Antitrust & Competition Policy Blog

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

Friday, May 28, 2010

Losses from competition in a dynamic game model of a renewable resource oligopoly

Posted by D. Daniel Sokol

Kenji Fujiwara (Kwansei Gakuin University) describes Losses from competition in a dynamic game model of a renewable resource oligopoly.

ABSTRACT: This paper develops a dynamic game model of an asymmetric oligopoly with a renewable resource to reconsider welfare effects of increases in the number of firms. We show that increasing not only the number of inefficient firms but also that of Efficient firms reduces welfare, which sharply contrasts to a static outcome. It is discussed that the closed-loop property of feedback strategies plays a decisive role in this finding.

May 28, 2010 | Permalink | Comments (0) | TrackBack (0)

Bank Efficiency Amid Foreign Entry: Evidence from the Central American Region

Posted by D. Daniel Sokol

Torsten Wezel (IMF) addresses Bank Efficiency Amid Foreign Entry: Evidence from the Central American Region.

ABSTRACT: This paper investigates the efficiency of domestic and foreign banks in the Central American region during 2002-07. Using two main empirical approaches, Data Envelopment Analysis and Stochastic Frontier Analysis, the paper finds that foreign banks are not necessarily more efficient than their domestic counterparts. If anything, the regional banks that were acquired by global banks in a wave of acquisitions during 2005-07 can keep up with the local institutions. The efficiency of these acquired banks, however, is shown to have dropped during the acquisition year, recovering only slightly thereafter. Finally, it is important to account for the environment in which banks operate, as country-, sector- and firm-specific characteristics are found to have a considerable influence on bank efficiency.

May 28, 2010 | Permalink | Comments (0) | TrackBack (0)

The simple analytics of oligopoly banking in developing economies

Posted by D. Daniel Sokol

Tarron Khemraj (New College Florida) discusses The simple analytics of oligopoly banking in developing economies.

ABSTRACT: Previous studies have documented the tendency for the commercial banking sector of many developing economies to be highly liquid and be characterised by a persistently high interest rate spread. This paper embeds these stylised facts in an oligopoly model of the banking firm. The paper derives both the loan and deposit rates as a mark up rate over a relatively safe foreign interest rate. Then, using a diagrammatic framework, the paper provides an analysis of: (i) the distribution of financial surplus among savers, business borrowers and banks; (ii) exogenous deposit shocks; (iii) exogenous loan demand shocks; and (iv) the impact of interest rate control on financial intermediation.

May 28, 2010 | Permalink | Comments (0) | TrackBack (0)

Thursday, May 27, 2010

Steve Salop to Receive AAI Antitrust Achievement Award

Posted by D. Daniel Sokol

In a very deserved ceremony, Steve Salop will receive the annual AAI Antitrust Achievement Award at the AAI annual conference.  I urge as many people as possible to attend as Salop has been a transformative figure in both academic and practitioner communities.

May 27, 2010 | Permalink | Comments (1) | TrackBack (0)

A revenue-based frontier measure of banking competition

Posted by D. Daniel Sokol

Santiago Carbó (University of Granada), David Humphrey (FSU), and Francisco Rodríguez (University of Granada) provide A revenue-based frontier measure of banking competition.

ABSTRACT: Measuring banking competition using the HHI, Lerner index, or H-statistic can give conflicting results. Borrowing from frontier analysis, the authors provide an alternative approach and apply it to Spain over 1992-2005. Controlling for differences in asset composition, productivity, scale economies, risk, and business cycle influences, they find no differences in competition between commercial and savings banks nor between large and small institutions, but the authors conclude that competition weakened after 2000. This appears related to strong loan demand where real loan-deposit rate spreads rose and fees were stable for activities where scale economies should have been realized.

May 27, 2010 | Permalink | Comments (0) | TrackBack (0)

Authorized Generic Entry prior to Patent Expiry: Reassessing Incentives for Independent Generic Entry

Posted by D. Daniel Sokol

Sylvia Appelt (Department of Economics University of Munich) discusses Authorized Generic Entry prior to Patent Expiry: Reassessing Incentives for Independent Generic Entry.

