Antitrust & Competition Policy Blog

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

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Saturday, October 22, 2011

Corporate Counsel Corner: Shell's Anne Riley

Posted by D. Daniel Sokol

The second of my interviews (the first was with Steve Cernak of GM) for my Corporate Counsel's Corner is up. In this installment, I interview Anne Riley of Shell. If you are a corporate counsel in Antitrust/Competition and want to be interviewed, please send me an email. In the meantime, enjoy the interview with Anne.

CPI Executive Board member Danny Sokol continues CPI's new Corporate Counsel Corner feature; a series of interviews highlighting the corporate viewpoint on dealing with antitrust issues.

Our second installment features a conversation with Anne Riley. Anne is Associate General Counsel at Shell International. She has practiced antitrust law for Shell since 1982 and serves as leader of the global antitrust team. One of Anne's responsibilities includes developing and maintaining Shell's antitrust compliance program. Danny taps into Anne's experience with Shell's dedication to compliance, and then elicits Anne's insights into antitrust compliance for businesses generally. The conversation begins with how Shell has a built a solid base for compliance by enshrining ethical behavior within its Code of Conduct. Anne elaborates by discussing the business principles essential to Shell's success with compliance: Shell seeks to compete fairly and ethically. Danny picks up this theme by asking Anne to share her thoughts on how a GC captures the attention of the business unit to treat antitrust compliance seriously.

Expanding beyond Shell, Anne shares her views on the obstacles compliance enforcers face in the global arena, where there are conflicting antitrust positions depending on the jurisdiction. Anne debates the approach of setting common standards to apply them consistently, and identifies when such an application runs up against difficulties. She pinpoints the "greatest challenge across different legal regimes," but proposes a workable solution to this problem.

The interview wraps up with Danny's query on how competition agencies can improve compliance. Anne recommends better advocacy not just in the business community, but also in the public at large. Promoting advocacy can make antitrust compliance more than a government regulation and transform it into a societal norm. Related to this prescription is better coordination and dialogue between businesses and agencies, to ensure that the latter is not sending mixed signals with regard to competition and enforcement. The key is again to promote advocacy instead of punishment as deterrence.

To hear the full interview, follow the link below: Danny Sokol and Anne Riley interview

October 22, 2011 | Permalink | Comments (0) | TrackBack (0)

Friday, October 21, 2011

Tailoring the Essential Facilities Doctrine to the IT Sector: Compulsory Licensing of Intellectual Property Rights after Microsoft

Posted by D. Daniel Sokol

Inge Graef, Maastricht University - European Law has thoughts on Tailoring the Essential Facilities Doctrine to the IT Sector: Compulsory Licensing of Intellectual Property Rights after Microsoft.

ABSTRACT: Under the essential facilities doctrine, intellectual property right holders are forced to license their exclusive right to competitors when certain conditions established by the European Court of Justice are met. In the Microsoft case, the Court of First Instance applied the doctrine, but it lowered the standards for the imposition of a compulsory license considerably. In this article, it will be argued that the Court did this because of the exceptional market situation in the case. Looking at the economics of IT and the innovation process in this industry, it will be shown that compulsory licenses should be imposed on the basis of more lenient conditions in order to protect innovation and competition in the IT market. The market situation grown around the intellectual property right could indicate how strictly the conditions of the essential facilities should be applied in future intellectual property licensing cases. The stricter conditions established in earlier judgments like Magill and IMS Health may therefore still be valid in cases where no substantial entry barriers to the market are present.

October 21, 2011 | Permalink | Comments (0) | TrackBack (0)

Antitrust, Innovation, and Product Design in Platform Markets: Microsoft and Intel

Posted by D. Daniel Sokol

William Hepburn Page, University of Florida - Fredric G. Levin College of Law and Seldon J. Childers, University of Florida - Levin College of Law explore Antitrust, Innovation, and Product Design in Platform Markets: Microsoft and Intel.

