer a Characterization of the relevant market in the media industry: some new evidence!

ABSTRACT: In this paper we estimate the degree of substitutability for advertisers across different media outlets. The estimates are motivated by the need that competition agencies have to properly characterize the relevant market when dealing with mergers in the media industry. As technology changes the industry, advertisers may not view a given media outlet as independent from those operating in other media platforms. Indeed, our results show that advertisers see outlets across platforms, either as substitutes or complements. From a policy perspective, our findings imply that competition agencies, particularly when defining relevant markets, should not assume that advertisers operate independently within a single media platform.

February 20, 2017 | Permalink | Comments (0)

Price discrimination of ott providers under duopolistic competition and multi-dimmesional product differentiation in retail broadband access

José Marino García García; Aurelia Valiño Castro; and A. Jesús Sánchez Fuentes examine Price discrimination of ott providers under duopolistic competition and multi-dimmesional product differentiation in retail broadband access.

ABSTRACT: Network neutrality regulation prevents price discrimination from Access Providers to Content Providers and product differentiation in terms of connection quality in the retail broadband access market. This paper analyzes the economic implications of price discrimination under duopolistic competition and multi-dimensional product differentiation in retail internet access using a sequential-moves game theoretic model. Under this framework, we discuss the impact of product differentiation and price discrimination on social welfare, and offer systematic simulations using feasible ranges for parameters value to help discern the impact of departing from network neutrality regulation on social welfare.

February 20, 2017 | Permalink | Comments (0)

On leniency and markers in antitrust: how many informants are enough?

Konstantinos Charistos (Department of Economics, University of Macedonia) and Christos Constantatos (Department of Economics, University of Macedonia) ask On leniency and markers in antitrust: how many informants are enough?

ABSTRACT: In this paper we investigate the impact of leniency programs on firms’ decision to collude. We depart from previous literature by relaxing the assumption that evidence provided by a single firm suffices to convict an existing cartel with certainty. Assuming the conviction-probability to be increasing in the number of reporting firms, we show first that efficient cartel deterrence requires incentives for all firms to report. Under a regime that secures a marker for the first in line applicant, eligibility for leniency should be extended to at least a second informant. Further, we show that the introduction of the marker system has an ambiguous impact on cartel deterrence. In relation to the manner that the marker is secured and the cartel-related evidence is allocated, we derive the conditions under which allowing the first applicant to secure a marker enhances cartel deterrence.

February 20, 2017 | Permalink | Comments (0)