ABSTRACT: Patent holders frequently attempt to mitigate the loss of monopoly power by authorizing generic entry prior to patent expiry (early entry). Competition in off-patent pharmaceutical markets may be adversely affected if early entry substantially impairs the attractiveness of subsequent market entry. I examine generic entry decisions made in the course of recent patent expiries to quantify the impact of early entry on incentives for generic entry. Using unique micro data and accounting for the endogeneity of early entry, I estimate recursive bivariate probit models of entry. Drug markets' pre-entry revenues largely determine both independent generic entry and early entry decisions. Early entry in turn has no significant impact on the likelihood of generic entry. Original drug producers appear to authorize generic entry prior to loss of exclusivity primarily fueled by rent-seeking rather than strategic entry-deterrence motives. 

May 27, 2010 | Permalink | Comments (0) | TrackBack (0)

An Overview of the Institute for Consumer Antitrust Studies

Posted by Spencer Waller

Thanks to Danny and the Blog for the opportunity to talk a bit about the Institute for Consumer Antitrust Studies at Loyola Chicago where I have served as Director for the past ten years.  Over the next few weeks, I will be posting a few times about different aspects of the Institute and my current scholarly work.  In this introduction, I will focus on an overview of the Institute,  its mission, and recent Institute programs.  In future posts, I will talk about the unique student fellowship program we run and my own research agenda as a faculty member at Loyola. 

The Loyola University Chicago Institute for Consumer Antitrust Studies is a non-partisan, independent academic center designed to explore the impact of antitrust law enforcement on the individual consumer and to shape public policy.  The Institute promotes a comprehensive, inclusive view of the benefits of competition law and policy that includes, but goes beyond, narrow notions of economic efficiency.  The Institute fulfills its mission by sponsoring symposia, academic colloquia, and consumer education classes, publishing working papers, undertaking research projects, hosting scholars from around the globe, and funding a unique student fellowship.

The Institute for Consumer Antitrust Studies owes its existence to the perseverance of two extraordinary people, the late Judge Hubert Will, United States District Court for the Northern District of Illinois and Dean Emeritus Nina Appel of Loyola University Chicago School of Law.

Beginning in the1980s, Judge Will increasingly believed that the centrist tradition in American antitrust law was threatened by the influence of the so-called Chicago school of antitrust analysis and the associated well-funded group of think tanks, academic literature, and judicial education programs that relentlessly sought to inculcate what he considered a false belief that a narrow definition of allocative efficiency was the only value at stake in antitrust.  More importantly, Judge Will decided to do something about it.  In supervising the settlement of a major private treble damage antitrust class action case, Judge Will announced that he would entertain proposals under the doctrine of cy pres, so that the funds remaining after all claims, fees and costs had been paid could be used to promote the interests of actual consumers in the ongoing antitrust debate.

Then Dean Nina Appel became aware of this opportunity and prepared with the help of the Loyola faculty and friends in the antitrust community the proposal that ultimately became the Institute for Consumer Antitrust Studies.  Judge Will selected the Loyola proposal over the competing proposals he received and directed the funds to Loyola.  This proved to be the beginning, rather than the end, of the process.  On appeal, the Seventh Circuit reversed Judge Will’s decision with respect to the left over funds and all monies were returned to the court.  It was only in a subsequent settlement of a different antitrust case that Judge Will followed the road map laid out for him by the Seventh Circuit and ultimately awarded similar funding to the Institute and the proposal again championed by Dean Appel. The Institute has received additional funding and support from Loyola University Chicago, subsequent cy pres distributions from courts, as well as gifts from foundations, law firms, corporations, and individuals.

