Friday, May 27, 2016
Steve Salop, Georgetown discusses Modifying Merger Consent Decrees: An Economist Plot to Improve Merger Enforcement Policy.
ABSTRACT: This short article analyzes a proposal that merger consent decrees should include a review and modification provision that would give the agency the ability to petition the court to order further relief if the consent decree fails to preserve or restore competition and protect consumer welfare in a reasonable period of time after the merger is consummated. This review and modification process would help to protect competition and consumers from insufficient, poorly designed or otherwise ineffective consent decrees. It would place more of the risk of failure on the merging parties who claim to the agency that the merger will not harm competition and that the remedy is sufficient to cure the agency’s concerns. The merging firms then would be incentivized to provide more efficient and effective remedies at the HSR stage rather than bear the risk of potentially more costly remedies, disgorgement and other relief later on. This allocation of risk to the merged firm also would help to deter the post-merger exercise of market power achieved or enhanced by the merger. For the same reasons, it also would increase the deterrence of anticompetitive mergers. The article analyzes the structure of the proposal, its goals and benefits, potential relief provisions if modification is required, and potential criticisms.
Ben Van Rompuy, T.M.C. Asser Instituut; Free University of Brussels (VUB) - iMinds-SMIT analyzes The Role of EU Competition Law in Tackling Abuse of Regulatory Power by Sports Associations.
ABSTRACT: In his opinion in Bosman, Advocate General Lenz called attention to the function of EU competition law to control the private regulatory power of international sports associations. The true potential of EU competition law to protect athletes and other parties against regulatory overreach by sports associations, however, remains underexplored. This article examines the prospect of an increased use of EU competition law to challenge restrictive rules or abusive conduct and, consequently, to exert influence on the governance structure and institutional features of sports associations. First, it generally assesses the extent to which the rule-making activity of sports associations relating to the organization of sport satisfies the requirements for the application of Articles 101 and 102 TFEU. It will highlight that the analytical framework gives sufficient flexibility to take into account the specific characteristics of sport. Second, to practically illustrate the nature and function of EU competition law enforcement, it analyses European and national decisional practice regarding conflicts of interest between the role of sports associations as the regulator of their sport and their commercial interests in the events that they promote and organize.
Jacob Hamburger, George Mason asks Crowding the Market: Is There Room for Antitrust in Market Manipulation Cases?
ABSTRACT: This article analyses the current debate surrounding the role of antitrust in recent market manipulation matters domestically. Despite the anti-competitive nature of this activity, there are several difficulties and inconsistencies that must be addressed. In particular, a stronger definition for market manipulation that captures a wide array of activity must be adopted. Next, it is also important to have a general understanding of the different laws and regulations used to combat market manipulation and how they have been applied in recent cases. This article also recommends an antitrust-based framework for analyzing current market manipulation cases like LIBOR and FX. Finally, this article addresses some of the difficulties with applying antitrust law, including regulatory overlap and the pushback against private enforcement efforts.
Thursday, May 26, 2016
The Centralization of EU Competition Policy: Historical Institutionalist Dynamics from Cartel Monitoring to Merger Control (1956–91)
Laurent Warlouzet, Artois University describes The Centralization of EU Competition Policy: Historical Institutionalist Dynamics from Cartel Monitoring to Merger Control (1956–91).
ABSTRACT: The contemporary strength of EU competition policy does not stem naturally and mechanically from the Treaty of Rome, nor is it only a consequence of the spread of ‘neoliberal’ ideas or the single market programme. It is also the product of decades of dynamics underlined by historical institutionalism, which allowed the Commission to secure decisive powers, despite the unwillingness of some of the most powerful Member States. In this regard, the two most important cornerstones were Regulations 17/62 on cartels and 4064/89 on mergers. The Commission benefited from the unintended consequences of decisions taken in the Council and from the path dependencies created by Regulation 17/62. It progressively developed a centralized institutional framework with itself at the centre.
Erik Hovenkamp, Northwestern University, Department of Economics and Herbert J. Hovenkamp, University of Iowa - College of Law explain Buying Monopoly: Antitrust Limits on Damages for Externally Acquired Patents.
ABSTRACT: The “monopoly” authorized by the Patent Act refers to the exclusionary power of individual patents. That is not the same thing as the acquisition of individual patent rights into portfolios that dominate a market, something that the Patent Act never justifies and that the antitrust laws rightfully prohibit.
