Antitrust & Competition Policy Blog

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

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Saturday, September 8, 2007

DOJ Weighs in on Net Neutrality

Posted by D. Daniel Sokol

The Department of Justice has weighed in on the net neutrality debate in an ex parte filing in the FCC docket on the subject.  DOJ reminds us that what matters in the internet is the promotion of competition, stating "The FCC should be highly skeptical of calls to substitute special economic regulation of the Internet for free and open competition enforced by the antitrust laws. Marketplace restrictions proposed by some proponents of "net neutrality" could in fact prevent, rather than promote, optimal investment and innovation in the Internet, with significant negative effects for the economy and consumers."

September 8, 2007 | Permalink | Comments (1) | TrackBack (0)

Friday, September 7, 2007

ABA Antitrust Litigation Course in Philadelphia

Posted by D. Daniel Sokol

The ABA Antitrust Section is sponsoring a course on how to succeed in the harsh and confrontational world of antitrust litigation.  Ironically the conference will be held in the "City of Brotherly Love," Philadelphia, at the Ritz Carlton on October 4-5.  Details are available here.

September 7, 2007 | Permalink | Comments (0) | TrackBack (0)

Antitrust, Two-Sided Markets, and Platform Competition: The Case of the Xm-Sirius Merger

Posted by D. Daniel Sokol

Scott Wallsten of the Progress & Freedom Foundation and Stanford University suggests that regulators may fall into a potential intellectual trap if they view the proposed Xm-Sirius merger as that of a single sided market rather than a double sided market in his paper Antitrust, Two-Sided Markets, and Platform Competition: The Case of the Xm-Sirius Merger, which he filed before the FCC in the case.

ABSTRACT: On July 9, 2007 The Progress & Freedom Foundation's Scott Wallsten filed comments regarding the proposed XM-Sirius merger at the Federal Communications Commission (FCC), explaining that this merger poses unique new challenges for antitrust officials.

Specifically, companies like Sirius and XM are platforms in two-sided markets that must attract subscribers and content providers, both of whom can choose among a variety of platforms. In addition, the platforms themselves are dynamic in that they can potentially carry any digital information, not just the services they currently offer.

A merger analysis of competing platforms that considers only a single component in this complex market is likely to reach an incorrect conclusion. In the case of the XM-Sirius merger, officials should consider not only subscribers, but also content providers, competing platforms, platforms that are potential competitors, and services the platforms in question may provide in the future that they do not today.

September 7, 2007 | Permalink | Comments (1) | TrackBack (0)

Wednesday, September 5, 2007

Harvard, Not Chicago: Which Antitrust School Drives Recent Supreme Court Decisions?

Posted by D. Daniel Sokol

Einer Elhauge of Harvard Law School provacatively asks (and answers) Harvard, Not Chicago: Which Antitrust School Drives Recent Supreme Court Decisions?

ABSTRACT: The U.S. Supreme Court has now decided 14 antitrust cases in a row in favor of the defendant. But this does not indicate an embrace of the conservative Chicago School over the moderate Harvard School. To the contrary, on every issue the Court has addressed where those two schools are in conflict, the Supreme Court has sided with the Harvard School. It has also sided with sound antitrust economics rather than with formalisms favoring plaintiffs or defendants.

September 5, 2007 | Permalink | Comments (0) | TrackBack (1)

Tuesday, September 4, 2007

Competition Policy Law Professor Needed

Posted by D. Daniel Sokol

The Faculty of Business Economics, University of Addis Ababa urgently needs a well qualified expert to teach its competition policy law module. The module has to be delivered and completed by mid-November, class size of about 25.  The class will inclide primarily government officials (among others).  The estimated time would be 20 hours per week for four weeks (including office hours to meet/guide students), plus time to mark exams.  Payment is up to $1,300 per day depending on the qualifications of the expert, plus return business class airfare, hotel accommodation and per diems to cover meals and incidentals. Interested individuals should contact, as soon as possible:

Ato Milikias T. Giorgis - Project Coordinator for the PSD CB credit, (E-mail: milktg@ethionet.et; cell phone 251-911-124605), and Ato Tsegabirhan  Wolde Giorgis, Head of Dept of Economics of AAU (E-mail: ch_econ@econ.aau.edu.et; cell phone 251-911-249071)

September 6 Update: I mistakenly posted that the position was for an economics professor.  It is for a competition law professor.  I have corrected it in the text of the post.

September 4, 2007 | Permalink | Comments (0) | TrackBack (0)

The Next Step in Chinese Competition Law - A Lesson from the EU?

