Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, February 26, 2011

Information Exchanges Among Competitors under the New Horizontal Guidelines – A Few Further Thoughts

Posted by D. Daniel Sokol

Andreas Reindl provides Information Exchanges Among Competitors under the New Horizontal Guidelines – A Few Further Thoughts. 

ABSTRACT: In December 2010 the Commission adopted the revised Horizontal Guidelines with a new chapter on information exchanges. The draft Guidelines already proposed sound principles for the analysis of information exchanges, as I explained in my earlier comment. I believe that the final text is a further improvement on the draft Guidelines in some important aspects. The Commission deserves credit for being open and receptive to comments and for taking suggestions on board, to a much greater extent than during recent other drafting exercises.

In this contribution I briefly comment on the substantially revised and expanded discussion in the Horizontal Guidelines on how to handle unilateral information disclosures, a complex question of great practical relevance for market participants. I will also provide some thoughts on the conceptual/systemic question, which has been highlighted by the Horizontal Guidelines and the debate surrounding them, whether European competition law continues to compartmentalize analysis in light of applicable Commission instruments and neglects general principles that should uniformly inform all competition analysis.

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

Friday, February 25, 2011

Spatial Cournot Competition and Consumers’ Heterogeneity: A Note

Posted by D. Daniel Sokol

Corrado Benassi (Dipartimento di Scienze Economiche, Alma Mater Studiorum - Università di Bologna; The Rimini Centre for Economic Analysis) theorizes Spatial Cournot Competition and Consumers’ Heterogeneity: A Note.

ABSTRACT: We consider the standard model of spatial Cournot competition and show that a necessary condition for dispersion equilibria is that the distribution be not unimodal.

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

Product differentiation decisions under ambiguous consumer demand and pessimistic expectations

Posted by D. Daniel Sokol

Michal Król (Economics, The University of Manchester) addresses Product differentiation decisions under ambiguous consumer demand and pessimistic expectations.

ABSTRACT: This paper examines the e¤ects of violating the common prior assumption embedded in the Product differentiation and location deci- sions under demand uncertainty model by Meagher and Zauner (Journal of Economic Theory [2004]). In particular, a situation is discussed in which the firms do not know the exact distribution of the location and price elasticity of consumer demand, but resolve the resulting ambiguity using the Arrow and Hurwicz -maxmin criterion When the firms are sufficiently pessimistic ( is high enough), the results are in contrast with the existing literature. In particular, an increase of demand location uncertainty decreases the equilibrium product differentiation, as well as the resulting second-stage equilibrium prices and profits for any realisation of consumer demand, although the e¤ect is dampened by a possibility of higher price elasticity of demand. Furthermore, pessimism could serve as a form of strategic deterrence, because any …rm that can commit itself to a more pes- simistic approach increases its equilibrium share of the market and becomes better o¤ at the competitor’s expense. However, this generates a Prisoner's Dilemma situation, since both firms lose when they both become more pes-simistic, suggesting that the presence of ambiguity can make the market more competitive.

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

Regulated Competition Under Increasing Returns to Scale

Posted by D. Daniel Sokol

Thomas Greve, University of Copenhagen - Department of Economics and Hans Keiding, University of Copenhagen - Department of Economics discuss Regulated Competition Under Increasing Returns to Scale.

ABSTRACT: This paper proposes a mechanism for the regulation of firms in the context of asymmetric information with the aim to induce firms to report its private information truthfully and to save information rents. Baron and Myerson (1982) have considered this problem and derived an optimal policy for regulating a monopolist with unknown costs. They show that it was possible to create a regulatory mechanism that induced the firm to report its private information truthfully. To secure this, a part of the mechanism is to pay the firm a subsidy. This article presents a regulatory mechanism which explores competition in the context of an industry characterized by increasing returns to scale. In contrast to the model in this article, the Baron and Myerson model doesn’t consider increasing returns to scale. In equilibrium each firm chooses to report truthfully without receiving any subsidy. However, the use of competition gives rise to an efficiency lost.

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

Thursday, February 24, 2011

Modeling Processor Market Power and the Incidence of Agricultural Policy: A Non-parametric Approach

Posted by D. Daniel Sokol

Rachael E. Goodhue, University of California at Davis-Agricultural and Resource Economics and Carlo Russo, Università degli Studi di Cassino-Facoltà di Economia discuss Modeling Processor Market Power and the Incidence of Agricultural Policy: A Non-parametric Approach.

