Antitrust & Competition Policy Blog

Essential Facility Access in Europe: Building a Test for Antitrust Policy

Posted by D. Daniel Sokol

Angelo Castaldo (Law - University of Rome “La Sapienza”) and Antonio Nicita (Economics - University of Sienna) address Essential Facility Access in Europe: Building a Test for Antitrust Policy.

ABSTRACT: This paper investigates the evolution of competition policy decisions in the US and, particularly, in the EU, concerning mandatory access to an essential facility held by a dominant firm. Based on some recent and controversial EU antitrust decisions, we outline a comprehensive test for identifying an essential facility and consequently imposing a mandatory access obligation on dominant firms.

Issues in Competition Law and Policy

Posted by D. Daniel Sokol

The ABA Antitrust Section has published

Issues in Competition Law and Policy

This new 2,400+ page book is a complete and detailed perspective on issues in the design and enforcement of competition law, the technical legal framework of competition law and the policy issues that lie behind the law. This massive 3-volume hard-cover book is essential for judges, enforcement officials, lawyers, and economists for understanding the jurisprudential, substantive, and methodological issues confronting modern competition law and policy. The authors of this book read like a who’s who of policy makers, academics, economists, and lawyers from across the globe, ensuring a variety of perspectives and approaches on competition law and policy. It's the complete resource for anyone who deals with competition laws.

Capacity Investments, Exclusionary Behavior, and Welfare: A Dynamic Model of Competition in the Airline Industry

Posted by D. Daniel Sokol

Jonathan Williams (Virginia - Econ) explains Capacity Investments, Exclusionary Behavior, and Welfare: A Dynamic Model of Competition in the Airline Industry.

ABSTRACT: This paper applies recently developed methods for estimating dynamic games to a unique data set to study the strategic capacity decisions of firms in the US airline industry during the 1990s. Using an incomplete information variant of the Ericson and Pakes (1995) framework along with the econometric methodology of Bajari, Benkard and Levin (2007), I recover the complete cost structure of firms in the airline industry while accounting for important sources of consumer, firm, and market heterogeity.

I find that the intensity of competition in a particular market depends directly on the characteristics and identity of the incumbent firms. In particular, entry by low-cost carriers (Lccs) tends to trigger dramatic changes in prices and capacity which cannot be explained by standard static models of competition. I find that hub carriers excessively invest in capacity, providing them with a commitment to price aggressively in future periods. In doing so, the hub carrier is able to substantially increase the likelihood of exit by targeted Lccs. Using the estimated structural parameters, I also demonstrate the degree to which both competition and welfare su¿er as a consequence of exclusionary investment in capacity by dominant firms.