Posted by D. Daniel Sokol

With the Chinese Anti-Monopoly Law slated for intrduction in 2008, today's BNA Antitrust and Trade Regulation Daily (subscription required) reports that Neelie Kroes is off to China for meetings to discuss competition policy between September 3-5.  As BNA reports, the meetings "...will include discussions of the Chinese and European economies as well as 'the role of competition policy in enhancing their competitiveness.'"  It further states that meetings will take place with both state actors (the Chinese Ministry of Commerce and the State Administration of Industry and Commerce) and non-state actors (Chinese academics and members of the business community).

September 4, 2007 | Permalink | Comments (0) | TrackBack (0)

Market Structure and Welfare in Two-Sided Payment Markets with Heterogenous and Non-Strategic Customers

Posted by D. Daniel Sokol

I have found yet another interesting antitrust payment systems article.  This one is by Mats Bergman of Södertörn University College in Sweden and the Swedish Competition Authority and is titled Market Structure and Welfare in Two-Sided Payment Markets with Heterogenous and Non-Strategic Customers.

ABSTRACT: Two-sided network effects in card payment systems are analysed under different market structures, e.g., competition, one-sided monopoly, bilateral monopoly and duopoly; with and without an interchange fee; for the so-called Baxter's case of non-strategic and heterogenous merchants. A partial ranking of market structures according to their welfare effects is provided. Some support is found for the policy adopted by the EU Commission in the competition law case concerning Visa's interchange fees.

September 4, 2007 | Permalink | Comments (0) | TrackBack (0)

Monday, September 3, 2007

Network Effects and Two-Sided Markets

Posted by D. Daniel Sokol

Pic_cento As I think about how I am going to teach payment systems in the spring, I am particularly interested in how to think about the antitrust implications of two sided markets.  Adding to the literature is Cento Veljanovski of Case Associates.  Veljanovski prepared his paper Network Effects and Two-Sided Markets as part of his teaching in the Kings College, University of London Postgraduate Diploma/Masters in Economics in Competition Law.

ABSTRACT: This paper sets out the basic economics of network effects and two-sided or multi-sided markets as relevant to antitrust and regulation. Network effects, and the related concept of two- (or multi-) sided markets, are playing an increasing role in antitrust/competition law in the communications sector, computer hardware and software, Computer Ticketing Services (CRS), Automated Teller Machines (ATMs) and credit card schemes sectors to name a few; and also in the evaluation of mergers, industry standards, market structure and competitive behaviour. The discussion begins by defining network effects and the way they alter the economics of market structure, competitive behaviour and pricing. The theory is then applied to concerns over the adoption of industry and product standards, mergers in the communications sector, and the pricing of mobile services. This is followed by an introduction to the theory of two-sided markets. This covers situations where network effects affect consumers in different groups or sides of the market brought together by a third party, such as credit card schemes. The theory of two-sided markets is developed and then applied to some features of credit card schemes. This paper is a module for the Kings College, University of London Postgraduate Diploma/Masters in Economics in Competition Law, 2006/2007.

September 3, 2007 | Permalink | Comments (0) | TrackBack (0)

Sunday, September 2, 2007

Reference Points and Self-Enforcing Collusion in Oligopoly

Posted by D. Daniel Sokol

Keeping on the theme of collusion from previous posts, an interesting new working paper Reference Points and Self-Enforcing Collusion in Oligopoly is available from Felix Monuz-Garcia of the University of Pittsburgh Department of Economics.

ABSTRACT: This paper examines incentives for total and partial collusion in one-shot oligopoly games. Specifically, firm managers are considered to assign a positive importance to the difference between other firms' actual production choices and a particular reference level of output that, in any collusive agreement, would have restricted the market's total product. These considerations might be important, for instance, when the firm manager operates under weak pressures for short-run profits from the shareholders, whereas when this pressure is relatively high the above considerations are negligible. First, I show that by considering the importance that firm managers assign to this difference - reflecting the firm manager's preference for collusive partners - higher levels of collusion can be supported than in standard oligopoly games. In addition, if firm mangers' preference for collusive partners is high enough, the collusive agreement (e.g. cartel) becomes self-enforced in the Nash equilibrium of the static game. Furthermore, for moderate firms' preferences, this paper shows that the fully cooperative agreement can be sustained as the Nash equilibrium of the infinitely repeated game for less restrictive discount factors than in standard game-theoretic models of oligopoly.


September 2, 2007 | Permalink | Comments (0) | TrackBack (0)