Most patent assignments are procompetitive and serve to promote the efficient commercialization of patented inventions. However, patent acquisitions may also be used to combine substitute patents from external patentees, giving the acquirer an unearned monopoly position in the relevant technology market. A producer requires only one of the substitutes, but by acquiring the combination it can impede product market rivals by limiting their access to important technological inputs. Similarly, a patent assertion entity may acquire substitute patents to eliminate inter-licensor competition, enabling it to charge supra-competitive license fees, much like a merger or cartel. For example, by acquiring two or more substitute patents that collectively dominate a market a PAE can effectively monopolize the technology for that market. Such anticompetitive practices are regularly condemned in conventional product contexts, but the courts have not yet applied the same antitrust logic to patent markets. And they passively encourage anticompetitive patent acquisitions by awarding large damages when such patents are infringed.
We propose that infringement damages for an externally acquired patent be denied if the acquisition served materially to expand or perpetuate the plaintiff’s dominant position in the relevant technology market. By weakening enforcement, this limits the patent holder’s ability to use such acquisitions to anticompetitive ends. We do not suggest that a dominant patent holder should be prohibited from securing external patent rights in the relevant technology market, but simply that it should obtain them through nonexclusive licensing, not transactions that restrict third party access. This is as valuable to patent policy as it is to antitrust, for it will tend to increase innovation by discouraging systematic monopoly in technology markets.
Jeffrey Lynch Harrison, University of Florida - Levin College of Law offers Some Inconvenient Truths About Antitrust Law and Economics.
ABSTRACT: For years those teaching and writing about antitrust law have stressed three basic goals -- consumer surplus, allocative efficiency, and productive efficiency. Rarely, if ever, are the limitations of those goals revealed to readers. For example, in determining costs of production, external costs are not accounted for. This means that the firm most able to externalize its cost by one means or another will appear to be the more efficient and will be given broad leeway as far as avoiding liability. The Essay discusses this and other problems inherent in the goals set out for antitrust law.
Lina Khan and Sandeep Vaheesan are upset about Market Power and Inequality: The Antitrust Counterrevolution and its Discontents.
ABSTRACT: One unexplored theme in the debate around economic inequality is the role of monopoly and oligopoly power. Despite the relative lack of attention to this topic, there is sound reason to believe that pervasive market power in the economy has contributed to extreme economic disparity in the United States today. Given the affluence of shareholders and executives compared to consumers in most markets as well as the power dynamics inside large corporations, market power, in general, can be expected to have significant regressive distributional effects. Case studies of anticompetitive practices and uncompetitive market structures in several key industries illustrate how large corporations have come to dominate the U.S. economy. On top of their market power, monopolistic and oligopolistic companies translate their economic power into political influence, often successfully pushing for laws and regulation that further enhance their clout and transfer wealth upwards. Pervasive market power in the economy, which appears to be contributing to economic inequality, is the result of an intellectual and political revolution in the 1980s that dramatically reoriented and narrowed the goals of antitrust law. Importantly, this counterrevolution can be reversed. We present a vision of antitrust that accords with what Congress intended in enacting “this comprehensive charter of economic liberty” and offer specific policy prescriptions.
Wednesday, May 25, 2016
The European Commission has appointed Professor Tommaso Valletti as the new Chief Economist of the Directorate General for Competition. Professor Valletti , who is an Italian national, currently holds teaching positions at both Imperial College Business School and at the University of Rome "Tor Vergata". He is also an Academic Director at the Centre for Regulation in Europe (CERRE) in Brussels, sits in the panel of academic advisors of OFCOM, the UK’s communications regulator and is a member of DG Competition’s Economic Advisory Group on Competition Policy. He will take up his duties as the fifth competition Chief Economist on 1 September 2016. The role entails assisting in the evaluation of the economic impact of the Commission’s actions in the competition field and providing independent guidance on methodological issues of economics and econometrics in the application of EU competition rules.
