Antitrust & Competition Policy Blog

Evaluating Merger Effects in Cable TV Industry in a Difference in Difference Method

Posted by D. Daniel Sokol

Jung, Hyun-Joon and Nahm, Jae (Department of Economics, Korea University, Seoul, Republic of Korea) explore Evaluating Merger Effects in Cable TV Industry in a Difference in Difference Method.

ABSTRACT: Between 2005 and 2008, there had been active mergers between cable system operators in Korean. By analyzing subscription fees changes between 2004 and 2008 in a panel data set, we evaluate the merger effects. We find that mergers had occurred in relatively low prices areas; the price increase was much higher in areas where merger had occurred than in areas where competition between multiple SO had remained.

Call for Papers: Advances in the Analysis of Competition Policy and Regulation - 24th of June to the 8th of July, 2011 (Conference: 1-3 July), in the seaside resort of Ixia in Rhodes, Greece

Posted by D. Daniel Sokol

Summer School & Conference 2011		Last update: 16/11/2010
Participants' Testimonies          List of Participants' Organisations		CRESSE courses are accredited by the Solicitors Regulation Authority (SRA)
The Athens University of Economics and Business (AUEB) will organise the Sixth Annual Competition and Regulation European Summer School and Conference (CRESSE) which will take place at the RODOS PALACE HOTEL (see Accommodation) from the 24th of June to the 8th of July, 2011 (Conference: 1-3 July), in the seaside resort of Ixia in Rhodes, Greece. The CRESSE Conference will be on "Advances in the Analysis of Competition Policy and Regulation". The CRESSE Summer School brings together many of the top European and USA economists and legal experts in Competition and Regulation, from over 25 distinguished Universities, as well as from law practices, authorities and economic consultancies (see School Faculty - Modules - Teaching Schedule). CRESSE also organises specialised customer-tailored training courses on Competition and Regulation delivered on-site to any interested organisation throughout the world. Organisation - Management, Scientific and Advisory Committee Rationale and Objectives Competition Policy and Sectoral (Network Industry) Regulation have undergone dramatic changes in the past two decades. This has been accompanied by an intellectually vibrant economic literature. Economists have developed new theories to characterize firm behavior and to assess which market contexts warrant government intervention – see for example Prof. M. Motta (CRESSE Lecturer and Member of the Scientific Committee, 2006-2010) “Competition Policy: Theory and Practice”, Cambridge University Press, 2004. Traditional views of which situations warrant intervention have changed substantially. The economic approach has gained ground both in policy making and in case law, sometimes challenging conventional views. Also, following the liberalization of many network industries, Sectoral Regulation has been increasingly adopting Competition Policy approaches to assess market power.  The aim of the Summer School is to familiarize participants with the new economic literature and with recent legal developments and to establish a clear link between the new theories and the day to day work of practitioners. It enables participants to face and answer difficult questions about the practical matters they come across in their work in an economically and legally informed manner. It is designed for Professionals (Public Officers, Managers, Policy Makers, Law and Economic Consultants or Analysts), working in the wider areas of Competition Policy and Network Industry Regulation, in: Competition Authorities and in Regulatory Bodies. Ministries or International Organizations (like the European Commission). Economic or Law Consultancies. Private and Public firms and organizations affected by interference in the form of sectoral regulation or antitrust and merger policies. Postgraduate (and Doctoral) students specialising in Competition, Regulation and Privatisation are also encouraged to apply (at significantly reduced special rates). A number of teaching methods are used that have been selected to meet the aims of the course and intended learning outcomes, exploiting the organisers' long experience in designing and delivering Executive training.

Horizontal Mergers of Online Firms: Structural Estimation and Competitive Effects

Posted by D. Daniel Sokol

Yonghong An (Johns Hopkins University), Michael R Baye (Department of Business Economics and Public Policy, Indiana University Kelley School of Business), Yingyao Hu (Johns Hopkins University), and John Morgan (University of California - Berkeley) analyze Horizontal Mergers of Online Firms: Structural Estimation and Competitive Effects.

ABSTRACT: This paper (1) presents a general model of online price competition, (2) shows how to structurally estimate the underlying parameters of the model when the number of competing firms is unknown or in dispute, (3) estimates these parameters based on UK data for personal digital assistants, and (4) uses these estimates to simulate the competitive effects of horizontal mergers. Our results suggest that competitive effects in this online market are more closely aligned with the simple homogeneous product Bertrand model than might be expected given the observed price dispersion and number of firms. Our estimates indicate that so long as two firms remain in the market post merger, the average transaction price is roughly unaffected by horizontal mergers. However, there are potential distributional effects; our estimates indicate that a three-to-two merger raises the average transaction price paid by price sensitive "shoppers" by 2.88 percent, while lowering the average transaction price paid by consumers "loyal" to a particular firm by 1.37 percent.