The Institute began under the leadership of Professor Jane Locke of the Loyola University Chicago and carved out for itself a unique niche as the only academic public interest center focusing on both antitrust and consumer protection law.  Living up to its mandate from Judge Will, the Institute began examining issues of competition from the perspective of the consumer and insisting that such benefits must be tangible, and not merely theoretical in the sense of wealth maximization for producers. The Institute sponsored consumer education classes, writing competitions, as well as conferences on antitrust and health care, antitrust at the millennium, and consumer protection issues for the elderly.

Since 2000 when I joined the Loyola faculty, the Institute has instituted a number of new programs.  The Institute created a unique fellowship for students at the law school which I will discuss in greater detail in my next post.  Those who can’t wait can find more details on the Institute web site at

For the academy, the Institute sponsors the annual Loyola Antitrust Colloquium to support the work of professors in law and related disciplines who share the Institute’s centrist pro-consumer orientation.  The first colloquium was convened in April 2001 and featured thirty attendees for a day of papers, commentary, and discussion.  The colloquium has grown to an annual event of over one hundred attendees and featured leading competition and consumer law professors, policy makers, practitioners, and members of the judiciary from the United States and abroad.

The Institute web site features a number of free publications designed both for the public and antitrust professionals.  The working paper series includes the papers from all the symposia held by the Institute, the current and past issues of the Loyola Consumer Law Review, as well as scholarly work from faculty members at Loyola University Chicago and other law schools.  The News and Views Section features shorter discussions of new books and current events in the field.  The web site also includes a Consumer’s Guide to Antitrust, Institute fact sheets with priorities for competition and consumer law, and the newsletters of the Institute.

The Advisory Boards are another key component of the Institute. The United States and International Advisory Boards assist the Institute director, faculty, and staff as a source of ideas for programs, speakers, research projects, competition advocacy before state and federal agencies and legislatures, job placement, funding opportunities, and provides valuable direction to the evolving nature of the Institute.  The Boards include representatives from all segments of  the bar, corporations, government, academia, and alumni of the Law School and student fellowship with diverse points of view, but all share a basic commitment to the importance of competition and consumer law.

Although the Institute for Consumer Antitrust Studies remains a work in progress, it is best defined by the numerous public programs over the past fifteen years.  In addition to the annual colloquium in the spring, the Institute has sponsored major symposia including antitrust and energy deregulation (2001); the future of private rights of action (2004); the 20th anniversary of Matsushita (2006); comparative monopolization law (2009); designing better institutions to enforce competition law (2009); and the antitrust marathon series of roundtable discussions focusing on timely issues of comparative competition issues.  Full information about all the activities of the Institute can be found on the web site at or by contacting me at

May 27, 2010 | Permalink | Comments (0) | TrackBack (0)

Introducing Guest Blogger Spencer Waller

Posted by D. Daniel Sokol

Spencer Weber Waller is a Professor of Law at Chicago Loyola and serves as Director of the school's Institute for Consumer Antitrust Studies. Spencer served as a staff law clerk for the U.S. Court of Appeals for the Seventh Circuit. He also worked for the U.S. Department of Justice, first as a trial attorney in the Foreign Commerce Section of the Antitrust Division and later as a special attorney in the Chicago Strike Force of the Criminal Division. He then practiced at the Chicago firm of Freeborn & Peters. He was a full-time faculty member at Brooklyn Law School for ten years until joining Loyola in 2000.

He will blog about what his center does and about some of his scholarly projects.

May 27, 2010 | Permalink | Comments (0) | TrackBack (0)

Knowledge Spillovers and the Timing of Foreign Entry

Posted by D. Daniel Sokol

Bruno Merlevede - Ghent University, Koen Schoors - Ghent University and Mariana Spatareanu (Rutgers) discuss Knowledge Spillovers and the Timing of Foreign Entry.

ABSTRACT: We analyze how foreign presence affects local firm productivity. We relax the standard implicit assumption that spillovers are immediate and permanent. We find that spillovers are dynamic. Foreign entry of a majority foreign owned firm has a short run negative effect on the productivity of local competitors, which is more than offset by a longer run positive effect. The entry of minority foreign owned firms has an immediate, though short-lived, positive effect on local suppliers. The entry of majority foreign owned fi?rms also improves the productivity of local suppliers, but the effect materializes later and lasts longer.