Valletti is a serious economist. His recent papers include:
Valletti T, Ahlfeldt G, Koutroumpis P, Speed 2.0: Evaluating access to universal digital highways, Journal of the European Economic Association, ISSN: 1542-4774
This paper shows that having access to a fast Internet connection is an important determinant ofcapitalization effects in property markets. Our empirical strategy combines a boundarydiscontinuity design with controls for time-invariant effects and arbitrary macro-economicshocks at a very local level to identify the causal effect of broadband speed on property pricesfrom variation that is plausibly exogenous. Applying this strategy to a micro data set fromEngland between 1995 and 2010 we find a significantly positive effect, but diminishing returnsto speed. Our results imply that disconnecting an average property from a high-speed firstgenerationbroadband connection (offering Internet speed up to 8 Mbit/s) would depreciate itsvalue by 2.8%. In contrast, upgrading such a property to a faster connection (offering speeds upto 24 Mbit/s) would increase its value by no more than 1%. We decompose this effect by incomeand urbanization, finding considerable heterogeneity. These estimates are used to evaluateproposed plans to deliver fast broadband universally. We find that increasing speed andconnecting unserved households passes a cost-benefit test in urban and some suburban areas,while the case for universal delivery in rural areas is not as strong.
Reggiani C, Valletti T, 2016, Net neutrality and innovation at the core and at the edge, International Journal of Industrial Organization, Vol: 45, Pages: 16-27, ISSN: 0167-7187
How would abandoning Internet net neutrality affect content providers that have different sizes? We model an Internet broadband provider that can offer a different quality of service (priority) to heterogeneous content providers. Internet users can potentially access all content, although they browse and click ads with different probabilities. Net neutrality regulation effectively protects innovation done at the edge by small content providers. Prioritization, instead, increases both infrastructure core investment and welfare only if it sufficiently stimulates innovation from the large content provider.
Valletti T, Peitz M, Greenstein S, 2016, Net Neutrality: A Fast Lane to Understanding the Trade-offs, Journal of Economic Perspectives, Vol: 30, Pages: 127-150, ISSN: 1944-7965
The “net neutrality” principle has triggered a heated debate and advocates have proposed policy interventions.In this paper, we provide perspective by framing issues in terms of the positive economic factors at work. We stress the incentives of market participants, and highlight the economic conflicts behind the arguments put forward by the different parties. We also identify several key open questions.
Bourreau M, Kourandi F, Valletti T, 2015, NET NEUTRALITY WITH COMPETING INTERNET PLATFORMS,JOURNAL OF INDUSTRIAL ECONOMICS, Vol: 63, Pages: 30-73, ISSN: 0022-1821
Genakos C, Valletti T, 2015, Evaluating a Decade of Mobile Termination Rate Regulation, ECONOMIC JOURNAL, Vol: 125, Pages: F31-F48, ISSN: 0013-0133
Kourandi F, Kraemer J, Valletti T, 2015, Net Neutrality, Exclusivity Contracts, and Internet Fragmentation,INFORMATION SYSTEMS RESEARCH, Vol: 26, Pages: 320-338, ISSN: 1047-7047
Nardotto M, Valletti T, Verboven F, 2015, UNBUNDLING THE INCUMBENT: EVIDENCE FROM UK BROADBAND, JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION, Vol: 13, Pages: 330-362, ISSN: 1542-4766
Peitz M, Valletti T, 2015, Reassessing competition concerns in electronic communications markets,TELECOMMUNICATIONS POLICY, Vol: 39, Pages: 896-912, ISSN: 0308-5961
Stavropoulou C, Valletti T, 2015, Compulsory licensing and access to drugs, EUROPEAN JOURNAL OF HEALTH ECONOMICS, Vol: 16, Pages: 83-94, ISSN: 1618-7598
Bennato AR, Valletti T, 2014, Pharmaceutical innovation and parallel trade, INTERNATIONAL JOURNAL OF INDUSTRIAL ORGANIZATION, Vol: 33, Pages: 83-92, ISSN: 0167-7187
Hoernig S, Inderst R, Valletti T, 2014, Calling circles: network competition with nonuniform calling patterns,RAND JOURNAL OF ECONOMICS, Vol: 45, Pages: 155-175, ISSN: 0741-6261
Iozzi A, Valletti T, 2014, Vertical Bargaining and Countervailing Power, AMERICAN ECONOMIC JOURNAL-MICROECONOMICS, Vol: 6, Pages: 106-135, ISSN: 1945-7669
Valletti T, 2014, Special Issue: Selected Papers, European Association for Research in Industrial Economics 40th Annual Conference, Evora, Portugal/30 August-1 September 2013 Foreword, INTERNATIONAL JOURNAL OF INDUSTRIAL ORGANIZATION, Vol: 34, Pages: 36-36, ISSN: 0167-7187
