Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, October 13, 2012

Unilateral Disclosure of Information with Anticompetitive Effects

Posted by D. Daniel Sokol

The OECD has published Unilateral Disclosure of Information with Anticompetitive Effects, a compilation of the materials presented and discussed at a Competition Committee roundtable held in February 2012. This publication includes: an analytical note by Mr. Antonio Capobianco for the OECD Secretariat, an executive summary and an aide-memoire of that discussion as well as over 20 national contributions.

October 13, 2012 | Permalink | Comments (0) | TrackBack (0)

Friday, October 12, 2012

Competition between wireless service providers sharing a radio resource

Posted by D. Daniel Sokol

Patrick MAILLE (Universite europeenne de Bretagne), Bruno Tuffin (Universite de Rennes 1) and Jean-Marc Vigne (Universite de Rennes 1) explore Competition between wireless service providers sharing a radio resource.

ABSTRACT: We present a model of competition on prices between two telecommunication service providers sharing an access resource, which can for example be the same WiFi spectrum. We obtain a two-level game corresponding to two time scales of decisions: at the smallest time scale, users play an association game by choosing their provider (or none) depending on price, provider reputation and congestion level, and at the largest time scale, providers compete on prices. We show that the association game always has an equilibrium, but that several can exist. The pricing game is then solved by assuming that providers are risk- averse and try to maximize the minimal revenue they can get at a user equilibrium. We illustrate what can be the outcome of this game and that there are situations for which providers can co-exist.

October 12, 2012 | Permalink | Comments (0) | TrackBack (0)

DOJ Antitrust Looking for An Attorney to Work in the Foreign Commerce Section on Asian Antitrust Issues

Posted by D. Daniel Sokol

TRIAL ATTORNEY (GS-905-15)

U.S. DEPARTMENT OF JUSTICE

ANTITRUST DIVISION

FOREIGN COMMERCE SECTION

About the Office

: The U.S. Department of Justice, Antitrust Division, is seeking a highly qualified

attorney to serve as a senior Attorney in its Foreign Commerce Section. This attorney would be

responsible for:

• Advising senior Division officials on the development and implementation of Division policy on

international enforcement and cooperation issues involving China and other East Asian jurisdictions,

and liaising on such issues with the Department of State and other U.S. government agencies.

• Assisting the Division's litigating sections in their matters with international aspects involving

Chinese and other East Asian antitrust issues, including facilitating law enforcement and other

cooperation between the Division and Chinese and East Asian antitrust agencies.

Major Duties

: The Division maintains direct relationships with competition enforcement agencies in

many jurisdictions. The senior attorney holding this position will serve as a liaison with the Chinese,

and other East Asian antitrust agencies, and be responsible for building and maintaining relationships,

keeping the Chinese and East Asian agencies and the Division informed of one another's significant

competition policy and enforcement developments, providing advice and support on antitrust issues

directly and by coordinating with senior Division management, and coordinating and preparing for

high-level contacts between agencies. The senior attorney should have a clear understanding of

Chinese and other East Asian governments, economies, and cultures, in order to develop and manage

the Division's relationships with these jurisdictions, many of which are major United States trading

partners. Foreign language skills, in particular Mandarin Chinese, Japanese or Korean are highly

desirable.

Qualifications

: Applicants must:

1) Possess a J.D. degree or equivalent, be an active member of the bar in good standing (any U.S.

jurisdiction), have at least four years of post-J.D. experience, and be a U.S. citizen;

2) Possess significant experience with international antitrust enforcement in China and other East

Asian and Southeast Asian jurisdictions; and

3) Possess familiarity with domestic and international regulatory and investigative agencies associated

with competition issues.

Salary Information

: Candidates are being solicited at the GS-15 level, ranging in pay from $123,758 -

$155,500 per annum, depending on current salary and experience.

Location

: Washington, DC

Relocation Expenses

: Relocation expenses will not be authorized.

Deadline and Submission Process

: Applications must be received no later than November 4, 2012.

