Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Monday, April 30, 2012

Pricing and Market Concentration: A New Estimation Strategy

Posted by D. Daniel Sokol

Michael J. Doane, Competition Economics LLC, Luke Froeb, Vanderbilt University - Owen Graduate School of Management, Gregory J. Werden, U.S. Department of Justice - Antitrust Division, and David M. Zimmer, Western Kentucky University - Department of Economics address Pricing and Market Concentration: A New Estimation Strategy.

ABSTRACT: Estimation of the effect of competition on prices is complicated by entry: High prices and profits attract entry, which reduces market concentration and prices. Regressing price on concentration, therefore, picks up both the effect of concentration on prices and the confounding effect of prices on concentration. This paper addresses this endogeneity problem by constructing an estimator that utilizes only variation in ownership concentration, while holding entry constant. The estimator is applied to the rental car industry, in which past mergers have created multi-brand firms. Despite significant market segmentation, overall market concentration, rather than segment concentration, explains rental car pricing. The estimated effect of concentration on prices is found to be roughly what simple theoretical models predict, and this estimate is used to predict the price effects of two recently proposed car rental mergers.

April 30, 2012 | Permalink | Comments (0) | TrackBack (0)

The Fallacy of 'Competition' in Agriculture

Posted by D. Daniel Sokol Michael E. Sykuta, University of Missouri at Columbia discusses The Fallacy of 'Competition' in Agriculture. ABSTRACT: Agriculture has long been viewed by economists as the best example of an industry characterized by perfect competition. However, the history of modern agriculture is marked with differences about just how competitive the industry is and whether competition is in fact a desirable thing. Present debates about competition in agriculture rally discontent with the competitive environment around the mantra of “free and fair competition.” But this populist ideal presents problems of its own. First, what is the economic meaning of “free and fair” competition? Second, how does the argument about the need for free and fair competition meet with the facts of how the agricultural industry behaves? And finally, what are the ethical implications of arguments for government intervention in the agricultural economy?

April 30, 2012 | Permalink | Comments (0) | TrackBack (0)

Sunday, April 29, 2012

Most Downloaded - TOP 10 Papers for SSRN Antitrust February 29, 2012 to April 29, 2012

Posted by D. Daniel Sokol

RECENT HITS (for all papers announced in the last 60 days) TOP 10 Most Downloaded Papers for Journal of Antitrust: Antitrust Law & Policy eJournal February 29, 2012 to April 29, 2012

Rank Downloads Paper Title

1 318 Occupy Wall Street and Antitrust
Maurice E. Stucke, University of Tennessee College of Law,

2 286 Why (Ever) Define Markets? An Answer to Professor Kaplow
Gregory J. Werden, U.S. Department of Justice - Antitrust Division,

3 264 Theories of Harm in European Competition Law: A Progress Report
Hans Zenger, Mike Walker, Charles River Associates (CRA), Charles River Associates, Incorporated ,

4 168 Chicago, Post-Chicago, and Beyond: Time to Let Go of the 20th Century
Bruce H. Kobayashi, Timothy J. Muris, George Mason University - School of Law, George Mason University School of Law,

5 134 Competition-Based Reform of the National Health Service in England: A One-Way Street?
Lucy Reynolds, Amir Attaran, Tamara K. Hervey, Martin McKee, London School of Hygiene and Tropical Medicine, University of Ottawa - Faculties of Law and Medicine, University of Sheffield - Faculty of Law, London School of Hygiene and Tropical Medicine,

6 120 Are Those Who Ignore History Doomed to Repeat it?
Peter Decherney, Nathan Ensmenger, Christopher S. Yoo, University of Pennsylvania, University of Texas at Austin - School of Information, University of Pennsylvania Law School,

7 117 The Rule of Reason and the Goals of Antitrust: An Economic Approach
Roger D. Blair, D. Daniel Sokol, University of Florida - Department of Economics, University of Florida - Levin College of Law,

8 111 Competition for Innovation
Herbert J. Hovenkamp, University of Iowa - College of Law,

9 101 Antitrust’s State Action Doctrine and the Ordinary Powers of Corporations
Herbert J. Hovenkamp, University of Iowa - College of Law,

10 95 The Strategic Use of Public and Private Litigation in Antitrust as Business Strategy
D. Daniel Sokol, University of Florida - Levin College of Law,

April 29, 2012 | Permalink | Comments (0) | TrackBack (0)