May 27, 2010 | Permalink | Comments (0) | TrackBack (0)

Commission adopts revised competition rules for motor vehicle distribution and repair

Posted by D. Daniel Sokol

According to a press release, "The European Commission has adopted new competition rules for agreements between vehicle manufacturers and their authorised dealers, repairers and spare parts distributors. The new rules will increase competition in the market for repair and maintenance by improving access to technical information needed for the repairs and by making it easier to use alternative spare parts. They will allow the Commission to tackle manufacturers' abuse of warranties when they request that cars are serviced only in authorised garages. The new rules will also reduce distribution costs for new cars by eliminating overly restrictive rules."

May 27, 2010 | Permalink | Comments (0) | TrackBack (0)

European Commission Decisions on Anti-Competitive Behavior

Posted by D. Daniel Sokol

Jordi Gual, University of Navarra - IESE Business School and Nuria Mas, IESE Business School of the University of Navarra explain European Commission Decisions on Anti-Competitive Behavior.  This is an important paper given the data set.  Download it while it is hot.

ABSTRACT: This paper provides an analysis of all the European Commission´s decisions on antitrust cases between January 1999 and February 2004. We use a unique dataset that contains information not only on the cases that were analyzed by the Commission and for which a decision was finally public, but also on all the cases that were never pursued any further or the ones for which there is no public final decision. We have two goals. First, this data allows us, for the first time in the literature, to determine whether there is any type of bias on the selection process followed by the Commission when deciding which cases to pursue until a final decision is reached. Our results show that the selection of cases is not random and that it is quite efficient. Second, we can contribute to determine whether the criteria that have been shown by the economic literature to play an important role on anti competitive behavior, are also important for the Commission´s decision on antitrust cases. Our results suggest that this is the case.

May 27, 2010 | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 26, 2010

Making Sense of Non-Binding Retail-Price Recommendations

Posted by D. Daniel Sokol

Stefan Buehler, University of St. Gallen - Department of Economics and Dennis Gärtner, University of Zurich - Socioeconomic Institute help us in Making Sense of Non-Binding Retail-Price Recommendations.

ABSTRACT: We model non-binding retail-price recommendations (RPRs) as a communication device facilitating coordination in vertical supply relations. Assuming both repeated vertical trade and asymmetric information about production costs, we show that RPRs may be part of a relational contract, communicating private information from manufacturer to retailer that is indispensable for maximizing joint surplus. We show that this contract is self-enforcing if the retailer’s profit is independent of production costs and punishment strategies are chosen appropriately. We also extend our analysis to settings where consumer demand is variable or depends directly on the manufacturer’s RPRs.

May 26, 2010 | Permalink | Comments (0) | TrackBack (0)

Competition Law and Policy in Developing Countries: A Critical Assessment of the Challenges to Establishing an Effective Competition Law Regime

Posted by D. Daniel Sokol

Maher Dabbah explores Competition Law and Policy in Developing Countries: A Critical Assessment of the Challenges to Establishing an Effective Competition Law Regime.

ABSTRACT: This article offers a critical assessment of the challenges facing developing countries in their efforts to establish effective competition law regimes domestically. In doing so, the article considers the unique circumstances and interests of developing countries and gives numerous examples from practice in order to analyse all of the crucial aspects of this topic. The article considers the challenges facing developing countries in a wider cultural, economic, legal and political context in order to give proper reflection of the true reality prevailing in developing countries and demonstrate how competition law and policy in these countries is a unique topic, which raises issues different from those specialists are usually familiar with from the experience of the developed world in the field.

May 26, 2010 | Permalink | Comments (0) | TrackBack (0)

Consumers’ participation rights in competition law procedures

Posted by D. Daniel Sokol

Please note that the workshop, originally planned on Friday, 16 April, 2010, has been postponed to 8 October 2010.