Haskel J, Iozzi A, Valletti T, 2013, Market structure, countervailing power and price discrimination: The case of airports, JOURNAL OF URBAN ECONOMICS, Vol: 74, Pages: 12-26, ISSN: 0094-1190
Calzada J, Valletti TM, 2012, Intertemporal Movie Distribution: Versioning When Customers Can Buy Both Versions, MARKETING SCIENCE, Vol: 31, Pages: 649-667, ISSN: 0732-2399
Genakos C, Valletti T, 2012, Regulating prices in two-sided markets: The waterbed experience in mobile telephony, TELECOMMUNICATIONS POLICY, Vol: 36, Pages: 360-368, ISSN: 0308-5961
Genakos C, Valletti T, 2011, TESTING THE "WATERBED" EFFECT IN MOBILE TELEPHONY, JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION, Vol: 9, Pages: 1114-1142, ISSN: 1542-4766
Genakos C, Valletti T, 2011, Seesaw in the air: Interconnection regulation and the structure of mobile tariffs,INFORMATION ECONOMICS AND POLICY, Vol: 23, Pages: 159-170, ISSN: 0167-6245
Hoernig S, Valletti TM, 2011, When Two-Part Tariffs are Not Enough: Mixing with Nonlinear Pricing, B E JOURNAL OF THEORETICAL ECONOMICS, Vol: 11, ISSN: 1935-1704
Inderst R, Valletti T, 2011, Incentives for input foreclosure, EUROPEAN ECONOMIC REVIEW, Vol: 55, Pages: 820-831, ISSN: 0014-2921
Inderst R, Valletti TM, 2011, BUYER POWER AND THE 'WATERBED EFFECT', JOURNAL OF INDUSTRIAL ECONOMICS, Vol: 59, Pages: 1-20, ISSN: 0022-1821
Genakos C, Valletti T, 2010, Mobile regulation and the 'waterbed' effect, Promoting New Telecom Infrastructures: Markets, Policies and Pricing, Pages: 284-300, ISBN: 9781849804455
Camden Hutchison, University of Wisconsin has written on Law and Economics Scholarship and Supreme Court Antitrust Jurisprudence, 1950-2010.
ABSTRACT: Although law and economics has influenced nearly every area of American law, few have been as deeply and as thoroughly "economized" as antitrust. Beginning in the 1970s, antitrust law — traditionally informed by populist hostility to economic concentration — was dramatically transformed by a new and overriding focus on economic efficiency. This transformation was associated with a provocative new wave of antitrust scholarship, which claimed that economic efficiency (or "consumer welfare") was the sole legitimate aim of antitrust policy. The U.S. Supreme Court seemingly agreed, issuing decision after decision rejecting traditional antitrust values and adopting the efficiency norm of the law and economics movement. By century's end, the populist origins of antitrust had faded into memory, and the professional discourse of the antitrust community (scholars, practitioners, and judges) had become dominated by economic analysis.
Although this transformation in antitrust law has been the subject of considerable academic commentary, its causes remain poorly understood. Many scholars assume, sometimes tacitly, that the economic analysis of law and economics scholarship had a direct, educative influence on the Supreme Court. Other scholars argue that changes in the Court's antitrust jurisprudence were merely a reflection of changes in its composition, specifically the conservative appointments of the Nixon administration. What these opposing interpretations share in common is their limited evidentiary basis — both are derived from impressionistic reviews of a select number of Supreme Court decisions, rather than systematic analysis of larger historical trends.
This article moves beyond previous scholarship by presenting a comprehensive, quantitative study of every Supreme Court antitrust case from 1950 to 2010, a period including the decades before, during, and after the economic turn in antitrust. This comprehensive approach allows for more generalized conclusions regarding the real-world influence of law and economics scholarship. Based on both quantitative and qualitative evidence, this article concludes that the Nixon appointments of the late 1960s and early 1970s were the primary cause of changes in antitrust jurisprudence, but that academic developments have infused these changes with an intellectual legitimacy they might otherwise have lacked, broadening their appeal and effectively insulating them from future changes in the composition of the Court.
Liangliang Jiang, Lingnan University, Ross Levine, UC Berkeley; National Bureau of Economic Research (NBER), and Chen Lin, The University of Hong Kong - Faculty of Business and Economics address Competition and Bank Opacity.
