Monday, September 7, 2009
Posted by D. Daniel Sokol
Academic/Practitioner Assimakis (Makis) Komninos is leaving private practice for a government position in Greece. Makis has been appointed a Commissioner, member of the board and president of chamber at the Hellenic Competition Commission. A recent amendment of the Greek Competition Act reshuffled the Greek Competition Commission. The Board of the authority will now consist of nine members. There will be one Commission President, four full-time Commissioners and four part-time members. The Commissioners will preside over the four chambers that have now been created and will also supervise the cases investigated by the Directorate-General. The President and the four Commissioners were confirmed by the Greek Parliament last week and take up their duties as of today. The President of the Commission is Dimitrios Kyritsakis, a former Vice-President of the Greek Supreme Court. Makis is a visiting professor at IREA - Université Paul Cézanne Aix - Marseille III and a visiting lecturer at University College London (UCL). I had the chance to meet him at an academic conference this past summer and found him to be quite analytically sharp. This is a big pick-up for the Greek competition system, perhaps the coolest Greek related news item since I found out that a remake is in the works of the early 1980s cult classic Clash of the Titans.
Posted by D. Daniel Sokol
Henry Ergas, Concept Economics, Emma Lanigan, Concept Economics, and Eric Kodjo Ralph, EKonomics LLC have written on Price Squeezes and Vertical Discrimination on Next Generation Access Networks.
ABSTRACT: Next generation access networks (NGANs) are in many cases likely to be supplied by vertically integrated firms, that is, firms that both wholesale access and sell services downstream to end-users. A long standing concern of regulators is that such firms may engage in anti-competitive price squeezes. This paper examines this concern and reviews the difficulties associated with conventional imputation tests in an NGAN context. The paper is organised as follows. Section 2 of the paper provides an analytical framework for understanding vertical integration, vertical discrimination, including price squeezes, and the incentives to engage in such behaviour. Section 3 explains why the incentives for a NGAN provider to vertically discriminate are sharply reduced as compared with a traditional vertically integrated telecommunications carrier. Section 4 considers regulatory approaches to the price squeeze. Section 5 focuses on how regulators are also concerned with inefficiently high prices and derives implications for the efficient setting of NGAN access charges.
Posted by D. Daniel Sokol
Geoffrey A. Manne, International Center for Law & Economics, Lewis & Clark Law School, LECG and Joshua D. Wright, George Mason University - School of Law have posted Regulating Innovation: Competition Policy and Patent Law under Uncertainty.
ABSTRACT: This essay is the introduction to a forthcoming volume entitled, Regulating Innovation: Competition Policy and Patent Law Under Uncertainty (Cambridge U. Press 2009 forthcoming).
In addition to introducing all of the papers in the volume, this essay introduces the organizing themes of the volume. Innovation is critical to economic growth. While it is well understood that legal institutions play an important role in fostering an environment conducive to innovation and its commercialization, much less is known about the optimal design of specific institutions. Regulatory design decisions, and in particular competition policy and intellectual property regimes, can have profoundly positive or negative consequences for economic growth and welfare. However, the ratio of what is known to unknown with respect to the relationship between innovation, competition, and regulatory policy is staggeringly low. In addition to this uncertainty concerning the relationships between regulation, innovation, and economic growth, the process of innovation itself is not well understood.
The regulation of innovation and the optimal design of legal institutions in this environment of uncertainty are two of the most important policy challenges of the 21st century. Any legal regime must attempt to assess the tradeoffs associated with rules that will affect incentives to innovate, allocative efficiency, competition, and freedom of economic actors to commercialize the fruits of their innovative labors and foster economic growth. Unfortunately, as this essay describes, our tools for assessing these tradeoffs are limited.
Any coherent regulatory framework must take account of the low level of empirical knowledge surrounding the complex relationship between regulation - both through competition policy and patent law - and innovation, and the corresponding uncertainty caused by this absence of knowledge. The relationship between regulation and innovation has posed a significant challenge to antitrust economists at least since Schumpeter’s suggestion that dynamic competition would result in “creative destruction,” leading to a competitive process where one monopolist would replace another sequentially as new entrants developed a superior product.
Interfering in this dynamic process for the sake of static efficiency gains is perilous, but, of course, not impossible. But regulators and policy makers must take (more) seriously the condition of fundamental uncertainty in which they act, and the significant costs of their inevitable errors before justifying interventions on grounds of promoting competition or facilitating innovation.
This essay and the chapters in this book, approach this critical set of problems from an economic perspective, relying on the tools of microeconomics, quantitative analysis, and comparative institutional analysis to explore and begin to provide answers to the myriad challenges facing policymakers. The strength of this analysis - often described as the New Institutional Economic approach - is in its recognition that understanding economic performance requires not only economic modeling of narrow behavior, but also an understanding of that behavior in its legal, economic, social, and political institutional context.
The essay includes a table of contents for the book.