ABSTRACT: The Antitrust Division’s Microsoft case and the Federal Trade Commission’s Intel case both rested on claims that antitrust intervention was necessary to preserve innovation in technological platforms at the heart of the personal computer. Yet, because those very platforms support markets that are among the most innovative in the American economy, injudicious intervention might well have jeopardized the very innovation that antitrust should promote. In this article, we review the role of platforms in technological innovation and consider how antitrust standards should apply to them. We then examine how Microsoft resolved antitrust issues affecting platform design at various stages of the litigation and show how that experience informed the allegations and the settlement in Intel. We are particularly concerned with the parallel claims in the two cases that Microsoft and Intel each used its control over the design of a dominant platform to hinder innovations that might have made a complementary product a better substitute for the platform. This exercise should help guide future applications of monopolization standards to high technology platforms.

October 21, 2011 | Permalink | Comments (0) | TrackBack (0)

‘Tally-Ho!’: UPP and the 2010 Horizontal Merger Guidelines

Posted by D. Daniel Sokol

James A. Keyte, Skadden, Arps, Slate, Meagher & Flom LLP and Kenneth B. Schwartz, Skadden, Arps, Slate, Meagher & Flom LLP have written ‘Tally-Ho!’: UPP and the 2010 Horizontal Merger Guidelines.

ABSTRACT: The 2010 Horizontal Merger Guidelines and their incorporation of upward pricing pressure (“UPP”), as discussed in Carl Shapiro’s article, The 2010 Horizontal Merger Guidelines: From Hedgehog to Fox in Forty Years, leave unanswered questions regarding whether the Guidelines are consistent with the Clayton Act – and whether a UPP screen provides a reliable basis in law or economics for identifying horizontal mergers that may raise competitive concern. The Guidelines’ departure from market definition and reasonable interchangeability in favor of consumer preferences is inconsistent with the Clayton Act and prevailing case law, including Brown Shoe and Oracle. Because of UPP’s absence of demonstrated reliability in predicting real-world competitive effects, it is premature to embrace UPP as a merger review tool for use by the FTC or the DOJ. Moreover, the Guidelines’ apparent willingness to embrace a UPP screen without providing clear consideration of how an inevitably positive UPP for merging competitors will be weighed against dynamic supply responses or efficiencies is cause for concern. Eliminating this potential counterweight to the UPP screen invites the serious potential in practice for the Agencies to adopt a “heads I win, tails you lose” application of the revised Guidelines.

October 21, 2011 | Permalink | Comments (0) | TrackBack (0)

Thursday, October 20, 2011

Department of Justice/Federal Trade Commission Issue Final Statement of Antitrust Policy Enforcement Regarding Accountable Care Organizations

Posted by D. Daniel Sokol

Final ACO rules are out.  According to the press release:

WASHINGTON — The Department of Justice and the Federal Trade Commission (FTC) today issued the final version of a joint policy statement detailing how the agencies will enforce U.S. antitrust laws with respect to new Accountable Care Organizations (ACOs). An ACO is an organization of health care providers that jointly offer services to reduce costs and improve the quality of patient care. Under the Affordable Care Act, ACOs will serve Medicare fee-for-service beneficiaries under the Medicare Shared Savings Program. 

Some ACOs may operate in the commercial market as well as in the Medicare program.  While ACOs may allow health care providers to innovate and improve care for both Medicare and commercially insured patients, under certain conditions ACOs could reduce competition and harm consumers through higher prices or lower quality care. Today’s guidance will help health care providers form procompetitive ACOs that benefit both Medicare beneficiaries and patients with private health insurance while protecting health care consumers from higher prices and lower quality. The Centers for Medicare and Medicaid Services (CMS) will also provide the agencies with data and information to help the agencies assess the competitive effects of all ACOs. The agencies will use this data and information, together with their traditional enforcement tools, to evaluate competitive concerns about an ACO’s formation or conduct and will take whatever enforcement action may be appropriate.

