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 27, 2011

Generic Advertising in Concentrated and Differentiated Agricultural Markets

Posted by D. Daniel Sokol

Sungill Han, Department of Livestock Business and Marketing Economics Konkuk University, Chanjin Chung Department of Agricultural Economics, Oklahoma State University, and Daeseok Suh Korean Rural Economic Institute explore Generic Advertising in Concentrated and Differentiated Agricultural Markets.

ABSTRACT: This study develops an analytical framework to examine the impact of generic advertising on brand advertising with alternative assumptions on demand changes (shift-up and rotation), product differentiation, market concentration, and relationship between commodity and brand advertising programs. The newly developed model allows one to determine the relationship between generic and brand advertising, which has not been clearly shown in previous studies. Analytical results show that when generic advertising leads to an inelastic demand, generic advertising would help brand advertising and could decrease the optimal brand advertising expenditures. However, when generic advertising leads to an elastic demand, it would negatively affect the profitability of brand advertising.

June 27, 2011 | Permalink | Comments (0) | TrackBack (0)

Effect of Plant Location Decisions on Raw Material Input Prices

Posted by D. Daniel Sokol

Diana M. Burton (Ecosystem Science and Management, Agricultural Economics, Texas A&M University) and H. Alan Love (Information & Operations Management, Agricultural Economics Texas A&M University) write on the Effect of Plant Location Decisions on Raw Material Input Prices.

ABSTRACT: In processing industries, plant location decisions are costly and have consequences for firm profitability. When raw materials are heavy or perishable, transportation costs limit shipping distances and processors must compete locally for raw material inputs. To determine the likely profitability of a new plant, a processor must forecast the effect entry will have on local post-entry raw material price. This requires anticipating how entry will affect market structure and intensify competition for raw materials. Using an econometric representation of game-theoretic Nash equilibria relating input prices to processor competition in local procurement areas, an empirical model is developed to ex ante forecast the likely impact of entry on input price. The methods developed are applicable to a wide variety of industries where historic data are available.

June 27, 2011 | Permalink | Comments (0) | TrackBack (0)

C.D. Howe Institute: Abolish Ownership Restrictions in Telecommunications

Posted by D. Daniel Sokol

Canada's C.D. Howe Institute Competition Policy Council has published a report advocating that Canada Abolish Ownership Restrictions in Telecommunications.

June 27, 2011 | Permalink | Comments (0) | TrackBack (0)

Formation of Decentralized Manufacturer-Supplier Networked Market

Posted by D. Daniel Sokol

Yasuhiro Shirata (Graduate School of Economics, Hitotsubashi University) analyzes Formation of Decentralized Manufacturer-Supplier Networked Market.

ABSTRACT: This paper studies trading in a two-sided market where firms strategically form a network. In a networked market, manufacturers and suppliers must be connected by links for trading. We show that if no contingent contract is available, then any pairwise Nash stable network is inefficient. Each supplier under-invests in links (a hold-up problem). If a contract contingent on direct links is available and link cost is low, then the under-investment problem solves. Furthermore, the complete network resulting in the Walrasian outcome is uniquely pairwise Nash stable. However, this outcome is also inefficient. A new hold-up problem, over-investment in links, arises.

June 27, 2011 | Permalink | Comments (0) | TrackBack (0)

An Experimental Contribution to the Revision of the Guidelines on Research and Development Agreements

Posted by D. Daniel Sokol

Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn) analyzes An Experimental Contribution to the Revision of the Guidelines on Research and Development Agreements.