ABSTRACT: Did regulatory reforms that lowered barriers to competition increase or decrease the quality of information that banks disclose to the public? By integrating the gravity model of investment with the state-specific process of bank deregulation that occurred in the United States from the 1980s through the 1990s, we develop a bank-specific, time-varying measure of deregulation-induced competition. We find that an intensification of competition reduced abnormal accruals of loan loss provisions and the frequency with which banks restate financial statements. The results suggest that competition reduces bank opacity, potentially enhancing the ability of markets to monitor banks.
Magdalena Helfrich, University of Bayreuth - Faculty of Law, Business and Economics and Fabian Herweg, University of Bayreuth - Faculty of Law, Business and Economics are Fighting Collusion by Permitting Price Discrimination.
ABSTRACT:We investigate the effect of a ban on third-degree price discrimination on the sustainability of collusion. We build a model with two firms that may be able to discriminate between two consumer groups. Two cases are analyzed: (i) Best-response symmetries so that profits in the static Nash equilibrium are higher if price discrimination is allowed. (ii) Best-response asymmetries so that profits in the static Nash equilibrium are lower if price discrimination is allowed. In both cases, firms’ discount factor has to be higher in order to sustain collusion in grim-trigger strategies under price discrimination than under uniform pricing.
UCL Jevons Institute & UCL Centre for Law, Economics & Society CPD course
The Digital Economy: Economics, Antitrust and Regulation
Tuesday 7th June 2016, from 9:30am - 2pm
at University College London
Professor David Evans (UCL / Chicago)
with Will Page (Chief Economist at Spotify at the 1-2pm session)
Book your tickets online at:
Speaker: Professor David Evans (UCL / University of Chicago)
Accreditation: 3 CPD hours, plus 1 CPD hour for the 1-2pm session
About the course:
The digital economy has grown vast and now reaches almost every aspect of our lives. Whether consumer, business, or regulator we interact with Internet-based businesses constantly. It is also undergoing a massive transformation, with accompanying disruption, as the PC-web-browser centric ecosystem shifts to a mobile-app-centric ecosystem. That transformation has resulted in the “sharing economy,” the “gig-economy”, and the “app-economy” to use some of phrases that dominate today’s conversations.
This course will cover the unique business models followed by Internet-based companies; explore the changes in market structure that has taken place in the last few years as a result of the move to mobile; and consider some of the key competition policy and regulatory issues being debated today.
The course will consist of twelve short segments:
- technological forces;
- economic forces;
- wires, towers, and physical stuff;
- software platforms, APIs, and apps;
- economics of free;
- ad-support platforms and attention markets;
- marketplaces and online retail;
- mobile OSs and app stores;
- gig and sharing platforms;
- privacy and data; and
- the great transition from PC/browser to mobile/app. Each segment will include an application to competition and regulatory policy for the digital economy using examples from the US, EU, and China.
The course will draw extensively on examples of competition policy cases involving the digital economy from the US, EU, and China and these will be included in each segment.
Who should attend:
The course is mainly designed for professionals familiar with competition policy and sectoral regulation (lawyers, economists, and officials) but should also be informative for anyone who works for, invests in, must interact with digital economy businesses.
The course will run from 9:30-1:00pm.
At 1pm attendees are invited to stay for an hour long session in which Professor Evans will discuss his recent book, Matchmakers: The New Economics of Multisided Platforms which recently profile in The Economist, The New York Times, and Wall Street Journal. Following his presentation, Will Page Chief Economist at Spotify, will talk about some applications of the ideas in the course and the book to Spotify, which has revolutionized the distribution of music online.
There are no pre-requisites for attending this course.
Brasil Empresta Ltd
Cleary Gottlieb Steen & Hamilton LLP
Colgate-Palmolive (UK) Ltd
Freshfields Bruckhaus Deringer LLP
Herbert Smith Freehills LLP
International Bar Association
Orrick Herrington & Sutcliffe (Europe) LLP
Osborne Clark LLP
Oxera Consulting LLP
Pinsent Masons LLP
Sidley Austin LLP
Transport Systems Catapult
University of Leeds
£200 standard fee
£125 UCL Alumni ticket
£50 Government employees and academics
£50 non-UCL students
Sissel Jensen, Norwegian School of Economics and Lars Sorgard, Norwegian School of Economics ask FINE SCHEDULE WITH HETEROGENOUS CARTELS: ARE THE WRONG CARTELS DETERRED?