The Department of Justice and the FTC will continue to enforce vigorously the antitrust laws, consistent with the policy statement and with the goals of this innovative program to protect health care consumers from higher prices and lower quality care.

As proposed in a draft policy statement issued for public comment in March 2011, the agencies will not challenge as per se illegal a Shared Savings Program ACO that jointly negotiates with private insurers to serve patients in commercial markets if the ACO satisfies certain conditions.  The ACO must comply with CMS’s eligibility criteria and use the same governance and leadership structures and clinical and administrative processes to serve patients in both Medicare and commercial markets. For ACOs that meet those criteria, the agencies will apply a “rule of reason” analysis in analyzing a potential antitrust violation.

The final policy statement also preserves an antitrust “safety zone” for certain ACOs, as described in the earlier proposed policy statement.  With some exceptions, safety zone eligibility is based on the combined Primary Service Area (PSA) shares of ACO participants that provide a common service (e.g., the same physician specialty or the same inpatient service) to patients from the same PSA. To fall within the safety zone, an ACO’s independent participants that provide a common service must have a combined share of 30 percent or less of each common service in each participant’s PSA, where two or more participants provide that service to patients in that PSA.

The policy statement provides examples of conduct that, under certain circumstances, may raise competitive concerns.  All ACOs should refrain from, and implement safeguards against, conduct that may facilitate collusion among ACO participants in the sale of competing services outside of the ACO. Further, for ACOs that may have market power, the policy statement identifies additional conduct that, depending on the circumstances, may prevent private insurers from obtaining lower prices and better quality services for their enrollees.

The Department of Justice and the FTC will offer voluntary expedited 90-day reviews for newly formed ACOs that are seeking additional antitrust guidance. The final policy statement includes detailed instructions for any newly formed ACO that wishes to take advantage of the voluntary expedited antitrust review process.

The final policy statement incorporates public input and differs from the original proposal in two significant respects:

  • Expanded Coverage
  • The entire final policy statement, except voluntary expedited review, applies to all provider collaborations that are eligible and intend, or have been approved, to participate in the Medicare Shared Savings Program. The policy statement no longer applies only to collaborations formed after March 23, 2010 (the date on which the Affordable Care Act was enacted).

  • Shift from Mandatory to Voluntary Review
  • Because the Medicare Shared Savings Program final rule no longer requires a mandatory antitrust review for certain collaborations as a condition of entry into the Shared Savings Program, the final policy statement no longer contains provisions relating to mandatory antitrust review.

The agencies have made other minor modifications to the policy statement in response to feedback received during the public comment period.

October 20, 2011 | Permalink | Comments (0) | TrackBack (0)

Anticompetitive Innovation and the Quality of Invention

Posted by D. Daniel Sokol

Alan James Devlin, University of Dublin - Trinity College, University College Dublin (UCD) and Michael S. Jacobs, DePaul University - College of Law discuss Anticompetitive Innovation and the Quality of Invention.

ABSTRACT: When, if ever, should antitrust condemn an act of invention? If the law seeks to foster innovation, as surely it does, one might imagine that it would never question the legitimacy of a newly commercialized technology. Such a perspective rightly informs the law’s skeptical reception of claims of predatory innovation. Nevertheless, theory instructs that dominant companies may, in certain circumstances, engage in strategic product design founded on illusory acts of invention intended to exclude rivals on qualitatively improper grounds. A categorical antitrust immunity for exclusionary innovation would thus be inappropriate. Yet, if the law is to entertain such claims at all, it must be with a jaundiced eye, for Type I errors that punish genuine acts of innovation threaten to yield perverse consequences. Unfortunately, the judiciary has struggled unsuccessfully to craft a coherent body of jurisprudence governing claims of anticompetitive innovation.

