Antitrust & Competition Policy Blog

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

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Monday, January 24, 2011

Towards Analysis of Vertical Structure of Industries: a method and its application to U.S. industries

Posted by D. Daniel Sokol

Sadao Nishimura (Nazan University) writes Towards Analysis of Vertical Structure of Industries: a method and its application to U.S. industries.

ABSTRACT: In this paper we present a method to analyse vertical structure of industries. A product of an industry has a hierarchical value structure with layers, each of which consists of value added injected by various production stages (current and previous) of various industries. This vertical structure makes it possible to measure value added (VA) levels (vertical positions) of VA receivers (stages of use industries), while products of supply industries and their value added flow into these stages of industries which have respective VA levels. These flows are value added contributions by supply industries. By calculating each industry's VA contributions and corresponding target VA levels, it is possible to evaluate vertical structure of industries in the whole economy. We applied this method to 1998--2008 U.S. Input-Output Tables. Resulting average VA contribution levels and graphs of VA contributions are displayed.

January 24, 2011 | Permalink | Comments (0) | TrackBack (0)

Strategic profit sharing leads to collusion in Bertrand oligopolies

Posted by D. Daniel Sokol

José Luis Ferreira and Roberts Waddle (both Universidad Carlos III de Madrid) investigate Strategic profit sharing leads to collusion in Bertrand oligopolies.

ABSTRACT: One simple way to endogenize the degree of cross ownership in an industry is that rms give away part of their pro ts. We show that this possibility of unilaterally giving pro ts away to the rival previous to Bertrand competition opens the door to multiple equilibria. In the symmetric duopoly with con- stant marginal costs any price between the cost and the monopolistic price can be sustained in a subgame perfect equilibrium. Thus, tacit collusion in the one shot game can be achieved. Further, any market share can also be sustained for any equilibrium price. These results are extended to more than two rms and to asymmetric costs.

January 24, 2011 | Permalink | Comments (0) | TrackBack (0)

Hotelling competition with multi-purchasing

Posted by D. Daniel Sokol

Simon P. Anderson (Dept. of Economics, University of Virginia), Øystein Foros (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration), and Hans Jarle Kind (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration) address Hotelling competition with multi-purchasing.

ABSTRACT: We analyze a Hotelling model where consumers either buy one out of two goods (single-purchase) or both (multi-purchase). The firms’ pricing strategies turn out to be fundamentally different if some consumers multi-purchase compared to if all single-purchase. Prices are strategic complements under single-purchase, and increase with quality. In a multi-purchase regime, in contrast, prices are strategically independent because firms then act monopolistically by pricing the incremental benefit to marginal consumers. Furthermore, prices can decrease with quality due to overlapping characteristics. Higher preference heterogeneity increases prices and profits in equilibrium with single-purchase, but decreases them with multi-purchase.

January 24, 2011 | Permalink | Comments (0) | TrackBack (0)

Japanese antitrust law; recent developments and an agenda for the years ahead

Posted by D. Daniel Sokol

Hiroshi Yamada (JFTC) explains Japanese antitrust law; recent developments and an agenda for the years ahead.

ABSTRACT: Did you know that the Japan Fair Trade Commission (JFTC) was the first authority in the world which challenged Intel, the largest computer chip manufacturer? In 2005, JFTC issued a cease-and-desist order against the Japanese subsidiary of the company on the ground that it had been foreclosing the market by providing excessive rebate and monetary incentives to Personal Computer Manufactures. The conduct fell under the category of ‘private monopolization’, prohibited by Japanese competition law, equivalent to so-called unilateral conduct regulation. Following this, the Korea Fair Trade Commission in 2008 fined Intel Corporation 25 million dollars and in the following year the European Union (EU) fined Intel 1.5 billion dollars, for abusing its dominant position by using a similar method as above. And the US Federal Trade Commission (FTC) this year (2010) reached a settlement with Intel who had allegedly employed exclusionary conduct and thereby violated the FTC Act.

January 24, 2011 | Permalink | Comments (0) | TrackBack (0)

Sunday, January 23, 2011

Israeli Antitrust Authority Looking for a New Head -- Why Not Look Abroad?

Posted by D. Daniel Sokol

Ha'aretz reports on some interesting developments in the search for a new head of the Israeli Antitrust Authority.  I have a basic point for our Israeli readership -- do you remember Jacob Frankel and Stanley Fischer?  Both were former US profs (Chicago and MIT respectively) who did stints at the IMF as chief economist before heading the Israel Central Bank and both performed well in their Central Bank posts.  There are lots of American (and European and Canadian -- even South American and South African) law and econ academics and practitioners with lots of experience in this area who would make a great agency head.  A number of them speak and write Hebrew well too. Moreover, there are a number of Israeli IO econ profs and law professors in Europe, Canada and the US in case the Israelis prefer to choose an "internal" candidate.  If I were the Israeli government, I might give someone like Dan Rubinfeld, Dennis Carlton, Steve Salop, Eleanor Fox, Harry First, Ilene Gotts, Barbara Rosenberg, Dave Lewis, Alberto Heimler, Ariel Ezrachi or Bill Blumenthal a call asap.

HT (Ted Banks)

January 23, 2011 | Permalink | Comments (1) | TrackBack (0)