For consideration, please list the source of the advertisement to which you are applying, and submit a

cover letter (highlighting relevant experience) and a resume (e-mail preferred) to:

[email protected]

Attention: Elena Morgan

Department of Justice/Antitrust Division

450 Fifth Street, NW

Room 3115

Washington, D.C. 20530

For additional information about this position, please contact:

Elena Morgan

Phone: (202) 353-8224

[email protected]

Internet Sites

: Additional info

October 12, 2012 | Permalink | Comments (0) | TrackBack (0)

Net Neutrality Debate: Impact of Competition among ISPs

Posted by D. Daniel Sokol

Francois Boussion (ENS - Ecole Normale Superieure), Patrick MAILLE (Universite europeenne de Bretagne) and Bruno Tuffin (Universite de Rennes 1) discuss Net Neutrality Debate: Impact of Competition among ISPs.

ABSTRACT: Network neutrality has recently been the topic of an important debate, in both the telecommunication and political worlds, because of its potential impact in every-day life. While there has been many studies discussing the advantages and drawbacks of neutrality, there is no game-theoretical study dealing with the observable situation of competitive ISPs in front of a (quasi-)monopolistic content provider (CP), while it is a complaint from ISPs, and an illustration of the non-neutrality need. This paper provides a first game-theoretical analysis of relations between two competitive ISPs and a single CP, in the form of a four-level game, played at different time scales. This game is analyzed by backward induction. We show that while the complaint from ISPs is relevant with a such a competitive model, inserting side payments does not solve the problem.

October 12, 2012 | Permalink | Comments (0) | TrackBack (0)

Competition economics and Utility finance course - November 2012

Posted by D. Daniel Sokol

Oxera presents

Using
economics in competition law

(two-day residential course) £1,640 plus VAT
Understanding economic theories, concepts and techniques
that will enhance your competition law skills

November 5th–6th 2012
*April 22nd–23rd 2013

October 12, 2012 | Permalink | Comments (0) | TrackBack (0)

Market Definition

Posted by D. Daniel Sokol

The OECD has published Market Definition, a compilation of the materials presented and discussed at a Competition Committee roundtable held in June 2012. This publication includes a background note by Ulrich Schwalbe and Frank Maier-Rigaud, an executive summary and an aide-memoire of that discussion as well as over 30 national contributions.

October 12, 2012 | Permalink | Comments (0) | TrackBack (0)

A game theory-based analysis of search engine non-neutral behavior

Posted by D. Daniel Sokol Luis GUIJARRO (Universitat Politecnica de Valencia), Vicent PLA (Universitat Politecnica de Valencia), Bruno Tuffin (INRIA - IRISA - DIONYSOS - INRIA - Universite de Rennes 1), Patrick MAILLE (Universite europeenne de Bretagne) and Pierre COUCHENEY (INRIA - IRISA - DIONYSOS - INRIA - Universite de Rennes 1) offer A game theory-based analysis of search engine non-neutral behavior. ABSTRACT: In recent years, there has been a rising concern about the policy of major search engines, and more specifically about their ranking in so-called organic results corresponding to keywords searches. The associated proposition is that their behavior should be regulated. The concern comes from search bias, which refers to search rankings based on some principle different from the expected automated relevance. In this paper, we analyze one behavior that results in search bias: the payment by content providers to the search engine in order to improve the chances to be located and accessed by a search engine user. A simple game theory-based model is presented where both a search engine and a content provider interact strategically, and the aggregated behavior of users is modeled by a demand function. The utility of each stakeholder when the search engine is engaged in such a non-neutral behavior is compared with the neutral case when no such side payment is present.

October 12, 2012 | Permalink | Comments (0) | TrackBack (0)

Thursday, October 11, 2012

Cartel overcharges and the deterrent effect of EU competition law

Posted by D. Daniel Sokol

Florian Smuda (ZEW) provides emperical work on Cartel overcharges and the deterrent effect of EU competition law.

