Antitrust & Competition Policy Blog

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

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Monday, November 17, 2008

Collusion through Price Ceilings? In Search of a Focal-Point Effect

Posted by D. Daniel Sokol

Dirk Engelmann, University of London - Royal Holloway - Department of Economics and Wieland Müller, Tilburg University - Department of Economics Collusion through Price Ceilings? In Search of a Focal-Point Effect.

ABSTRACT: With this study we resume the search for a collusive focal-point effect of price ceilings in laboratory markets. We argue that market conditions in previous studies were unfavorable for collusion which may have been responsible for not finding such a focal-point effect. Our design aims at maximizing the likelihood of a focal-point effect. Nevertheless, our results again fail to support the focal-point hypothesis. Collusion is as unlikely in markets with a price ceiling as in markets with unconstrained pricing. Overall, the static Nash equilibrium predicts the data fairly accurately. We argue that this might warrant re-interpretation of field studies on anti-competitive effects of price ceilings.

November 17, 2008 | Permalink | Comments (0) | TrackBack (0)

Tacit versus Overt Collusion Firm Asymmetries and Numbers: What’s the Evidence?

Posted by D. Daniel Sokol

Stephen Davies (ESRC Centre for Competition Policy, University of East Anglia) & Matthew Olczak (ESRC Centre for Competition Policy, University of East Anglia) provide a fascinating analysis in a new paper Tacit versus Overt Collusion Firm Asymmetries and Numbers: What’s the Evidence?

ABSTRACT: It is conventional wisdom that collusion is more likely the fewer firms there are in a market and the more symmetric they are. This is often theoretically justified in terms of a repeated non-cooperative game. Although that model fits more easily with tacit than overt collusion, the impression sometimes given is that ‘one model fits all’. Moreover, the empirical literature offers few stylized facts on the most simple of questions—how few are few and how symmetric is symmetric?

This paper attempts to fill this gap while also exploring the interface of tacit and overt collusion, albeit in an indirect way. First, it identifies the empirical model of tacit collusion that the European Commission appears to have employed in coordinated effects merger cases—apparently only fairly symmetric duopolies fit the bill. Second, it shows that, intriguingly, the same story emerges from the quite different experimental literature on tacit collusion. This offers a stark contrast with the findings for a sample of prosecuted cartels; on average, these involve six members (often more) and size asymmetries among members are often considerable. The indirect nature of this ‘evidence’ cautions against definitive conclusions; nevertheless, the contrast offers little comfort for those who believe that the same model does, more or less, fit all.

November 17, 2008 | Permalink | Comments (0) | TrackBack (0)

Sunday, November 16, 2008

Economic Developments in European Competition Policy

Posted by D. Daniel Sokol

Economic Developments in European Competition Policy

Wednesday, 3 December 2008
Conrad Hotel, Brussels

8.00–8.45 Registration

8.45–9.00 Introduction and welcome

9.00–9.30 Keynote: A European competition policy for all weather
Philip Lowe
Director General, DG Competition

9.30–10.30 Hot Topics Part I:
Competition policy in troubled times– what priorities for agencies?
Chair: Alan Overd
CRA
John Fingleton
Chief Executive, Office of Fair Trading
Discussants:
Xavier Vives
IESE, Barcelona
John Van Reenen
London School of Economics

10.30–10.50 Coffee break

10.50–11.20 The new Article 82 guidelines
Damien Neven
Chief Economist, DG Competition

11.20–1.00 Hot Topics Part II:
– Dominant firm conduct
– Evolving rules on vertical restraints
– Update on cartels
Chair: Cristina Caffarra
CRA
Massimo Motta
University of Bologna
Aaron Edlin
Department of Economics and School of Law, University of California at Berkeley
Nils Wahl
Judge, Court of First Instance
Margaret Slade
University of British Columbia
Comments: Damien Neven
Chief Economist, DG Competition

2.00–2.30 Keynote: US antitrust – what lies ahead?
Bill Kovacic
Chairman, Federal Trade Commission

2.30–3.30 Economic assessment in competition enforcement: developments in France and Germany
Chair: Laurent Flochel
CRA
Bruno Lasserre
President, Conseil de la concurrence
Bernhard Heitzer
President, Bundeskartellamt

3.30–3.45 Coffee break

3.45–5.00 Developments in merger analysis
Chair: Matthias Pflanz
CRA
Guillaume Loriot
Head of Unit, DG Competition
Christian Ewald
Head of Economics Unit, Bundeskartellamt
Bill Kovacic
Chairman, Federal Trade Commission
Amelia Fletcher
Chief Economist, OFT
Bruce Lyons
Centre for Competition Policy,
University of East Anglia

November 16, 2008 | Permalink | Comments (0) | TrackBack (0)