This Article addresses the challenging question of how best to judge predatory-invention claims, and under what standard courts should go about the formidable task of weighing the quality of a challenged improvement. It rejects as variously unworkable and incongruous the conflicting legal standards espoused by the D.C., Second, Ninth, and Federal Circuits. Considering the pertinent issues of judicial error, ex ante legal uncertainty and their negative effects on innovation platforms, the cost and duration of monopolization proceedings vis-à-vis the rapidity of scientific progress, the serious remedial limitations afflicting a court that finds an antitrust violation, and the respective social gains and losses associated with strategic product designs, the Article advocates the following test: if an impugned act of invention does not foreclose, but merely disadvantages, rival products, it should be per se lawful. If the challenged innovation effectively excludes entry into the relevant market, an antitrust violation should follow if the plaintiff demonstrates, and the defendant fails to rebut, the absence of a genuine technological improvement. We define “genuine” as reflecting a calculable premium that consumers would pay for the improved-upon alternative(s), even if the extent of that price differential falls short of the level required to place the new product in a distinct antitrust market.

In determining the quality of an invention, courts should not draw an inference of technological merit from the fact that the U.S. Patent & Trademark Office has awarded a patent over the relevant product or process. Further, evidence of predatory intent should play no role in antitrust analysis of predation. Finally, we recommend jettisoning as unhelpful the concept of “coercion” as a limitation on using consumer demand for a product as a proxy for bona fide innovation.. The Article concludes by applying its test to what, in many observers’ minds, is the quintessential example of predatory innovation: product hopping in the pharmaceutical industry.

October 20, 2011 | Permalink | Comments (0) | TrackBack (0)

Exclusive Dealing and Market Foreclosure: Further Experimental Results

Posted by D. Daniel Sokol

Claudia M. Landeo, Yale University - Law School, University of Alberta - Department of Economics and Kathryn E. Spier, Harvard University - Law School have an interesting new paper on Exclusive Dealing and Market Foreclosure: Further Experimental Results.

ABSTRACT: This paper reports further experimental results on exclusive dealing contracts. We extend Landeo and Spier's (2009) work by studying Naked Exclusion in a strategic environment that involves a four-player, two-stage game. In addition to the roles of seller and buyers, our experimental environment includes the role of a potential entrant (a fourth passive player). Our findings are as follows. First, payoff endogeneity increases the likelihood of exclusion. Second, communication between the potential entrant and the buyers increases buyers' coordination on their preferred equilibrium (equilibrium with entry) and hence, reduces the likelihood of exclusion. Communication also induces more generous offers.

October 20, 2011 | Permalink | Comments (0) | TrackBack (0)

Doctors' remuneration schemes and hospital competition in two-sided markets with common network externalities

Posted by D. Daniel Sokol

David Bardey (University of Rosario (Bogota, Colombia) and Toulouse School of Economics), Helmuth Cremer (Toulouse School of Economics (IDEI and GREMAQ-CNRS)) and Jean-Marie Lozachmeur (Toulouse School of Economics (IDEI and GREMAQ-CNRS)) address Doctors' remuneration schemes and hospital competition in two-sided markets with common network externalities.

ABSTRACT: This paper uses a two-sided market model of hospital competition to study the implications of different remunerations schemes on the physicians side. The two-sided market approach is characterized by the concept of common network externality (CNE) introduced by Bardey et al. (2010). This type of externality occurs when occurs when both sides value, possibly with different intensities, the same network externality. We explicitly introduce effort exerted by doctors. By increasing the number of medical acts (which involves a costly effort) the doctor can increase the quality of service offered to patients (over and above the level implied by the CNE). We first consider pure salary, capitation or fee-for-service schemes. Then, we study schemes that mix fee-for-service with either salary or capitation payments. We show that salary schemes (either pure or in combination with fee-for-service) are more patient friendly than (pure or mixed) capitations schemes. This comparison is exactly reversed on the providersside. Quite surprisingly, patients always loose when a fee-for-service scheme is introduced (pure of mixed). This is true even though the fee-for-service is the only way to induce the providers to exert effort and it holds whatever the patientsvaluation of this effort. In other words, the increase in quality brought about by the fee-for-service is more than compensated by the increase in fees faced by patients.

