Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Tuesday, August 7, 2012

Apple and Microsoft’s patent troll spells trouble for smartphone innovation

Posted by D. Daniel Sokol

David Balto argues that Apple and Microsoft’s patent troll spells trouble for smartphone innovation.

August 7, 2012 | Permalink | Comments (0) | TrackBack (0)

A note on acquisition of complements in a vertically differentiated market

Posted by D. Daniel Sokol

Ornella Tarola, University of Rome "La Sapienza", and Cecilia Vergari, University of Bologna offer A note on acquisition of complements in a vertically differentiated market.

ABSTRACT: This note is concerned with the e¤ects of joint ownership of complements when they are vertically differentiated. We provide strong arguments for the positive nature of network integration among firms, while showing at the same time that, in some circumstances, anti-competitive consequences can be observed under acquisition.

August 7, 2012 | Permalink | Comments (0) | TrackBack (0)

Trust and Deterrence

Posted by D. Daniel Sokol

Maria Bigoni University of Bologna - Department of Economics, Sven-Olof Fridolfsson Research Institute of Industrial Economics (IFN), Chloe Le Coq, SITE-Stockholm School of Economics and Giancarlo Spagnolo, University of Rome 'Tor Vergata'; EIEF; Stockholm School of Economics (SITE) have a very interesting paper on Trust and Deterrence. Highly recommended!

ABSTRACT: This paper presents results from a laboratory experiment on the channels through which different law enforcement strategies deter cartel formation. With leniency policies offering immunity to the first reporting party a high fine is the main determinant of deterrence, having a strong effect even when the probability of exogenous detection is zero. Deterrence appears then mainly driven by 'distrust', the fear of partners deviating and reporting. Absent leniency, the probability of detection and the expected fine matter the most, and low fines are exploited to punish defections. The results appear relevant to several other crimes sharing cartels' strategic features, including corruption and financial fraud.

August 7, 2012 | Permalink | Comments (0) | TrackBack (0)

Pricing behaviour at capacity constrained facilities

Posted by D. Daniel Sokol

Huric Larsen and Jesper Fredborg, University of Southern Denmark discuss Pricing behaviour at capacity constrained facilities.

ABSTRACT: Entry of new firms can be difficult or even impossible at capacity constrained facilities, despite the actual cost of entering is low. Using a game theoretic model of incumbent firms’ pricing behaviour under these conditions, it is found that under the assumption of Bertrand competition and firms having different costs, the optimal pricing behaviour imply price stickiness and upward pricing. The findings further suggest a competitive behaviour of incumbents of disposing weaker opponents only if, it leads to weaker competitors entering the market and to use weaker opponents to shelter the incumbent. The results propose a new explanation of the mixed empirical findings on incumbent pricing to entry and suggest that competition authorities should use an effect-based approach to detect the behaviour.

August 7, 2012 | Permalink | Comments (0) | TrackBack (0)

Monday, August 6, 2012

The Lessons from Libor for Detection and Deterrence of Cartel Wrongdoing

Posted by D. Daniel Sokol

Rosa M. Abrantes-Metz, Global Economics Group, LLC; New York University - Leonard N. Stern School of Business - Department of Economics and D. Daniel Sokol, University of Florida - Levin College of Law; University of Minnesota School of Law discuss The Lessons from Libor for Detection and Deterrence of Cartel Wrongdoing.

ABSTRACT: In late June 2012, Barclays entered into a $453 million settlement with UK and U.S. regulators due to its manipulation of Libor between 2005 and 2009. Among the agencies that investigated Barclays is the Department of Justice Antitrust Division (as well as other antitrust authorities and regulatory agencies from around the world). Participation in a price fixing conduct, by its very nature, requires the involvement of more than one firm.

We are cautious to draw overly broad conclusions until more facts come out in the public domain. What we note at this time, based on public information, is that the Libor conspiracy and manipulation seems not to be the work of a rogue trader. Rather it seems to have been organized across firms and required the active knowledge of a number of individuals at relatively high levels of seniority among certain Libor setting banks. Collusion across firms is at the core of illegal antitrust behavior. The Supreme Court has deemed the pernicious effects of cartels so central to antitrust’s mission that it has stated that cartels are “the supreme evil of antitrust.”

The involvement of more than one bank in such a cartel is a significant corporate governance failure due to the coordination that such a cartel would have required among the various cartel members. That the Libor cartel seems to have occurred in such a highly regulated industry after a wave of corporate governance reforms post-Enron and a push to greater internal compliance in the early 2000s is perhaps even more surprising. Yet, the very nature of what may have occurred regarding Libor manipulation, in hindsight, seems rather obvious. The rate did not move for over a year until the day before the financial crisis of 2009 hit. Also, quotes by the member banks that were submitted under seal moved simultaneously to the same number from one day to the next during that time period. Had any member bank that set Libor or indeed any antitrust authority undertaken an econometric screen, they would have detected these anomalies, undertaken a more in-depth investigation and discovered the wrongdoing.