ABSTRACT: The European Commission is working on a revision of its Guidelines on Research and Development Agreements. On this occasion, this note surveys the existing experimental evidence. Experiments add a number of additional arguments to the normative assessment. R&D agreements have a much smaller effect on later competition in the product market if they serve as a substitute for incomplete (legal) protection of innovation effort. They may help firms settle the resulting fairness issue, and stay away from investment wars. Using the results from 107 published experiments on oligopoly, a meta-study shows that clearing an R&D agreement can be beneficial since it removes the additional collusion incentive resulting from fear that, through successful innovation, competitors might gain an advantage. This is the case if the opposite market side has countervailing power, and the more market conditions are stable. By contrast, t! he meta-data suggests that R&D agreements increase the risk of collusion in the product market if products are substitutes, if capacity cannot immediately be extended, if market participants may communicate, and if they are experienced; the latter two conditions are very likely to hold in the field.

June 27, 2011 | Permalink | Comments (1) | TrackBack (0)

OFT Unveils Compliance Related Competition Internet Features

Posted by D. Daniel Sokol

The OFT has released a number of resources intended to help businesses to comply with competition law.  The press release is available here. The link to the competition law compliance webpage containing the various materials is here.

 

The materials published include the following:

 

  • Compliance guidance - OFT1341 'How your business can achieve compliance with competition law' - this is the updated version of our general guidance on compliance
  • Directors guidance - OFT1340 'Company directors and competition law' - this guidance document is specifically targeted at directors and explains the steps we consider individual directors should be taking to prevent, detect and bring to an end any infringements of competition law within their company, recognising the important role that directors play in establishing an effective competition law compliance culture
  • OFT Quick Guide -- 'Quick Guide to Competition Law Compliance' - this document contains a high level summary of the above two documents and may be particularly suitable for SMEs or individuals seeking an introduction to the topics.
  • The OFT 'Competition law compliance survey' - the results of a survey we undertook on competition law awareness and compliance
  • The OFT's Interactive compliance wheel - this is an online resource to help businesses to understand our suggested four step approach to effective competition law compliance
  • The OFT film -- 'Understanding Competition Law' - this is a new DVD which explains the basics of competition law and competition law compliance, it contains a dramatised dawn raid and may be useful for training business colleagues. The running time is around 15 minutes.

June 27, 2011 | Permalink | Comments (0) | TrackBack (0)

Consolidation and Rationalization in the Transatlantic Air Transport Market – Prospects and Challenges for Competition and Consumer Welfare

Posted by D. Daniel Sokol

Antigoni Lykotrafiti, Tilburg Law and Economics Center (TILEC), Tilburg Law School has written on Consolidation and Rationalization in the Transatlantic Air Transport Market – Prospects and Challenges for Competition and Consumer Welfare.

ABSTRACT: The Discussion Paper examines the regulation of the air transport sector from the perspective of competition law, focusing specifically on EU-US air transport relations. Emphasis is placed on the ongoing negotiations between Europe and the United States for the creation of a transatlantic open aviation area, where American and European airlines will operate freely without restrictions on traffic rights, subject solely to common rules agreed between the parties. In 2007, the first-ever EU-US Air Transport Agreement was reached, followed, in 2010, by a second-stage agreement. All efforts are now concentrated on the conclusion of the final agreement. Given that the transatlantic air transport market accounts for almost 60% of world traffic, the conclusion of the final agreement will signal the creation of the biggest liberalized airspace in the world. The prospects and challenges thereof are expected to be major and are examined from the perspective of the consumers, the airline industry and the law itself. The first part of the paper is a flight into the past, tracing the regulation of air transport from the birth of civil aviation up until today. The second part is a flight into the future, aspiring to foresee how smooth or turbulent the transition to the new regime is going to be. Given that the successful application of the final agreement is dependent upon effective regulatory cooperation aimed ultimately at regulatory convergence, the analysis looks into the prospects and challenges associated with regulatory convergence at both sector-specific and general competition law level.

June 27, 2011 | Permalink | Comments (0) | TrackBack (0)

Sunday, June 26, 2011

Vigorously Enforcing the Antitrust Laws: Developments at the Division

Posted by D. Daniel Sokol

Christine Varney (DOJ) gave a speech titled Vigorously Enforcing the Antitrust Laws: Developments at the Division.

June 26, 2011 | Permalink | Comments (0) | TrackBack (0)