This workshop will analyze the administrative procedures in EC competition law as they were designed back in 1962 and how they were changed as a result of landmark cases from the European courts during the 1990s. The core aspect of the workshop is to scrutinize the procedural model of tripartite distinction between undertakings, the holders of a "legitimate interest" and holders of a "sufficient interest".

In particular, in the light of recent legislative reforms (Regulation 1/2003 and the modernization package) and case law developments (Österreichische Postparkasse and VKI), the workshop will inquire whether adversarial inter partes procedures are an appropriate model to serve the substantive interests that competition law rules are intended to pursue.

The workshop will further scrutinize whether and how this procedural model aligns with the present patchwork of various enforcement methods of EC competition law. For example, how consumers' participation rights relate with leniency applications, commitments and in particular, with private enforcement as an alternative avenue of redress.

The workshop is organized with support of the Amsterdam Centre for Law and Economics and the Foundation Europa Instituut.

Speakers & Chair

  • Chair: Prof. Deirdre Curtin, ACELG, University of Amsterdam 
  • Prof. Gareth Davies, Vrije Universiteit, Amsterdam
  • Prof. Lorenzo Pace, University of Molise, Italy
  • Mr. Michael Albers, Hearing Officer, European Commission
  • Mr. David M. Ortega Peciña, BEUC - The European Consumer's Organisation & OCU - Organizacion de Consumidores y Usarios
  • Mr. Onno Brouwer, Freshfields Bruckhaus Deringer, Amsterdam
  • Dr. Joana Mendes, Amsterdam Centre for European Law and Governance
  • Dr. Kati Cseres, Amsterdam Centre for European Law and Governance & Amsterdam Centre for Law and Economics


Download here the programme.

Date and Venue

Friday, 8 October 2010
University of Amsterdam, Room to be announced

Contact and Registration

Participation in the conference is free of charge. For organizational reasons, we ask you to register, using the Conference Registration Form below.

For more information, or any questions you might have, please send an email to

May 26, 2010 | Permalink | Comments (0) | TrackBack (0)

Asia-Pacific Antitrust Review 2010

Competition, Patents and Innovation II

Posted by D. Daniel Sokol

Jeremy West (OECD) has posted Competition, Patents and Innovation II.

ABSTRACT: In June 2009, the OECD Competition Committee continued a discussion on innovation that began in 2006. This roundtable revisited the ways in which competition and patents can influence innovative activity. It also explored the uncertainty created by pending patents and how that uncertainty can be used for strategic purposes, some of which may be harmful to competition and innovation. These latter include tactics such as ambushing standard setting organizations, patent flooding, and patent trolling.

This document includes an executive summary and the documents from the roundtable meeting: an analytical note by Jeremy West for the OECD, written submissions from Canada, Chile, Germany, Japan, Korea, Switzerland, the United Kingdom, the United States, Chinese Taipei, the European Commission and BIAC, as well as a summary of the discussion.

May 26, 2010 | Permalink | Comments (0) | TrackBack (0)

A conference to mark the 20th Anniversary of the EU Merger Regulation 28 & 29 September 2010, Brussels

Posted by D. Daniel Sokol


A conference to mark the 20th Anniversary of the EU Merger Regulation

28 & 29 September 2010, Brussels

Global Competition Review takes great pleasure in announcing a major international conference to mark the 20th anniversary of the EU Merger Regulation to be held at the Radisson Blu Royal Hotel in Brussels.

Following the opening address from Joaquín Almunia, Vice-President of the European Commission and Commissioner in charge of Competition, current and former enforcers will come together with competition law specialists from the EU, the USA and China to celebrate the ECMR's achievements and legacy worldwide and look at the developments in international merger policy.