This essay explores the use of econometric screens as a tool to improve detection of potential price fixing cartel behavior as a method to police the firm from illegal behavior either by enforcement authorities or via firms themselves.

August 6, 2012 | Permalink | Comments (1) | TrackBack (0)

Clearance: The Back Story and Looking Forward

Posted by D. Daniel Sokol

Justin Kay (Drinker) discusses Clearance: The Back Story and Looking Forward.

ABSTRACT: Since the FTC’s establishment in 1914, the FTC and the Antitrust Division have sought to allocate their shared enforcement responsibilities. Justin Kay examines the progression of clearance protocols and forecasts what might happen if Bill Baer becomes the next Assistant Attorney General.

August 6, 2012 | Permalink | Comments (0) | TrackBack (0)

Competition under Consumer Loss Aversion

Posted by D. Daniel Sokol

Heiko Karle, Universite Libre de Bruxelles and Martin Peitz, University of Mannheim explain Competition under Consumer Loss Aversion.

ABSTRACT: We address the effect of contextual consumer loss aversion on firm strategy in imperfect competition. Consumers are fully informed about match value and price at the moment of purchase. However, some consumers are initially uninformed about their tastes and form a reference point consisting of an expected match—value and price distribution, while others are perfectly informed all the time. We show that, in duopoly, a larger share of informed consumers leads to a less competitive outcome if the asymmetry between firms is sufficiently large and that narrowing the set of products which consumers consider leads to a more competitive outcome.

August 6, 2012 | Permalink | Comments (0) | TrackBack (0)

Public Compensation as a Complementary Mechanism to Damages Actions: From Policy Justifications to Formal Implementation

Posted by D. Daniel Sokol

Ariel Ezrachi (Oxford) and Maria Ioannidou (Oxford) explore Public Compensation as a Complementary Mechanism to Damages Actions: From Policy Justifications to Formal Implementation.

ABSTRACT: Limited private litigation and shortcomings in collective redress draw attention to the possibility of using public competition law enforcement as an alternative route to facilitate compensation. Public enforcement could be deployed to promote some of the objectives traditionally linked to damages actions in national courts. It would enable competition authorities to award a certain form of compensation alongside the imposed fine following a public investigation. Embedded in the current regulatory framework, it could facilitate compensation, increase deterrence and encourage greater consumer involvement in competition law enforcement.

August 6, 2012 | Permalink | Comments (1) | TrackBack (0)

Andy Gavil to Join FTC

Posted by D. Daniel Sokol

Howard Law Professor Andy Gavil will join the FTC as Director of the Office of Policy Planning. This is a great pick. Andy is an excellent and careful scholar, smart and a nice guy.

August 6, 2012 | Permalink | Comments (0) | TrackBack (0)

The Economics of Supermarkets: A Brief Literature Review

Posted by D. Daniel Sokol

Leandro Zipitria, Universidad de Montevideo provides his thoughts on The Economics of Supermarkets: A Brief Literature Review.

ABSTRACT: This article presents a brief review of the literature on the effect of supermarkets on productivity, employment, the survival of small retailers, prices, and competition in retailing. The following stylized facts emerge: (1) the retail sector has undergone a major concentration around the world, (2) the entry of supermarkets tends to expel small competing groceries, and encourage the entry or conversion of others; (3) supermarkets are a source of productivity gains in the sector, (4) they generates a net increase in employment, and (5) has the effect of reducing the level of prices in markets where entry occurs. Some qualifications to these general conclusions are discussed.

August 6, 2012 | Permalink | Comments (0) | TrackBack (0)

Marrying Neo-Chicago with Behavioral Antitrust

Posted by D. Daniel Sokol

Max Huffman, Indiana University Robert H. McKinney School of Law discusses Marrying Neo-Chicago with Behavioral Antitrust.