ABSTRACT: This paper examines interactions between market power and agricultural policy in the U.S. wheat flour milling industry using a non-parametric approach. The analysis focuses on marketing loan and pre-1986 deficiency payment programs; farmers’ payments from these programs are dependent on whether or not the market price exceeds a “policy” price. It assesses if the payments trigger a change in the underlying economic behavior of the milling industry, and any resulting change in the flour-wheat price margin. The analysis compares the outcomes of using constrained and unconstrained sliced inverse regressions in order to identify the significant factors affecting millers' pricing behavior. In both cases, the link functions are then estimated using a non-parametric regression of prices on these factors. Constraining the factors in the sliced inverse regression in order to generate coefficients that are easily interpreted using economic theory does not affect the results. Based on the SIR factors, millers were able to extract an additional $0.24/cwt. of flour by increasing their marketing margins in years farmers received program payments. Based on the CIR factors, the increase in the marketing margin was $0.23/cwt. In both cases the increase was approximately 10 percent of the estimated marketing margin in years farmers received program payments.

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

The Obama Administration's Innovation Policy

Posted by D. Daniel Sokol

The Obama Administration's Innovation Policy

Event


In his 2011 State of Union Address, President Obama warned of a "Sputnik moment" and called for the nation to confront our international economic competitiveness and innovation policy challenges. As a national debate on this challenge gets underway, ITIF will host key Obama Administration officials charged with developing and overseeing the Administration's innovation policy and top private sector leaders for a discussion of the Administration's recently updated "Strategy for American Innovation." The forum will focus on key elements of the Administration's strategy: 1) Investing in the Building Blocks of American Innovation; 2) Promoting Competitive Markets that Spur Productive Entrepreneurship and 3) Catalyzing Breakthroughs for National Priorities.

Date/Time:
Wednesday, March 9, 2011
8:30 AM-11:30 AM (add to calendar)

Location:
Hamilton Crowne Plaza
1001 14th Street NW
Washington, DC 20005 (map)

Presenters:

Aneesh Chopra
U.S. Chief Technology Officer and Associate Director for Technology in the White House Office of Science and Technology Policy

Austan Goolsbee
Chairman, Council of Economic Advisors

Phillip J. Weiser
Senior Advisor to the Director for Technology and Innovation, National Economic Council

Moderator:

Robert D. Atkinson

President and Founder, Information Technology and Innovation Foundation

Respondents:
TBD


Register for the event.

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

Does the Packers and Stockyards Act Require Antitrust Harm?

Posted by D. Daniel Sokol

Herb Hovenkamp (Iowa Law) asks Does the Packers and Stockyards Act Require Antitrust Harm?

ABSTRACT: The Packers and Stockyards Act was enacted in 1921. Congress was plainly influenced by the 1919 publication of a Federal Trade Commission Report on the meatpacking industry. Consistent with the FTC’s jurisdiction and concerns, the Report dealt with deceptive and unfair practices as well as practices that were believed to violate the antitrust laws. The language of the PSA does much the same, mixing the two. Of its seven specific prohibitions, three contain antitrust-like provisions requiring a lessening of competition. Two others reach unfair and tort-like conduct without any requirement of harm to competition. The remaining two reach both anticompetitive and tortuous conspiracies. One of the conspiracy provisions plainly reaches price fixing and market division agreements. The other plainly reaches a full range of tortious and anticompetitive conduct without stating a harm to competition requirement.

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

ACLE Conference - Call for Papers - deadline for submission is March 1 2011

Posted by D. Daniel Sokol

 

ACLE Conference - Call for Papers

The Amsterdam Center for Law & Economics at the University of Amsterdam organizes its 7th annual Competition & Regulation meeting on the topic:

 

Competition Policy for Emerging Economies: When and How?

May 20, 2011
University of Amsterdam

 

Keynote Speakers include:

Frederic Jenny (ESSEC Business School)
Daniel Sokol (University of Florida)
Michal Gal (University of Haifa)

 

Roundtable discussion chaired by William Kovacic (FTC) between the keynote speakers, joined by Andrew Gavil (Howard University), Ioannis Lianos (UCL), Sean Ennis (OECD) and Hassan Qaqaya (UNCTAD).

 

The objective of this C&R Meeting is to bring together renowned specialists in emerging competition law enforcement and its interrelationship to economic development in conference to debate. We also welcome practitioners with a keen interest in this specialty subject, including (new) agency officials, government officials interested in competition policy as a development aid tool, competition lawyers and consultants and scholars working on these research topics.