October 20, 2011 | Permalink | Comments (0) | TrackBack (0)

Third Annual Hong Kong University - Norton Rose Competition Lecture - 6:30 - 7:30pm, Monday 21 November 2011

Posted by D. Daniel Sokol

Competition law and SMEs | by William E Kovacic, Former Chairman of the US Federal Trade Commission | Third Annual Hong Kong University - Norton Rose Competition Lecture

The Hong Kong University's Thomas Cheng and the Norton Rose Asia Competition Team are organizing the Third Annual Hong Kong Competition Lecture.  This year the speaker will be William E Kovacic, who recently retired from the US Federal Trade Commission and re-joined The George Washington University School of Law as Professor.

Professor Kovacic will speak about SMEs and competition law, which is one of the hot issues debated by the Hong Kong legislature in the context of the possible adoption of a Competition Ordinance.

Interested parties can register at www.hkcompetitionlecture.org

October 20, 2011 | Permalink | Comments (0) | TrackBack (0)

Consolidation and Price Discrimination in the Cable Television Industry

Posted by D. Daniel Sokol

David P.Byrne (University of Melbourne - Economics) has posted a paper on Consolidation and Price Discrimination in the Cable Television Industry.

ABSTRACT: This paper measures the impact of consolidation on cable television prices, product quality,profits and consumer welfare. I estimate a multi-product monopoly model using panel data on cable menus and costs in Canada from 1990 to 1996. Using counterfactual simulations, I find mean consumer welfare rises with acquisitions, as does welfare inequality across consumers. Scale economies are the primary driver of consolidation effects quantitatively, with firm heterogeneity in demand and costs having a smaller impact. Regional consolidation yields non-negligible welfare gains, particularly in rural markets where potential cable quality improvements and cost reductions are the largest.

October 20, 2011 | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 19, 2011

Access Pricing, Competition, and Incentives to Migrate from "Old" to "New" Technology

Posted by D. Daniel Sokol

Marc Bourreau (Telecom ParisTech and CREST-LEI, Paris), Carlo Cambini (Polytechnic University of Turin) and Pinar Dogan (Harvard University) explain Access Pricing, Competition, and Incentives to Migrate from "Old" to "New" Technology.

ABSTRACT: In this paper, we analyze the incentives of an incumbent and an entrant to migrate from an "old" technology to a "new" technology, and discuss how the terms of wholesale access affect this migration. We show that a higher access charge on the legacy network pushes the entrant firm to invest more, but has an ambiguous effect on the incumbent's investments, due to two conflicting effects: the wholesale revenue effect, and the business migration effect. If both the old and the new infrastructures are subject to ex-ante access regulation, we also find that the two access charges are positively correlated.

October 19, 2011 | Permalink | Comments (0) | TrackBack (0)

DOJ Hires Big Gun (Outside Lawyer) to Try AT&T/T-Mobile

Posted by D. Daniel Sokol

According to Bloomberg, DOJ Antitrust has hired Glenn Pomerantz, a partner at Munger, Tolles & Olson LLP, to block the merger.

I think that hiring an outside lawyer to litigate the case is a signal that DOJ expects to litigate this case out and not settle.  As I am teaching an antitrust mergers class this spring, AT&T/T-Mobile should be a highlight of my course.

 

October 19, 2011 | Permalink | Comments (0) | TrackBack (0)

A Reassessment of Flexible Price Evidence Using Scanner Data: Evidence from an Emerging Economy

Posted by D. Daniel Sokol

Gaston Chaumont, Miguel Fuentes, Felipe Labbé, and Alberto Naudon (all Central Bank of Chile) provide A Reassessment of Flexible Price Evidence Using Scanner Data: Evidence from an Emerging Economy.