ABSTRACT: Neo-Chicago Antitrust is the topic of this symposium. Its adherents characterize it as a return to Chicago principles, informed by the developments in economic thinking over the past thirty-or-so years – notably, insights from both the Chicago and Post-Chicago schools. Behavioral Antitrust is a new area of scholarly inquiry that has gathered some attention in very recent years. The earliest article explicitly proposing a behavioral approach to antitrust was written in 2002. Proponents encourage courts and policy-makers to import the study of behavioral law and economics into antitrust analysis, using empirical study better to understand the conduct of individuals in market settings. Like foregoing antitrust economics movements, Behavioral Antitrust is on its face result-neutral, but as it has been discussed to date, it has a political slant. Until very recently, all of the writing advocating Behavioral Antitrust favored increased antitrust enforcement. Neo-Chicago and Behavioral Antitrust came along at about the same time, and a marriage of the two might temper any respective tendencies of either toward predetermined political ends. The combination might produce a more result-neutral enterprise of “economically informed antitrust.” Neo-Chicago promises an improvement over Chicago’s simplification of facts in pursuit of tractability, which Chicago’s advocates applaud but critics argue has gone so far as to produce false understandings of marketplace conduct and effects. That suggests adherents might be receptive to efforts of Behavioral Antitrust scholars in critiquing antitrust rules in the light of empirical studies of individual economic actors. Behavioral Antitrust, in turn, has the goal of informing the assumptions underlying established economic theory through empirical study of the behavior of individual economic actors. That goal might be advanced by looking to Neo-Chicago’s combination of theories from the Chicago and Post-Chicago Schools for a comprehensive theoretical framework for analysis. I suggest here a possible synthesis of Neo-Chicago with Behavioral Antitrust into an enterprise of “economically informed antitrust.”

August 6, 2012 | Permalink | Comments (0) | TrackBack (0)

Sunday, August 5, 2012

Most Cited Tenure Track Antitrust Law Professors in the JLR database 2012 edition

Posted by D. Daniel Sokol

Updated 8/5/12 at 7pm

Updated 8/6/12 at 9:30am (I forgot to include Mark Lemley - major oops)

Once again, (see here for 2011) I rank the most cited antitrust law professors using the JLR Westlaw database. If the name was uncommon the search string is first name /2 last name. In case where this leads to mishits (e.g., William /2 Page) I went with the full name ("William H. Page"). I include only professors who have published antitrust related scholarship from 2010 to the present plus works I know about in the pipeline (via working papers, etc.). I only include US based tenure track law faculty and only active antitrust scholars where active means something written on the subject in the past three years (2010-12) and/or something forthcoming.

Let me provide some caveats.  There are plenty of people not on the list who know their stuff and have great expertise in the field, who may be doing consulting on antitrust, focusing on teaching and/or who may not have something advanced in the pipeline but have made very important academic contributions so I accept all of those criticisms of this list upfront.  This means a number of people with lots of citations do not make the list, as in the case of some important names in the field among tenure track faculty who would otherwise be on any antitrust specialist list, and former academics who are now judges (Posner, Easterbrook, Wood).  

One other item of note - in some cases, the number of citations are down from last year. Part of this is due to refinements in the searches. However, in some cases citations have mysteriously disappeared, which suggests that the JLR database has been tweaked in terms of what has been included in it among the journals searched within the past year.

I also include next to the name any other field in which the scholar writes. In some cases, the other field is the primary field. Please send me any corrections to the list, as I may have accidentally overlooked some people. 

Note the overall dominance of NYU, with four faculty in the top 21. 

For such an important field of scholarship and practice (front page stories such as Libor and anything related to Google this past week as an example) I note that a number of impressive schools lack someone on the list (although in the case of Penn's Christopher Yoo, mostly a network industry guy but who also writes on antitrust, he has a handbook chapter on networks with Dan Spulber in my Oxford Handbook of International Antitrust Economics that I am co-editing with Roger Blair so he will be back on the list soon and he had been active very recently (2009)). Given in particular the demand for antitrust by LLM students (the only growth area for students at US law schools with the  overall JD class sizes shrinking yet again), the lack of antitrust coverage is not a good business strategy for a number of law schools.

Citations are an imperfect measure of many things but people crave rankings so here they are. 

