Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Monday, July 2, 2012

The Smart Grid, Entry, and Imperfect Competition in Electricity Markets

Posted by D. Daniel Sokol

Hunt Allcott (NYU) explores The Smart Grid, Entry, and Imperfect Competition in Electricity Markets.

ABSTRACT: Most US consumers are charged a near-constant retail price for electricity, despite substantial hourly variation in the wholesale market price. The Smart Grid is a set of emerging technologies that, among other effects, will facilitate "real-time pricing" for electricity and increase price elasticity of demand. This paper simulates the effects of this increased demand elasticity using counterfactual simulations in a structural model of the Pennsylvania-Jersey-Maryland electricity market. The model includes a different approach to the problem of multiple equilibria in multi-unit auctions: I non-parametrically estimate unobservables that rationalize past bidding behavior and use learning algorithms to move from the observed equilibrium counterfactual bid functions. This routine is nested as the second stage of a static entry game that models the Capacity Market, an important element of market design in some restructured el! ectricity markets. There are three central results. First, I find that an increase in demand elasticity could actually increase wholesale electricity prices in peak hours, contrary to predictions from short run models, while decreasing Capacity Market prices and total entry. Second, although the increased demand elasticity from the Smart Grid reduces producers' market power, in practice this would be a small channel of efficiency gains relative to forestalled entry. Third, I find that the gross welfare gains from moving a typical consumer to the Smart Grid, under the assumed demand parameters and before subtracting out the initial infrastructure costs, are about 10 percent of the consumer's total wholesale electricity costs.

July 2, 2012 | Permalink | Comments (0) | TrackBack (0)

Demand shifting across flights and airports in a spatial competition model

Posted by D. Daniel Sokol

Diego Escobariy (University of Texas - Pan American) and Sang-Yeob Lee (Korea Institute of Public Finance) have written on Demand shifting across flights and airports in a spatial competition model.

ABSTRACT: This paper investigates the nature of day-to-day competition between flights using a unique panel data set on prices and inventories. We use instrumental variables methods and several spatial autoregressive models (SAR) to estimate price reaction functions. The primary source of product differentiation is departure time. After controlling for flight-specific characteristics and various sources of price dispersion, we find important evidence of demand shifting between competing flights. Most of the shift is being captured by flights scheduled to depart within a 3-hour window. We find no evidence of demand shifting between airports.

July 2, 2012 | Permalink | Comments (0) | TrackBack (0)

USING ANTITRUST ENFORCEMENT PRUDENTLY IN HIGH-TECH MARKETS: The Flaws of a Potential Antitrust Case Against Google

How large is the magnitude of fixed-mobile call substitution? Empirical evidence from 16 European countries

Posted by D. Daniel Sokol

Anne-Kathrin Barth, Duesseldorf Institute for Competition Economics and Ulrich Heimeshoff, Duesseldorf Institute for Competition Economics provide analysis on How large is the magnitude of fixed-mobile call substitution? Empirical evidence from 16 European countries.

ABSTRACT: This paper investigates the degree of fixed-mobile call substitution (FMCS). We use quarterly data from 2004 to mid 2010 on 16 mainly Western European countries. By applying dynamic panel data techniques, we are able to estimate short-and long-run elasticities. The own-price and cross-price elasticities found give strong empirical evidence for substitutional effects towards mobile services. In particular, the estimated cross-price elasticities of the mobile price on the fixed line call demand are relatively large compared to other studies.

July 2, 2012 | Permalink | Comments (1) | TrackBack (0)

Sunday, July 1, 2012

Most Downloaded Antitrust papers on SSRN (for all papers announced in the last 60 days) May 2, 2012 to July 1, 2012

Posted by D. Daniel Sokol

Rank Downloads Paper Title
1 334
Is Pepsi
Really a Substitute for Coke? Market Definition in Antitrust and IP


Mark A. Lemley, Mark P. McKenna,
Stanford Law School, Notre Dame Law
School,
Date posted to database: April 11, 2012
Last
Revised:
June 6, 2012
2 161
Cartels,
Corporate Compliance and What Practitioners Really Think About Enforcement


D. Daniel Sokol,
University of Florida - Levin College of
Law,
Date posted to database: June 7, 2012
Last
Revised:
June 7, 2012
3 152
The
Regulation/Competition Interaction

Javier Tapia, Despoina Mantzari,
Centre for Regulation and Competition,
Universidad de Chile, University College London-Faculty of Laws,
Date
posted to database:
April 25, 2012
Last Revised: April 25, 2012
4 150
The
Antitrust/Consumer Protection Paradox: Two Policies at War with Each Other


Joshua D. Wright,
George Mason University - School of Law,
Faculty,
Date posted to database: May 31, 2012
Last
Revised:
May 31, 2012
5 133
Abandoning
Antitrust's Chicago Obsession: The Case for Evidence-Based Antitrust


Joshua D. Wright,
George Mason University - School of Law,
Faculty,
Date posted to database: May 3, 2012
Last
Revised:
June 14, 2012
6 128
A Roadmap
to the Smartphone Patent Wars and FRAND Licensing

Michael A. Carrier,
Rutgers University School of Law -
Camden,
Date posted to database: May 4, 2012
Last
Revised:
May 4, 2012
7 125
Do
Developing Countries Enforce Their Antitrust Laws? A Statistical Study of Public
Antitrust Enforcement in Developing Countries

Dina I. Waked,
Harvard University - Law School - Faculty,

Date posted to database: April 23, 2012
Last
Revised:
April 23, 2012
8 124
The Oral
Hearing in Competition Proceedings Before the European Commission


Wouter P. J. Wils, Wouter P. J. Wils,
European Commission, University of
London - School of Law,
Date posted to database: May 3, 2012

Last Revised: June 18, 2012
9 116
Google and
Search Engine Market Power

Mark R. Patterson,
Fordham University School of Law,

Date posted to database: April 29, 2012
Last Revised: May
1, 2012
10 111
Citizen
Petitions: An Empirical Study

Michael A. Carrier, Daryl Wander,
Rutgers University School of Law - Camden,
Unaffiliated Authors - affiliation not provided to SSRN,
Date
posted to database:
June 4, 2012
Last Revised: June 4, 2012

July 1, 2012 | Permalink | Comments (0) | TrackBack (0)

Violations of Antitrust Provisions: The Optimal Level of Fines for Achieving Deterrence

Posted by D. Daniel Sokol

Alberto Heimler, Advanced School of Public Administration (Italy) and Kirti Mehta European Union - Directorate General for Competition have written on Violations of Antitrust Provisions: The Optimal Level of Fines for Achieving Deterrence.

ABSTRACT: While the general principle that fines for antitrust violations be set at deterrent levels is well established in prevailing Guidelines on Fines, how these principles are to be interpreted in specific cases is not even considered, or at most only non-operational indications are provided. This article attempts to fill this gap by elaborating some guidance on how deterrence could be achieved for specific categories of violations, by taking into account very simple parameters of demand and supply responses to price signals. In the first place, we argue that a measure of ‘ex ante’ extra profits provides the conceptually correct starting point and we suggest how this may be calculated. Second, general principles of determination of fines can and should be applied in distinct ways to cartel and to abuse of dominance violations, taking into account the different probability of detecting these violations. Furthermore, the determination of the deterrent level of fines would benefit both enforcement and compliance if appropriate account is taken of the interplay between fines, leniency, and private litigation. A simulation approach is developed in the article to provide competition authorities with ranges of percentages of fines that may become useful in practical applications.

July 1, 2012 | Permalink | Comments (0) | TrackBack (0)