Call for Papers – NOW OPEN

Academics, private practitioners and competition officials, both with a legal and an economic background, are encouraged to submit their research for inclusion in the conference program. We welcome all original research (in progress).

 

Submissions for inclusion in the program (full papers or abstracts) may be sent together with the author’s address information to: [email protected]

 

The deadline for submission is March 1 2011. Decisions on acceptance to the program will be communicated mid March. 

 

Call for Papers 

 

The scientific program committee, which consists of Maarten Pieter Schinkel (chair), Rein Wesseling, Benjamin van Rooij, Jeroen van de Ven, Kati Cseres and Jo Seldeslachts, will produce a full day program based on the response to this call. Local organizers are Martijn Han and Michael Frese.

 

More Information

For more information, please visit the ACLE conference website: http://emergingagencies.acle.nl

 

Relevant information on the preliminary program, registration, fees and accommodation will be posted on this website as we progress towards the conference date. 

 

Please accept our apologies for the inconvenience should you, despite our every effort to clean our database for doubles, receive this message more than once.

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

Internet Retailing and ‘Free Riding’: A Post-Leegin Antitrust Analysis

Posted by D. Daniel Sokol

Marina Lao (Seton Hall Law) has posted Internet Retailing and ‘Free Riding’: A Post-Leegin Antitrust Analysis.

ABSTRACT: This article is adapted for the Journal of Internet Law from a more in-depth article that the author has published: Resale Price Maintenance: The Internet Phenomenon and Free Rider Issues, 55 Antitrust Bulletin 473 (2010). It examines the characteristics of the Internet, online retailing, and the issues they raise pertaining to the free rider justification. It argues that, for most products, the abundance of information available online should diminish the need for in-store demonstrations or knowledgeable sales assistance and, thus, the frequency of free riding. Several recent marketing studies seem to confirm this analysis and to further suggest that free riding may be synergistic, not harmful, calling into question the usual free rider justification for resale price fixing agreements. Even if one rejects these insights and views free riding from a conventional perspective, RPM is not particularly effective in eliciting from online retailers the types of brick-and-mortar services upon which they are allegedly prone to free ride. In any event, there are other less anti-competitive means of achieving the objective of inducing dealer services. Given the many benefits of Internet retailing and the risk that prohibiting discounting would impede its growth, it is important not to allow the rule of reason to devolve into a de facto legality rule for RPM. This article concludes by suggesting a way forward that would avoid this result without running afoul of Leegin.

 

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

The Cartel Project: Report on a Survey of the Australian Public Regarding Anti-Cartel Law and Enforcement

Posted by D. Daniel Sokol

Caron Y. Beaton Wells, Melbourne Law School, Fiona Haines, University of Melbourne - Department of Criminology, Christine Parker, Melbourne Law School - University of Melbourne, and Chris Platania-Phung, University of Melbourne discuss The Cartel Project: Report on a Survey of the Australian Public Regarding Anti-Cartel Law and Enforcement.

ABSTRACT: This survey has been undertaken in connection with a research project (The Cartel Project) that investigates various aspects of the criminalisation of cartel conduct in Australia. In section 1 of the Report we set out the background to cartel criminalisation in Australia (section 1.1) and explain the aims and components of The Cartel Project (section 1.2). We also set out why we decided to undertake this survey as part of The Cartel Project and, in particular, why we regard empirical evidence of public opinion on cartel criminalisation as relevant from various perspectives (section 1.3). The scope of the survey, as determined by the questions we were seeking to answer, is explained (section 1.4), and finally there is a note on the purpose and scope of this report (section 1.5).

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

Wednesday, February 23, 2011

Competition Law and the Pharmaceutical Industry conference - 17 May 2011

Posted by D. Daniel Sokol

The conference will be held on 17 May 2011 from 10am to 6pm in the Mary Sunley Building, St Catherines College, Manor Road, Oxford. The Registration Fee includes all conference materials, refreshments and a buffet lunch.

The Oxford Centre for Competition Law and Policy will host a one day conference on Competition Law and the Pharmaceutical Industry on Tuesday, 17 May 2011.