  1. Mark Lemley - Stanford 4837 (IP)
  2. Herb Hovenkamp - Iowa 3757 (Legal History, IP)
  3. Louis Kaplow - Harvard 3363 (Tax, Law and Econ)
  4. George Priest – Yale 2611 (Law and Econ)
  5. Einer Elhauge – Harvard 1513 (Admin)
  6. Daniel Rubinfeld – Berkeley/NYU 1417 (Law and Econ)
  7. Fred McChesney – Miami 1158 (Law and Econ, Corporate)
  8. Eleanor Fox – NYU 1130
  9. Steve Salop – Georgetown 1114
  10. Keith Hylton – BU 1091 (Torts, Law and Econ)
  11. Tim Muris – George Mason 1084
  12. Bill Kovacic – George Washington 1034
  13. Doug Ginsburg - NYU 951
  14. Spencer Waller – Chicago Loyola 825
  15. Bob Lande – Baltimore 792
  16. Randy Picker - Chicago 717 (Commercial Law)
  17. Jeff Harrison – Florida 707 (Law and Econ)
  18. Thomas Cotter – Minnesota 768 (IP)
  19. Phil Weiser – Colorado 684 (Telecom)
  20. Bill Page - Florida 641
  21. Harry First – NYU 638
  22. Jon Baker – American 611
  23. Bruce Kobayashi – George Mason 603 (Law and Econ)
  24. Shubha Ghosh – Wisconsin 590 (IP)
  25. David Gerber – Chicago Kent 561
  26. Christopher Leslie – Irvine 534
  27. Daniel Crane - Michigan 493
  28. Howard Shelanski – Georgetown 477 (Telecom, IP)
  29. Mike Carrier – Rutgers-Camden 471
  30. George Hay - Cornell 460
  31. Ed Swaine – George Washington 454 (International Law)
  32. Daniel Gifford - Minnesota 451
  33. Tom Arthur - Emory 443
  34. Warren Grimes – Southwestern 438
  35. John Lopatka – Penn State 395
  36. Andy Gavil – Howard 407
  37. Joe Bauer – Notre Dame 397
  38. Alan Meese – William & Mary 393
  39. Peter Carstensen – Wisconsin 319
  40. Tim Greaney – St. Louis 311 (Health Care)
  41. Ned Cavanagh – St. Johns 297
  42. Aaron Edlin – Berkeley 292
  43. Mark Pattersen – Fordham 270 (IP)
  44. Scott Hemphill – Columbia 254 (IP)
  45. Katheryn Spier - Harvard 248 (Law and Econ)
  46. Barak Richman – Duke 236 (Health Care)
  47. Tom Nachbar – Virignia 215 (Communications/IP)
  48. Josh Wright – George Mason 215
  49. Marina Lao – Seton Hall 209
  50. Christina Bohannan - Iowa 198 (IP)
  51. Josh Davis – San Francisco 191 (Civil Procedure)
  52. Darren Bush – Houston 188 (Regulation)
  53. Danny Sokol – Florida 174
  54. Mike Jacobs – DePaul 173
  55. Maurice Stucke – Tennessee 168 (Behavioral Law and Econ)
  56. Salil Mehra – Temple 148 (Asian Law)
  57. Jack Kirkwood – Seattle 143
  58. Barak Orbach – Arizona (Regulation) 132
  59. Mike McCann – Vermont (Sports Law) 129
  60. Deven Desai – Thomas Jefferson (IP) 128
  61. Steven Semeraro – Thomas Jefferson 127
  62. Avishalom Tor - Notre Dame 125 (Behavioral Law and Econ)
  63. Marc Edelman 116 – Barry (Sports Law)
  64. Chris Sagers – Cleveland State 109
  65. Thom Lambert – Missouri 108
  66. Joe Miller – Georgia 95 (IP)
  67. Beth Farmer – Penn State 84
  68. Abe Wickelgren – Texas (Law and Econ) 79
  69. Hillary Greene – Connecticut (IP) 78
  70. Jesse Markham – San Francisco 71
  71. Anu Bradford – Columbia (includes under maiden name) (International Law) 62
  72. Max Huffman – Indiana-Indianapolis 62
  73. Tom Horton – South Dakota 56
  74. Gabe Feldman – Tulane (Sports Law) 53
  75. Shahar Dillbary – Alabama 29 (IP)
  76. Wentong Zheng – Florida 27 (International Trade)
  77. Babette Boliek – Pepperdine 17 (Regulated Industries)
  78. Rebecca Haw – Vanderbilt 8

August 5, 2012 | Permalink | Comments (0) | TrackBack (0)

Grading the Professor: Evaluating Bill Kovacic’s Contributions to Antitrust Engineering

Posted by D. Daniel Sokol

D. Daniel Sokol, University of Florida - Levin College of Law; University of Minnesota School of Law, Christine Wilson, Kirkland & Ellis and Joseph Nord, Kirkland & Ellis have posted Grading the Professor: Evaluating Bill Kovacic’s Contributions to Antitrust Engineering. This paper is for an upcoming book in honor of Bill Kovacic. Christine and Joe were great co-authors.

ABSTRACT: It is with two parts gumption and one part trepidation that we seek to turn the tables on Bill Kovacic in a way that his students might find amusing. In this chapter, we propose to use Bill’s own metrics, laid out in How Does Your Competition Agency Measure Up?, to grade Bill’s contributions to the field of “competition policy engineering” over time. These contributions span many decades as a practitioner, academic, enforcer, and consultant to other governments, so we can but scratch the surface. We nonetheless conclude that Bill Kovacic has passed with flying colors the work-study program of Antitrust Engineering.

August 5, 2012 | Permalink | Comments (0) | TrackBack (0)