ABSTRACT: This paper examines cartel overcharges for the European market. Using a sample of 191 overcharge estimates and several parametric and semi-parametric estimation procedures, the impact of different cartel characteristics and the market environment on the magnitude of overcharges is analyzed. The mean and median overcharge rates are found to be 20.70 percent and 18.37 percent of the selling price and the average cartel duration is 8.35 years. Certain cartel characteristics and the geographic region of cartel operation influence the level of overcharges considerably. Furthermore, empirical evidence suggests that the currently existing fine level of the EU Guidelines is too low to achieve optimal deterrence.

October 11, 2012 | Permalink | Comments (0) | TrackBack (0)

Quality Pricing-To-Market

Posted by D. Daniel Sokol

Raphael A. Auer, Swiss National Bank, Thomas Chaney, University of Chicago, and Philip Saure, Swiss National Bank analyze Quality Pricing-To-Market.

ABSTRACT: We document that in the European car industry, exchange rate pass-through is larger for low than for high quality cars. To rationalize this pattern, we develop a model of quality pricing and international trade based on the preferences of Mussa and Rosen (1978). Firms sell goods of heterogeneous quality to consumers that differ in their willingness to pay for quality. Each firm produces a unique quality of the good and enjoys local market power, which depends on the prices and qualities of its closest competitors. The market power of a firm depends on the prices and qualities of its direct competitors in the quality dimension. The top quality firm, being exposed to just one direct competitor, enjoys the highest market power and equilibrium markup. Because higher quality exporters are closer to the technological leader, markups are generally increasing in quality, exporting is relatively more profitable for high quality than for low quality firms, and the degree of exchange rate pass-through is decreasing in quality.

October 11, 2012 | Permalink | Comments (0) | TrackBack (0)

Six “Small” Proposals for SSOs Before Lunch

Posted by D. Daniel Sokol

Renata Hesse (DOJ) provded an interesting talk on Six “Small” Proposals for SSOs Before Lunch.

October 11, 2012 | Permalink | Comments (0) | TrackBack (0)

An equilibrium analysis of efficiency gains from mergers

Posted by D. Daniel Sokol

Dragan Jovanovic (Dusseldorf Institute for Competition Economics) and Christian Wey (Dusseldorf Institute for Competition Economics) provide An equilibrium analysis of efficiency gains from mergers.

ABSTRACT: We analyze the efficiency defense in merger control. First, we show that the relationship between exogenous efficiency gains and social welfare can be non-monotone. Second, we consider both endogenous mergers and endogenous efficiencies and find that merger proposals are largely aligned with a proper social welfare analysis which explicitly considers the without merger counterfactual. We demonstrate that the merger specificity requirement does not help much to select socially desirable mergers; to the contrary, it may frustrate desirable mergers inducing firms not to claim efficiencies at all.

October 11, 2012 | Permalink | Comments (0) | TrackBack (0)

Consumers' Imperfect Information and Price Rigidities

Posted by D. Daniel Sokol

Jean-Paul L'Huillier (EIEF) has written on Consumers' Imperfect Information and Price Rigidities.

ABSTRACT: This paper develops a model of price rigidities and information diffusion in decentralized markets with private information. First, I provide a strategic microfoundation for price rigidities, by showing that firms are better off delaying the adjustment of prices when they face a high number of uninformed consumers. Second, in an environment where consumers learn from firms' prices, the diffusion of information follows a Bernoulli differential equation. Therefore, learning follows nonlinear dynamics. Third, the price rigidity produces an informational externality that affects welfare. Fourth, the dynamics of output are hump-shaped due to consumer learning.

October 11, 2012 | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 10, 2012

Optimal quality choice under uncertainty on market development

Posted by D. Daniel Sokol

Lota D. Tamini (Laval University) describes Optimal quality choice under uncertainty on market development.