ABSTRACT: In this paper we use a new database of scanner-level prices for the Chilean economy to characterize the microeconomic behavior of prices during a period of high inflation. We are able to characterize the price-setting behavior by supermarket chain. The evidence indicates that there is significant heterogeneity in the pricing behavior of individual retailers. Analyzing the source of shocks, results show that even though chain-specific shocks account for a sizable fraction of the observed variation, common (i.e. countrywide) shocks to individual goods and product categories are the most important factors to explain the behavior of prices. In other words, the pricing strategy of retailers seems less important in developing countries to explain microeconomic price dynamics.

October 19, 2011 | Permalink | Comments (0) | TrackBack (0)

American Antitrust Institute's 5th Annual Conference on the Future of Private Antitrust Enforcement at the National Press Club in Washington D.C. on December 7, 2011

Posted by D. Daniel Sokol

You are invited to attend the American Antitrust Institute's 5th Annual Conference on the Future of Private Antitrust Enforcement at the National Press Club in Washington D.C.  on December 7, 2011.   Please click here to learn more and to register.   

Since 2007, this event has served as a vehicle for the antitrust community to come together to network and obtain an updated and comprehensive profile of private enforcement as a business.

 

This year's program will cover some of the most current and relevant issues in antitrust, including generic entry cases, damage awards, and the ongoing challenges to class certification. There will be a two-hour afternoon panel focusing on settling class action litigation.  Speakers include:

  • Howard Bashman, Law Offices of Howard J. Bashman
  • Richard Brunell, Director of Legal Advocacy, American Antitrust Institute
  • John M. Connor, Professor of Industrial Economics, Purdue University
  • James L. Cooper, Partner, Arnold & Porter LLP
  • Eric L. Cramer, Shareholder, Berger & Montague, P.C.
  • Joshua P. Davis, Associate Dean for Faculty Scholarship, Professor, and Director of the Center for Law and Ethics, University of San Francisco School of Law
  • Kenneth G. Elzinga, Robert C. Taylor Professor of Economics, University of Virginia
  • Bert Foer, President, American Antitrust Institute
  • Eric D. Green, Principal, Resolutions, LLC
  • Dan Gustafson, Gustafson Gluek PLLC
  • Louis Kaplow, Finn M. W. Caspersen and Household International Professor of Law and Economics, Harvard Law School
  • Robert Lande, Venable Professor of Law, University of Baltimore; AAI Director
  • Jeffrey Leitzinger, Managing Director, Econ One
  • Roberta D. Liebenberg, Senior Partner, Fine Kaplan and Black
  • Scott Martin, Shareholder, Greenberg Traurig  
  • Linda P. Nussbaum, Director, Grant & Eisenhofer
  • William H. Page, Marshall M. Criser Eminent Scholar and Associate Dean for Faculty Development, University of Florida Levin College of Law
  • J. Douglas Richards, Partner, Cohen Milstein Sellers & Toll PLLC
  • The Honorable James M. Rosenbaum (Ret.), JAMS; Former Sr. U. S. District Judge, District of Minnesota
  • Maurice Schweitzer, Professor of Operations and Information Management, Cecilia Yen Koo Professor, the Wharton School at the University of Pennsylvania
  • Daniel A. Small, Partner, Cohen Milstein Sellers & Toll PLLC
  • Joe Tabacco, Managing Partner, Berman DeValerio  
  • John W. Treece, Partner, Sidley Austin LLP  

October 19, 2011 | Permalink | Comments (0) | TrackBack (0)

Precautionary price stickiness

Posted by D. Daniel Sokol

James Costain (Banco de Espana) and Anton Nakov (Banco de Espana) address Precautionary price stickiness.

ABSTRACT: This paper proposes two models in which price stickiness arises endogenously even though firms are free to change their prices at zero physical cost. Firms are subject to idiosyncratic and aggregate shocks, and they also face a risk of making errors when they set their prices. In our first specification, firms are assumed to play a dynamic logit equilibrium, which implies that big mistakes are less likely than small ones. The second specification derives logit behavior from an assumption that precision is costly. The empirical implications of the two versions of our model are very similar. Since firms making sufficiently large errors choose to adjust, both versions generate a strong "selection effect" in response to a nominal shock that eliminates most of the monetary nonneutrality found in the Calvo model. Thus the model implies that money shocks have little impact on the real economy, as in Golosov and Lucas (2007), bu! t fits microdata better than their specification.