The event is scheduled to start at 10h00 and will feature leading academics, practitioners and competition officials. Confirmed speakers include:

-Steven Anderman, University of Essex

-Ulf Bernitz, IECL, University of Oxford

-Michael Carrier – Rutgers University

-Elisabeth Eklund - Advokatfirman Delphi, Sweden

-Hugh M. Hollman - US FTC

-Helen Jenkins – OXERA

-Hans Henrik Lidgard, University of Lund

-Ian Karet - Linklaters

-Greg Perry - European Generic Medicines Association

-Julia Pike - Sandoz International GmbH

-Simon Priddis - Freshfields Bruckhaus Deringer

-Dominik Schnichels - EU Commission

-Steve Shadowen - Hangley Aronchick Segal & Pudlin

-Geoffrey Steadman – UK OFT

-Pat Treacy - Bristows

-Mark Williams – NERA

 

Places for this conference are limited and early registration is advisable. To register, please visit the conference registration and payment page. The registration fee of £35 includes the conference materials, refreshments and a buffet lunch. 

February 23, 2011 | Permalink | Comments (0) | TrackBack (0)

Vertical Integration with Complementary Inputs

Posted by D. Daniel Sokol

Markus Reisinger, University of Munich - Economics Department, CESifo (Center for Economic Studies and Ifo Institute for Economic Research) and Emanuele Tarantino, University of Bologna - Department of Economics, Tilburg Law and Economics Center (TILEC) address Vertical Integration with Complementary Inputs.

ABSTRACT: We analyze the profitability and welfare consequences of vertical integration when downstream firms deal with suppliers of complementary intermediate goods that exert market power. We show that the results in this setting are markedly different from those of the received literature that deals only with substitute intermediate goods. In particular, vertical integration is not necessarily profitable since the integrated firm faces the problem that the complementary input producer expropriates the higher profits earned by the integrated chain on the downstream market. Interestingly, this effect is particularly strong is the integrated firm is very efficient. We also show that if vertical integration is profitable, foreclosure of downstream rivals is no longer the optimal strategy of the integrated firm. Instead, the integrated firm may set prices even below marginal costs thereby rendering vertical integration pro-competitive, which has profound consequences on antitrust policy.

February 23, 2011 | Permalink | Comments (0) | TrackBack (0)

Monopolistic Competition and Product Diversity: Review and Extension

Posted by D. Daniel Sokol

Winston W. Chang, State University of New York - Department of Economics has posted Monopolistic Competition and Product Diversity: Review and Extension.

ABSTRACT: The modeling of monopolistic competition has contributed to rapid developments in numerous fields of economics, notably macroeconomics, international trade, industrial organization, economic growth and economic geography. This paper provides a brief survey and synthesis of the original monopolistic competition models and their subsequent developments, including the works of Spence (1976a, 1976b) and Dixit and Stiglitz (1977) that are based on the "love-of-variety" approach, the works of Lancaster (1966, 1979) that are based on the "love-of-characteristic" approach, and the large-group monopolistic competition models of Hart (1979, 1985a, 1985b), among others. This paper will also examine some of the special utility functions frequently used in the literature on models of monopolistic competition. Perhaps owing to the complexity of these models, the literature lacks a broad and systematic coverage of this essential subject. This paper aims to help fill the gap.

February 23, 2011 | Permalink | Comments (0) | TrackBack (0)

Competition in the Turkish mobile telecommunications market: Price elasticities and network substitution

Posted by D. Daniel Sokol

Justus Haucap (Heinrich-Heine-University of Düsseldorf, Düsseldorf Institute for Competition Economics), Ulrich Heimeshoff (Heinrich-Heine-University of Düsseldorf, Düsseldorf Institute for Competition Economics), and Mehmet Karacuka (Ege University, Department of Economics) have written on Competition in the Turkish mobile telecommunications market: Price elasticities and network substitution.

ABSTRACT: This paper estimates demand elasticities for the Turkish mobile telecommunication market. In contrast to most other studies, firm level data is used to estimate dynamic panel data models including instrumental variable techniques. Both short- and long-run elasticities are calculated, yielding a long-run price elasticity of -0.72 for the post-paid market and of -0.33 for the pre-paid market. The short-run price elasticity is estimated to be -0.36 for the post-paid market and -0.20 for the pre-paid market. In addition, evidence of fixed to mobile traffic substitution is provided for consumers that use pre-paid cards.

February 23, 2011 | Permalink | Comments (0) | TrackBack (0)

Semi-collusion in media markets

Posted by D. Daniel Sokol

Ralf Dewenter, Justus Haucap, and Tobias Wenzel (all Dusseldorf Institute for Competition Economics) investigate Semi-collusion in media markets.