Distinguished speakers, who will provide delegates with a thorough update on recent developments, legislation and cases and assess the challenges that lie ahead, include:


* Opening address:  Commissioner Joaquín Almunia, Vice-President of the European Commission


* Jim Venit, Partner, Skadden Arps Slate Meagher & Flom LLP

* Professor Mario Monti, President, Bocconi University, Milan; former Competition Commissioner, European Commission

* William E. Kovacic, Member, Federal Trade Commission

* Philip Lowe, Director-General of the Energy DG; former Director-General Competition, European Commission

* Bo Vesterdorf, Consultant, Herbert Smith; former Judge and President, CFI

* Nicholas Forwood, Judge, General Court of the European Communities

* Ian Forrester QC, Partner, White & Case LLP

* John Davies, Partner, Freshfields Bruckhaus Deringer LLP

* John Fingleton, Chief Executive, Office of Fair Trading

* Rachel Brandenberger, Special Adviser, International, US Department of Justice

* Bruno Lasserre, President, Autorité de la Concurrence

* Andreas Mundt, President, Bundeskartellamt

* Thomas Vinje, Partner, Clifford Chance LLP

* Damien Neven, Chief Economist, DG Competition

* Amelia Fletcher, Chief Economist, Office of Fair Trading

* William J. Kolasky, Partner, WilmerHale LLP

* Cristina Caffarra, Vice President, Charles River Associates

* Jean-Yves Art, Professor, College of Europe, Bruges

* Nicholas Levy, Partner, Cleary Gottlieb Steen & Hamilton LLP

* Ronan P. Harty, Partner, Davis Polk & Wardwell LLP

* Jorge Padilla, Managing Director, LECG

* Alec Burnside, Partner, Linklaters LLP

* Götz Drauz, Partner, Howrey LLP

* Nadine Mouy, Head of Mergers Service, Autorité de la Concurrence


To register or to request a brochure please email



May 26, 2010 | Permalink | Comments (0) | TrackBack (0)

A short survey of network economics

Posted by D. Daniel Sokol

Oz Shy (Boston Federal Reserve Bank)  provides A short survey of network economics.

ABSTRACT: This paper surveys a variety of topics related to network economics. Topics covered include: consumer demand under network effects, compatibility decisions and standardization, technology advances in network industries, two-sided markets, information networks and intellectual property, and social influence.

May 26, 2010 | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 25, 2010

Delegated agency in multiproduct oligopolies with indivisible goods

Posted by D. Daniel Sokol

Ivan Arribas (ERI-CES) and Amparo Urbano Salvador (ERI-CES) address Delegated agency in multiproduct oligopolies with indivisible goods.

ABSTRACT: This paper focuses on oligopolistic markets in which indivisible goods are sold by multiproduct firms to a continuum of homogeneous buyers, with measure normalized to one, who have preferences over bundles of products. Our analysis contributes to the literature on delegated agency games with direct externalities and complete information, extending the insights by Berheim and Whinston (1986, a , b) to markets with indivisibilities. By analyzing a kind of extended contract schedules - mixed bundling prices - that discriminate on exclusivity, the paper shows that efficient equilibria always exist in such settings. There may also exist inefficient equilibria in which the agent chooses a suboptimal bundle and no principal has a profitable deviation inducing the agent to buy the surplus-maximizing bundle because of a coordination problem among the pricipals. Inefficient equilibria can be ruled out by either assuming that all f! irms are pricing unsold bundles at the same profit margin as the bundle sold at equilibrium, or imposing the solution concept of subgame perfect strong equilibrium, which requires the absence of profitable deviations by any subset of principals and the agent. More specific results about the structure of equilibrium prices and payoffs for common agency outcomes are offered when the social surplus function is monotone and either submodular or supermodular.

May 25, 2010 | Permalink | Comments (0) | TrackBack (0)

Jersey Competition Regulatory Authority Seeks part-time Non-Executive Director

Posted by D. Daniel Sokol

The JCRA is seeking to appoint a part-time Non-Executive Director. Further information can be found here.

May 25, 2010 | Permalink | Comments (0) | TrackBack (0)