October 19, 2011 | Permalink | Comments (0) | TrackBack (0)

Best Sukkot Music Video

Posted by D. Daniel Sokol

On the suggestion of David Balto (Center for American Progress), after I posted the best of music videos for Rosh Hashana as picked by a panel of expert judges, my daughters Raquel and Gabriela, I have decided to bring back the expert judges to rank the best Sukkot music videos.  I note that as with children's books, Sukkot (Feast of Tabernacles) is not a holiday with many music videos.

The top pick (unanimous) is the following:

 

October 19, 2011 | Permalink | Comments (0) | TrackBack (0)

Advertising Expenditure and Consumer Prices

Posted by D. Daniel Sokol

Ferdinand Rauch (LSE) explores Advertising Expenditure and Consumer Prices.

ABSTRACT: This paper studies the effect of a change in the marginal costs of advertising on advertising expenditures of firms and consumer prices across industries. It makes use of a unique policy change that caused a decrease of the taxation on advertising expenditures in parts of Austria and a simultaneous increase in other parts. Advertising expenditures move immediately in the opposite direction to the marginal costs of advertising. Simultaneously the price reaction to advertising is negative in some industries (food, education) and positive in other industries (alcohol, tobacco, transportation, hotels and restaurants), depending on the information content of advertising. The paper reconciles these findings using a model that contains informative and persuasive forces of advertising.

October 19, 2011 | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 18, 2011

Examples & Explanations: Antitrust

Posted by D. Daniel Sokol

Chris Sagers (Cleveland Marshall Law) has a new book that is of use to students on Examples & Explanations: Antitrust.

Examples & Explanations: Antitrust is designed to be accessible to students with no background in economics, but also sophisticated enough for advanced courses on antitrust law. Author Christopher L. Sagers provides straightforward introductions to the principles of antitrust law and uses the proven-effective Examples & Explanations pedagogy to illustrate the practical applications of the principles described under each topic.

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

Geographic concentration and firm survival

Posted by D. Daniel Sokol

Dakshina G. De Silvay (Texas Tech) and Robert P. McComb (Texas Tech) explain Geographic concentration and firm survival.

ABSTRACT: If localization economies are present, firms within denser industry concentrations should exhibit higher levels of performance than more isolated firms. Nevertheless, research in industrial organization that has focused on the influences on firm survival has largely ignored the potential effects from agglomeration. Recent studies in urban and regional economics suggests that agglomeration effects may be very localized. Analyses of industry concentration at the MSA or county-level may fail to detect important elements of intra-industry firm interaction that occur at the sub-MSA level. Using a highly detailed dataset on firm locations and characteristics for Texas, this paper analyses agglomeration effects on firm survival over geographic areas as small as a single mile radius. We find that greater firm density within very close proximity (within 1 mile) of firms in the same industry increases mortality rates while greater concentration over larger distances reduces mortality rates.

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

Competitive Pressure: Competitive Dynamics as Reactions to Multiple Rivals

Posted by D. Daniel Sokol

Leon Zucchini (University of Munich) and Tobias Kretschmer (University of Munich) describe Competitive Pressure: Competitive Dynamics as Reactions to Multiple Rivals.

ABSTRACT: Competitive dynamics research has focused primarily on interactions between dyads of firms. Drawing on the awareness-motivation-capability framework and strategic group theory we extend this by proposing that firms’ actions are influenced by perceived competitive pressure resulting from actions by several rivals. We predict that firms’ action magnitude is influenced by the total number of rival actions accumulating in the market, and that this effect is moderated by strategic group membership. We test this using data on the German mobile telephony market and find them supported: the magnitude of firm’s actions is influenced by a buildup of actions by multiple rivals, and firms react more strongly to strategically similar rivals.

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