ABSTRACT: This paper analyzes the impact of risk and ambiguity aversion - Knightian uncertainty - on the choice of optimal quality and timing of market entry. Irreversibility of the investment in product development is introduced in a continuous-time stochastic model applying the real option literature. We consider a market characterized by a duopoly with a Stackelberg-Nash game for quality choice. When the follower provides a higher-quality good, the level of quality is decreasing in ambiguity aversion while it is a non-monotonic function of the level of risk. For low levels of risk, the increase of product quality is an efficient response. Up to certain threshold level of risk, risk and ambiguity aversion reduce the optimal quality level and increase the value of waiting when the follower supplies a higher-quality good. The implication is that risk and ambiguity aversion allow the leader to make a sustainable monopoly profit. Wh! en the follower supplies a lower-quality good, there is no value for it to wait. It should therefore provide the lowest-quality good possible. In a vertically integrated supply chain firms provide higher quality, and the difference between vertically integrated and non-integrated firms is increasing in risk and ambiguity aversion.

October 10, 2012 | Permalink | Comments (0) | TrackBack (0)

ASSESSING BUNDLED AND SHARE-BASED LOYALTY REBATES: APPLICATION TO THE PHARMACEUTICAL INDUSTRY

Posted by D. Daniel Sokol

Kevin Caves (Navigant Economics) and Hal Singer are (Navigant Economics) ASSESSING BUNDLED AND SHARE-BASED LOYALTY REBATES: APPLICATION TO THE PHARMACEUTICAL INDUSTRY.

ABSTRACT: Bundled loyalty discounts are considered exclusionary whenever an equally efficient competitor in the competitive (“tied”) market cannot earn a profit while compensating the buyer for forgone discounts on the monopolized (“tying”) product. This “discount attribution” standard has been applied in cases involving share-based loyalty rebates for a single product; in those cases, the “contestable” portion of demand plays the role of the tied product, and the non-contestable portion constitutes the tying product. Economists have developed an alternative test that predicts the impact on consumer welfare by comparing the standalone price of the tying product to the profit-maximizing price that would prevail the absence of the bundled (or share-based) rebate. Economists have proposed to implement this test by comparing the price of the tying good before and after the implementation of the loyalty rebate. We propose a framework that builds on these concepts, expanding the analysis to model fluctuations in market conditions. In a review of three recent cases in the pharmaceutical industry, we find that comparisons based on a simple before-after approach are often clouded by confounding factors. By explicitly modeling shifts in demand and cost structures, our proposed framework provides a more robust mechanism for applying these consumer-welfare-based tests.

October 10, 2012 | Permalink | Comments (0) | TrackBack (0)

Deal or No Deal? - Consensual Arrangements as an Instrument of European Competition Policy

Posted by D. Daniel Sokol

Oliver Budzinski, Ilmenau University of Technology, University of Southern Denmark - Department of Environmental and Business Economics and Bjoern A. Kuchinke, Ilmenau University of Technology ask Deal or No Deal? - Consensual Arrangements as an Instrument of European Competition Policy.

ABSTRACT: Roughly during the last decade, European Competition Policy has undergone a series of fundamental changes. All four areas – cartel policy, merger policy, abuse control, and state aid control – have been subject to a modernization process, which led to a focus on analyzing the effects of individual cases and established a tendency towards deciding each case on its individual merits. These changes can be understood as a move away from rule-based competition policy towards a case-by-case approach. The case-by-case approach especially includes consensual arrangements, so-called ‘deals’ between the competition authority and business companies. Therefore, this paper will discuss the pros and cons of ‘deals’ as an instrument of (European) competition policy. The paper’s central focus lies on the economic analysis of the advantages and disadvantages of using consensual arrangements as a relevant instrument of European competition policy. With respect to European competition policy, we conclude that we need to issue a note of caution. From an economic perspective, an expansion of consensual elements necessarily walks hand in hand with a continual weakening of the protection of competition. Consumer welfare will not benefit from expanding the role and importance of consensual arrangements as a means of European competition policy.

October 10, 2012 | Permalink | Comments (0) | TrackBack (0)

Competing Through Information Provision

Posted by D. Daniel Sokol

Jean Guillaume Forand (Department of Economics, University of Waterloo) describes Competing Through Information Provision.