ABSTRACT: This paper explores the effects that collusion can have in newspaper markets where firms compete for advertising as well as for readership. We compare three modes of competition: i) competition in the advertising and the reader market, ii) semi-collusion over advertising (with competition in the reader market), and iii) (full) collusion in both the advertising and the reader market. We find that semi-collusion leads to less advertising (but higher advertising prices) and lower copy prices which is beneficial for readers. Under certain circumstances, semi-collusion may even benefit advertisers as newspaper circulation is higher. In addition, total welfare may rise due to semi-collusion. Results under full collusion are ambiguous. However, even under full collusion newspaper copy prices may decrease and welfare may increase.

February 23, 2011 | Permalink | Comments (0) | TrackBack (0)

Tuesday, February 22, 2011

The Good, the Bad, and the Ugly: Comments to the Commission's Horizontal Guidelines-Standardization

Posted by D. Daniel Sokol

Jorge Padilla (LECG) has posted The Good, the Bad, and the Ugly: Comments to the Commission's Horizontal Guidelines-Standardization.

ABSTRACT: This note sets out my comments to Section 7 of the Guidelines on the applicability of Article 101 of the TFEU to horizontal co-operation agreements ("Guidelines") and, in particular, to the criteria for assessment of standardization agreements which (a) involve intellectual property rights ("IPR"), (b) establish technical interoperability and compatibility between products and systems, and (c) give rise to a de facto industry standard.

There are many statements in these Guidelines that I find helpful and support. However, I disagree with other statements. I am concerned that the policy principles contained in those statements may chill innovation and undermine the process of standardization. Finally, there are many statements that I find confusing and where I would appreciate some further clarification.

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

Price effects of Dutch hospital mergers, An ex post assessment of hip surgery

Posted by D. Daniel Sokol

Ron Kemp (Netherlands Competition Authority) and Astrid Severijnen (Netherlands Competition Authority) provide Price effects of Dutch hospital mergers, An ex post assessment of hip surgery.

ABSTRACT: This study analyses price effects of two mergers in the Dutch healthcare industry. We investigate whether the merging hospitals raised their prices for hip surgery after the merger and, if so, how patients react to this higher price. For the Ziekenhuis Hilversum – Ziekenhuis Gooi-Noord merger, we found a statistically significant price increase for hip surgery, whereas for the Erasmus MC ziekenhuis – Havenziekenhuis Rotterdam merger, we did not find a significant price increase due to the merger. For both mergers, travel behaviour of patients prior and after the merger increased only slightly. As we studied only one treatment, hip surgery, we cannot draw conclusions on the overall price effect of the mergers.

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

Antitrust Seminar on ecent Developments on Cartels - April 11, 2011 in Buenos Aires

Competencia_eng

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

The roles of price points and menu costs in price rigidity

Posted by D. Daniel Sokol

Edward S. Knotek II (Federal Reserve Bank of Kansas City) explains The roles of price points and menu costs in price rigidity.

ABSTRACT: Macroeconomic models often generate nominal price rigidity via menu costs. This paper provides empirical evidence that treating menu costs as a structural explanation for sticky prices may be spurious. Using supermarket scanner data, I note two empirical facts: (1) price points, embodied in nine-ending prices, account for more than 60 percent of prices; (2) at the conclusion of sales, post-sale prices return to their pre-sale levels nearly 90 percent of the time. I construct a model that nests roles for menu costs and price points and estimate model variants via simulated method of moments. Excluding the two facts yields a statistically and economically significant role for menu costs in generating price rigidity. Incorporating the two facts yields an incentive to set nine-ending prices two orders of magnitude larger than the menu costs in this model. In this setting, the price point model can match the two stylized fact! s, but menu costs are effectively irrelevant as a source of price rigidity. The choice of a mechanism for price rigidity matters for aggregate dynamics. 

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

Nash Equilibrium and Robust Stability in Dynamic Games: A Small-Gain Perspective

Posted by D. Daniel Sokol

Iasson Karafyllis (Department of Environmental Engineering, Technical University of Crete), Zhong-Ping Jiang (Department of Electrical and Computer Engineering, Polytechnic Institute of New York University) and George Athanasiou (TT Hellenic Postbank) develop Nash Equilibrium and Robust Stability in Dynamic Games: A Small-Gain Perspective.

ABSTRACT: This paper develops a novel methodology to study robust stability properties of Nash equilibrium points in dynamic games. Small-gain techniques in modern mathematical control theory are used for the first time to derive conditions guaranteeing uniqueness and global asymptotic stability of Nash equilibrium point for economic models described by functional difference equations. Specification to a Cournot oligopoly game is studied in detail to demonstrate the power of the proposed methodology.

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