Antitrust & Competition Policy Blog

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

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Monday, September 26, 2011

‘Lead, Follow or Cooperate’: Endogenous Timing & Cooperation in Symmetric Duopoly Games

Posted by D. Daniel Sokol

Marco Marini (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo" and CREI, Università di Roma III) and Giorgio Rodano (Dipartimento di Informatica e Sistemistica "Antonio Ruberti", Università di Roma "La Sapienza") discuss ‘Lead, Follow or Cooperate’: Endogenous Timing & Cooperation in Symmetric Duopoly Games.

ABSTRACT: The aim of this paper is to extend Hamilton and Slutsky's (1990) endogenous timing game by including the possibility for players to cooperate. At an initial stage players are assumed to announce both their purpose to play early or late a given duopoly game as well as their intention to cooperate or not with their rival. The cooperation and timing formation rule is rather simple: when both players agree to cooperate and play with a given timing, they end up playing their actions coordinately and simultaneously. Otherwise, they play as singletons with the timing as prescribed by their own announcement. We check for the existence of a subgame perfect Nash equilibrium (in pure strategies) of such a cooperation-timing duopoly game. Two main results on the emergence of cooperation are provided. If players' actions in the symmetric duopoly game are strategic substitutes and there is no discount, cooperating early (as a grand co! alition) is a subgame perfect equilibrium of the extended timing-cooperation game. Conversely, cooperating late (at period two) represents an equilibrium when playersstrategies are strategic complements. Other equilibria are also possible. Most importantly, our model shows that, in general, the success of cooperation is a¤ected by the endogenous timing of the game. Moreover, the slope of players' best-replies appears crucial both for the success of cooperation as well as for the players' choice of sequencing their market actions.

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

Bertrand competition in markets with network effects and switching costs

Posted by D. Daniel Sokol

Irina Suleymanova and Christian Wey (both Dusseldorf Institute for Competition Economics) describe Bertrand competition in markets with network effects and switching costs.

ABSTRACT: We analyze Bertrand duopoly competition in markets with network effects and consumer switching costs. Depending on the ratio of switching costs to network effects, our modelerates four different market patterns: monopolization and market sharing which can be either monotone or alternating. A critical mass effect, where one firm becomes the monopolist for sure only occurs for intermediate values of the ratio, whereas for large switching costs market sharing is the unique equilibrium. For large network effcts both monopoly and market sharing equilibria exist. Our welfare analysis reveals a fundamental conflict between maximization of consumer surplus and social welfare when network effects are large. We also analyze firms' incentives for compatibility and we examine how market outcomes are affected by the switching costs, market expansion, and cost asymmetries. Finally, in a dynamic extension of our model, we show how comp! etition depends on agents' discount factors.

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

Sunday, September 25, 2011

Job Posting for OFT: Assistant Legal Directors – Competition Law and Policy

Posted by D. Daniel Sokol

Assistant Legal Directors – Competition Law and Policy

Salary : £61,500 (total salary package including lawyer premium)

The Office of Fair Trading is the UK's consumer and competition authority, with a mission to make markets work well for consumers. Each year we deliver substantial benefits to consumers, businesses and the wider UK economy. We are an ambitious world-class organisation, intent on using our competition and consumer tools to ensure businesses operate in a fair and competitive way. We are looking for talented high performers for the General Counsel's Office and Competition Policy team to take responsibility for leading legal or competition policy work on investigations, projects and studies, focusing on some of the most significant, novel and technically complex competition law issues. As one of our senior lawyers you'll advise on legal and policy aspects of high-profile competition law cases, litigation and projects and on public law. A solicitor or barrister qualified to practise in England and Wales, you will have an excellent working knowledge of competition law and preferably public law, including human rights issues and judicial review claims. You'll also need to demonstrate high academic ability together with strong oral and written presentation skills. You will be a strategic thinker and a highly analytical individual who can develop innovative solutions, equipped with strong project and people management skills.

For more information on this role, please refer to the full job description and person specification (pdf 178kb).

How to apply

To apply please send a CV and covering letter explaining how you meet the requirements of the role to recruitment@oft.gsi.gov.uk. Please quote reference number OFT920 stating where you saw the role advertised. Also, please complete and submit a diversity monitoring form (Word 147kb).

Closing date: 19 October 2011 The Office of Fair Trading is an equal opportunities employer.

Contact details: email: recruitment@oft.gsi.gov.uk

September 25, 2011 | Permalink | Comments (0) | TrackBack (0)

Almunia on Collective Redress

Posted by D. Daniel Sokol

Joaquin Almunia Vice President of the European Commission responsible for Competition Policy has given a speech outlining Collective Redress.

September 25, 2011 | Permalink | Comments (0) | TrackBack (0)