ABSTRACT: This paper studies the symmetric equilibria of a two-buyer, two-seller model of directed search in which sellers commit to information provision. More informed buyers have better differentiated private valuations and extract higher rents from trade.When sellers cannot commit to sale mechanisms, information provision is higher under competition than under monopoly, yet partial information is provided when sellers are price-setters. In contrast, when sellers commit to both information provision and sale mechanisms, I identify simple conditions under which sellers post auctions and provide full information in every equilibrium, ensuring that all equilibrium outcomes are constrained efficient. Sellers capture the efficiency gains from increased information and compete only over non-distortionary rents offered to buyers.

October 10, 2012 | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 9, 2012

OECD is Hiring: Senior Competition Expert (Paris based, frequent travel to Budapest)

Posted by D. Daniel Sokol

OECD is looking for a senior expert with substantial experience in competition policy analysis and the application of competition laws, to join its competition team in Paris. S/he will be responsible for providing competition capacity-building in the Central, East and South-East European region through the OECD-GVH Regional Centre for Competition (RCC) in Budapest, Hungary, which was opened in 2005.

 
Requirements:
· An advanced degree in law and/or economics, ideally specialised in competition law and/or industrial organisation.
· Eight to ten years of experience in the application of competition law and policy including at least five years in a national or international administration responsible for the enforcement of competition law.
· Knowledge of substantive, procedural and institutional issues that arise in all aspects of competition law enforcement; knowledge of the competition regimes of several OECD member and non-members would be an advantage.
· Experience of competition regimes within Europe would be an advantage.
· Teaching experience would be an advantage.
 
For more information and to apply online please visit:
 
 
Closing date for applications is 21st October 2012.

October 9, 2012 | Permalink | Comments (0) | TrackBack (0)

Suggested retail prices with downstream competition

Posted by D. Daniel Sokol

Simona Fabrizi (Massey University), Steffen Lippert (University of Otago), Clemens Puppe (Karlsruhe Institute of Technology) and Stephanie Rosenkranz (Utrecht University, Utrecht School of Economics) examine Suggested retail prices with downstream competition.

ABSTRACT: We analyze vertical relationships between a manufacturer and competing retailers when consumers have reference-dependent preferences. Consumers adopt the manufacturer's suggested retail price as their reference price and perceive losses when purchasing above the suggested price and gains when purchasing below it. In equilibrium, retailers undercut price suggestions and the manufacturer suggests a retail price if consumers are sufficiently bargain-loving and perceive retailers as sufficiently undifferentiated. The manufacturer engages in resale price maintenance otherwise. Consumers can be worse off with suggested retail prices than with resale price maintenance, prompting a rethinking of the current legal treatment of suggested retail prices.

October 9, 2012 | Permalink | Comments (0) | TrackBack (0)

Strategic commitment to pursue a goal other than profit in a Cournot duopoly

Posted by D. Daniel Sokol

Dimitry Rtischev, Gakushuin University analyzes Strategic commitment to pursue a goal other than profit in a Cournot duopoly.

ABSTRACT: Competition among profit-seeking firms in an oligopolistic industry inherently generates incentives for firms to commit to maximize a performance metric other than profit. We briefly review the underlying theory, analyze its ramifications in a Cournot duopoly, and consider feasibility constraints from the perspective of strategic management.

October 9, 2012 | Permalink | Comments (0) | TrackBack (0)

On two-part tariff competition in a homogeneous product duopoly

Posted by D. Daniel Sokol

Krina Griva (Ioannina) and Nikos Vetas (Athens University of Economics and Business) provide thoughts On two-part tariff competition in a homogeneous product duopoly.

ABSTRACT: We explore the nature of two-part tariff competition between duopolists providing a homogeneous service when consumers differ with respect to their usage rates. Competition in only one price component (the fixed fee or the rate) may allow both firms to enjoy positive profits if the other price component has been set at levels different enough for each firm. Endogenous market segmentation emerges, with the heavier users choosing the lower rate firm and the lighter users choosing the lower fee firm. We therefore characterize how fixing one price component indirectly introduces an element of product differentiation to an otherwise homogeneous product market. We also examine the crucial role that non-negativity constraints play for the nature of market equilibrium.

October 9, 2012 | Permalink | Comments (0) | TrackBack (0)