Antitrust & Competition Policy Blog

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

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Monday, July 18, 2011

Competition as an Ambiguous Discovery Procedure: A Reappraisal of Hayek's Epistemic Market Liberalism

Posted by D. Daniel Sokol

Ulrich Witt (Max Planck Institute of Economics - Jena) has posted Competition as an Ambiguous Discovery Procedure: A Reappraisal of Hayek's Epistemic Market Liberalism.

ABSTRACT: Epistemic arguments play a significant role in Hayek's defense of market liberalism. His claim that market competition is a discovery procedure that serves the common good is a case in point. The hypothesis of the markets' efficient use of existing knowledge is supplemented by the idea that markets are also most effectively creating new knowledge. However, in his assessment Hayek neglects the role of new technological knowledge. He ignores that the discovery procedure induces not only price and cost competition but also competition by innovations. Thence he overlooks the ambiguity that follows from the unpredictability of the consequences of innovations. This fact is shown to challenge the epistemic foundations and the stringency of Hayek's version of market liberalism.

July 18, 2011 | Permalink | Comments (0) | TrackBack (0)

SP Betting as a Self-Enforcing Implicit Cartel

Posted by D. Daniel Sokol

Adi Schnytzer (Bar-Ilan University) and Avichai Snir (Bar-Ilan University) describe SP Betting as a Self-Enforcing Implicit Cartel.

ABSTRACT: A large share of the UK off-course horse racing betting market involves winning payouts determined at Starting Prices (SP). This implies that gamblers can bet with off-course bookies on any horse before a race at the final pre-race odds as set by on-course bookies for that horse. Given the oligopolistic structure of the off-course gambling market in the UK, a market that is dominated by a small number of large bookmaking firms, we study the phenomenon of SP as a type of self-enforcing implicit collusion. We show that given the uncertainty about a race outcome, and their ability to influence the prices set by on-course bookies, agreeing to lay bets at SP is superior for off-course bookies as compared with offering fixed odds. We thus extend the results of Rotemberg and Saloner (1990) to markets with uncertainty about both demand and outcomes, We test our model by studying the predicted effects of SP betting on the behavio! r of on-course bookies. Using data drawn from both the UK and Australian on-course betting markets, we show that the differences between these markets are consistent with the predicted effects of SP betting in the UK off-course market and its absence from the Australian market.

July 18, 2011 | Permalink | Comments (0) | TrackBack (0)

Does Competition Raise Productivity Through Improving Management Quality?

Posted by D. Daniel Sokol

John Van Reenen (LSE - Econ) asks Does Competition Raise Productivity Through Improving Management Quality?

ABSTRACT: A classic question in industrial organization is whether competition raises productivity and if so, through what mechanism? I discuss recent empirical evidence from both large-scale databases and specific industries which suggests that tougher competition does indeed raise productivity and one of the main mechanisms is through improving management practices. To establish this, I report on new research seeking to quantify management. I relate this to theoretical perspectives on the economics of competition and management, arguing that management should be seen at least in part as a transferable technology. A range of recent econometric studies suggest that (i) competition increases management quality and (ii) improved management quality boosts productivity.

July 18, 2011 | Permalink | Comments (0) | TrackBack (0)

Richard Cordray Nominated to Head the Consumer Financial Protection Bureau

Posted by D. Daniel Sokol

I would be remiss not to note that there is a significant development in the area of consumer protection, which in many ways compliments antitrust/competition law. Richard Cordray, a former Attorney General of Ohio has been nominated to head the Consumer Financial Protection Bureau. The Walls Street Journal has a story about it here.

July 18, 2011 | Permalink | Comments (0) | TrackBack (0)

Corruption as an Alternative to Limit Pricing

Posted by D. Daniel Sokol

Raluca Elena Buia (Department of Economics, University Of Venice Ca Foscari) discusses Corruption as an Alternative to Limit Pricing.

ABSTRACT: We explore to what extent bribery can be an alternative way of fighting rivals’ entry on the market when there is uncertainty about the degree of corruption in the public sector. For high levels of corruption, “covert” fight through bribery is the optimal choice of an incumbent. For low degree of corruption, instead, the incumbent prefers to act strategically but overtly by playing a limit pricing game.

July 18, 2011 | Permalink | Comments (0) | TrackBack (0)

Sunday, July 17, 2011

Call for Papers - Asian Competition Forum Annual Conference 2011

Posted by D. Daniel Sokol

Call for Papers - ACF Annual Conference 2011

We have noted continued development in competition law in Asia in the last year especially in ASEAN countries. We believe it is important to enhance and support competition culture in the region so as to facilitate the building of sound competition regimes. We have thus decided to adopt this as the theme for our annual conference. "Establishing Sound Competition Cultures in Asia" will be the focus of the conference this year which will be held in Hong Kong on Monday 5th and Tuesday 6th December, 2011.

We would therefore like to invite you to indicate your interest in presenting a paper at the conference on the theme of the conference by sending to Samantha Ma (afsma@inet.polyu.edu.hk or fax: (852) 2330 9845) on or before 31st July 2011 a title and an abstract of your proposed contribution. A decision will be made on submissions by 31st August 2011. If you or your organization / institute would like to sponsor the Conference, please feel free to let me know so we may discuss further details.

Mark Williams

Convener of Asian Competition Forum
Professor of Law and Associate Head
School of Accounting and Finance
The Hong Kong Polytechnic University
Email: afmarkw@polyu.edu.hk

July 17, 2011 | Permalink | Comments (1) | TrackBack (0)