Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Monday, June 29, 2009

Competition and financial markets: issues in the current financial crisis

Posted by D. Daniel Sokol

The OECD has released Competition and financial markets: issues in the current financial crisis.

ABSTRACT: The OECD’s Competition Committee debated competition issues in the current financial crisis on 17-18 February 2009. This document presents two key documents from that event: an Executive Summary which draws on the debate and the written materials and the Background Paper for the discussion. The full set of materials from the event, including national contributions and a summary of the discussion, can be found at www.oecd.org/competition/roundtables.

June 29, 2009 | Permalink | Comments (0) | TrackBack (0)

Price Regulation and Generic Competition in the Pharmaceutical Market

Posted by D. Daniel Sokol

Dag Morten Dalen (Handelshøyskolen BI), Tonje Habeth (Handelshøyskolen BI), and Steinar Strøm (Department of Economics, University of Oslo) explore Price Regulation and Generic Competition in the Pharmaceutical Market.

ABSTRACT: In March 2003 the Norwegian government implemented yardstick based price regulation schemes on a selection of drugs experiencing generic competition. The retail price cap, termed “index price”, on a drug (chemical substance) was set equal to the average of the three lowest producer prices on that drug, plus a fixed wholesale and retail margin. This is supposed to lower barriers of entry for generic drugs and to trigger price competition. Using monthly data over the period 1998-2004 for the 6 drugs (chemical entities) included in the index price system, we estimate a structural model enabling us to examine the impact of the reform on both demand and market power. Our results suggest that the index price helped to increase the market shares of generic drugs and succeeded in triggering price competition.

June 29, 2009 | Permalink | Comments (0) | TrackBack (0)

Tacit Collusion over Foreign Direct Investment under Oligopoly

Posted by D. Daniel Sokol

David Collie (Cardiff Business School) examines Tacit Collusion over Foreign Direct Investment under Oligopoly.

ABSTRACT: A two-country model of the FDI versus export decisions of firms is analysed. The analysis considers both the Cournot duopoly and the Bertrand duopoly models with differentiated products. It is shown that the static game is often a prisoners' dilemma where both firms are worse off when they both undertake FDI. To avoid the prisoners' dilemma, in an infinitely-repeated game, the firms can collude over their FDI versus export decisions. Then, a reduction in trade costs may lead firms to switch from exporting to undertaking FDI when trade costs are relatively high. Also, collusion over FDI may increase welfare.

June 29, 2009 | Permalink | Comments (0) | TrackBack (0)

Sunday, June 28, 2009

“Competition is a click away”

Posted by D. Daniel Sokol

“Competition is a click away,” so says Google Antitrust GC Dana Wagner.  The NY Times has a full story on Google's efforts to minimize its antitrust risk.

June 28, 2009 | Permalink | Comments (0) | TrackBack (0)