ABSTRACT: This article analyzes the minimum fines necessary to prevent price fixing when the size of the potential cartel overcharge differs across industries. We show that the incentive constraint is typically binding in industries where cartels would lead to a high overcharge, while the participation constraint is typically binding in industries where the potential for overcharge is quite low. We show that the introduction of private litigation and criminal sanctions (such as imprisonment) can make cartels with high overcharges more stable and only deter some of the potential cartels with low overcharges. We contrast our minimum fine schedule with the fine schedules that can be derived from current judicial practice and discuss the policy implications of our results.
Tuesday, May 24, 2016
See here for details for the GCR Women in Antitrust 2016 - call for nominations.
The Big 3 (DOJ Antitrust, FTC, DG Competition) are headed by women. So many of the most important law firm lawyers, in-house practitioners, professors, economic consultants and government stars are also female. It is hard to limit the group to just 100.
Ioannis Lianos, University College London - Faculty of Laws; HSE-Skolkovo Laboratory for Law and Development, Dmitry Katalevsky, HSE-Skolkovo Laboratory for Law and Development and Alexey Ivanov explore The Global Seed Market, Competition Law and Intellectual Property Rights: Untying the Gordian Knot.
ABSTRACT: The paper explores the competition dynamics of the global seed market. It documents the growth strategies of the major seed companies, in particular their M&A activity and their reliance on complex intellectual property strategies in order to offer a one stop shop solution to farmers. Recent merger activity in this sector (the Monsanto bid to buy Syngenta, the DuPont and Dow merger deal, ChemChina’s bid to buy Syngenta) illustrates its rapid transformation from an already concentrated industry to a tight oligopoly on a global scale. The increasing global consolidation of this industry raises new challenges for competition law enforcement authorities dealing with the emergence of new powerful actors at the factor of production (input) level, in view of the broader concerns animating public policy in the food sector and the existence of a nexus of international commitments for biodiversity, sustainability, the right to food etc. By exploring this under-studied but fascinating area of competition law enforcement we open the debate over the inclusion of broader public interest concerns in competition policy and the consideration of its distributive impact from a global perspective.
Superior Bargaining Power and the Global Food Value Chain: The Wuthering Heights of Holistic Competition Law?
Ioannis Lianos, University College London - Faculty of Laws; HSE-Skolkovo Laboratory for Law and Development and Claudio Lombardi, HSE describe Superior Bargaining Power and the Global Food Value Chain: The Wuthering Heights of Holistic Competition Law?
ABSTRACT: In this paper we analyse the role of superior bargaining power in competition law and policy in the agri-food value chain. Conventional approaches to competition law based on a neoclassical price theory perspective tend to neglect or to stay opaque on the role of bargaining power in competition law. However, national competition authorities and national legislators seem to be less biased by specific theoretical approaches and have increasingly engaged with the application of the concept of bargaining power in competition law. In this paper we discuss both positions and set a general theoretical framework, the global value chain approach, to better understand the interactions between suppliers and retailers in the food sector. Finally, we observe the framing of new tools of competition law intervention at national level, in order to deal with situations of superior bargaining power in specific settings related to the food value chain.
Vikas Kathuria, Tilburg University describes Pharmaceutical Mergers and Their Effect on Access and Efficiency: A Case of Emerging Markets.
ABSTRACT: The pharmaceutical M&As in emerging markets may jeopardies cheap access to generics. This may be a motivation for policy makers to use competition law as a tool to deter cross-border M&As. Additionally, M&As in pharmaceutical sector may also give rise to certain efficiencies. However, it is not clear as to how efficiencies will be treated in the peculiar socio-economic context of emerging markets. This paper develops a theoretical framework, which argues that the application of competition law is guided by sector-specific socio-economic realities and institutional realities of the jurisdiction. Thereafter, it employs this framework to analyze both the issues.
Niklas Horstmann, Karlsruhe Institute of Technology, Jan Kraemer, University of Passau, and Daniel Schnurr, Karlsruhe Institute of Technology experiment on Oligopoly Competition in Continuous Time.
ABSTRACT: We conduct oligopoly competition experiments with differentiated goods in discrete and continuous time. Continuous time experiments allow for real-time, asynchronous strategic interaction and are therefore argued to be a more realistic mode of interaction, particularly in the context of (electronic) markets. We consider duopolies and triopolies both under Bertrand as well as Cournot competition and consistently find that, ceteris paribus, tacit collusion is higher under discrete time than under continuous time, which contrasts the theoretical prediction. Thus, our results bear important methodological implications for research on oligopoly competition.