Private Agreements for Coordinating Patent Rights: The Case of Patent Pools

Posted by D. Daniel Sokol

Nancy Gallini (UBC - Econ) addresses Private Agreements for Coordinating Patent Rights: The Case of Patent Pools.

ABSTRACT: Inventors and users of technology often enter into cooperative agreements for sharing their intellectual property in order to implement a standard or to avoid costly infringement litigation. Over the past two decades, U.S. antitrust authorities have viewed pooling arrangements that integrate complementary, valid and essential patents to have “pro-competitive benefits†in reducing prices, transactions costs, and the incidence of costly infringement suits. Since patent pools are cooperative agreements, they also have the potential of suppressing competition if, for example, they harbor weak or invalid patents, dampen incentives to conduct research on innovations that compete with the pooled patents, foreclose competition from downstream product or upstream innovation markets, or raise prices on goods that compete with the pooled patents. In synthesizing the ideas advanced in the economic literature, this paper explores whether these antitrust concerns apply to pools with complementary patents. Special attention is given to the U.S. Department of Justice-Federal Trade Commission Guidelines for the Licensing of Intellectual Property (1995) and its application to recent patent pool cases.

Economic Arguments in U.S. Antitrust and EU Competition Policy: Two Roads Diverged

Posted by D. Daniel Sokol

Stephen Martin (Purdue - Econ) presents Economic Arguments in U.S. Antitrust and EU Competition Policy: Two Roads Diverged.

ABSTRACT: In this paper, I compare economic arguments in U.S. Supreme Court antitrust and EU Court of Justice competition policy decisions on four topics: refusal to deal, predation, vertical contracts, and hor- izontal interfirm relations.

Heterogeneous Exits: Evidence from New Firms

Posted by D. Daniel Sokol

Masatoshi Kato (School of Economics, Kwansei Gakuin University) and Yuji Honjo (Institute of Economic Research, Hitotsubashi University) describe Heterogeneous Exits: Evidence from New Firms.

ABSTRACT: This paper explores heterogeneous exits—bankruptcy, voluntary liquidation, and merger—by focusing on new firms. Using a sample of approximately 16,000 firms founded in Japan during 1997–2004, we examine the determinants of new-firm exit according to forms of exit. Regarding industry-specific characteristics, our findings indicate that new firms in capital-intensive and R&D-intensive industries are less likely to go bankrupt. In industries characterized by large amounts of capital and low price–cost margins, new firms are more likely to exit through voluntary liquidation and merger. Region-specific characteristics, such as regional agglomeration and unemployment rate, have significant effects on the hazards of exit, and their effects vary across different forms of exit. Moreover, we provide evidence that firm-specific characteristics, such as the number of employees, and entrepreneur-specific characteristics, such as educational background and age, play significantly different roles in determining each form of exit.

Best Antitrust Works of 2010 - Experts' End of the Year Guide

Posted by D. Daniel Sokol

As is our yearly tradition on the blog, I have collected a number of professors to ask them about their picks for the best antitrust and competition policy work published in 2010.

Daniel Sokol, University of Florida	David Gerber, Global Competition: Law, Markets and Globalization (Oxford University Press); Francesco Russo, Maarten Pieter Schinkel, Andrea Günster and Martin Carree, European Commission Decisions on Competition Economic Perspectives on Landmark Antitrust and Merger Cases (Cambridge University Press)
Michal Gal, University of Haifa	David Gerber, Global Competition: Law, Markets and Globalization (Oxford University Press)
Maurice Stucke, University of Tennesse	Simon Johnson & James Kwak, 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown (Random House)
Barry Rodger, University of Strathclyde	Maurice Stucke, Reconsidering Competition and the Goals of Competition Law
Andreas Stephan, University of East Anglia	David Gerber, Global Competition: Law, Markets and Globalization (Oxford University Press)
Max Huffman, University of Indiana	David Gerber, Global Competition: Law, Markets and Globalization (Oxford University Press)
Josh Wright, George Mason University	Keith Hylton, Antitrust Law & Economics (Edward Elgar Press)
Alberto Heimler, Italian School of Government	Carl Shapiro, The 2010 Horizontal Merger Guidelines: From Hedgehog to Fox in Forty Years
David Evans, University College London, University of Chicago	Mark Armstrong and Steffen Huck, Behavioral Economics as Applied to Firms: A Primer; Doug Ginsburg and Josh Wright, Antitrust Sanctions