Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Tuesday, October 23, 2012

Performance in distribution systems : What is the influence of the upstream firm's organizational choices?

Posted by D. Daniel Sokol

Muriel Fadairo (GATE Lyon Saint-Etienne) and Cintya Lanchimba Lopez (GATE Lyon Saint-Etienne ) ask Performance in distribution systems : What is the influence of the upstream firm's organizational choices?

ABSTRACT: This paper studies the performance of distribution networks as the result of a range of organizational choices made by the upstream firm. The analytical part of the paper surveys the vast literature devoted to franchising and to dual distribution. From this framework, several testable propositions are derived, linking the networks performance to the organizational choices. Three complementary criteria of performance are taken into account : the internationalization rate, the expansion rate, the market share. The paper provides evidence that these criteria are empirically related. Thus, a system of simultaneous equations is defined, free of endogeneity relating to the explanatory variables. The estimations on recent French data by means of the three-least squares method provide robust results, and show that the type of distribution network, the number of company-owned units in the network, the type of sector, and the choice to manage several networks simultaneously affect the performance in distribution systems.

October 23, 2012 | Permalink | Comments (0) | TrackBack (0)

ICN CWG: Past Achievements and Future Challenges – European Commission's Perspective

Posted by D. Daniel Sokol

Eric Van Ginderachter (DG Competition) explains ICN CWG: Past Achievements and Future Challenges – European Commission's Perspective.

October 23, 2012 | Permalink | Comments (0) | TrackBack (0)

Product quality, competition, and multi-purchasing

Posted by D. Daniel Sokol

Simon P. Anderson (University of Virginia), Oystein Foros (NHH Norwegian School of Economics), and and Hans Jarle Kind (NHH Norwegian School of Economics) analyze Product quality, competition, and multi-purchasing.

ABSTRACT: In a Hotelling duopoly model, we introduce quality that is more appreciated by closer consumers. Then higher common quality raises equilibrium prices, in contrast to the standard neutrality result. Furthermore, we allow consumers to buy one out of two goods (single-purchase) or both (multi-purchase). Prices are strategically independent when some consumers multi-purchase because suppliers price the incremental benefit to marginal consumers. In a multi-purchase regime, there is a hump-shaped relationship between equilibrium prices and quality when quality functions overlap. If quality is sufficiently good, it might be a dominant strategy for each supplier to price high and eliminate multi-purchase.

October 23, 2012 | Permalink | Comments (0) | TrackBack (0)

Wisconsin Law Review Symposium Spotlights Comparative Institutional Analysis

Posted by Shubha Ghosh

Wisconsin Law Review Symposium Spotlights Comparative Institutional Analysis

Scholars from a wide range of legal disciplines (administrative law, constitutional law, intellectual property, international law) met at the Wisconsin Law Review symposium on October 19-20 to celebrate the work of Wisconsin law professor Neil Komesar and his development of comparative institutional analysis. The title of presentations and list of speakers can be found here:  http://law.wisc.edu/lrs/.  Discussions ranged from the variations of institutional analysis,  the New Legal Realism, the implications for administrative law and judicial review, and applicability to such wide ranging topics as the design of international institutions, same sex marriage, and health care reform.  Look for audio of the event to be posted shortly and the Wisconsin Law Review Symposium issue  to be published in the Spring.  Kudos to the Wisconsin Law Review and to Wisconsin law professor Andrew Coan for their hard work and vision in putting together this event.

October 23, 2012 | Permalink | Comments (0) | TrackBack (0)

SOEs and competition policy in China

Posted by D. Daniel Sokol

Wei Tan (Renmin) discusses SOEs and competition policy in China.

ABSTRACT: Since China’s Anti-Monopoly Laws (“AML”) bill passed in 2008, competition policy in China is thoroughly analyzed by antitrust practitioners around the world. The rulings by the Chinese antitrust enforcement agencies are often compared with rulings by competition authorities in developed economies. These comparisons may not properly take into account the major distinction of the Chinese economy. Namely, China’s economy is still in the transition from a planned economy to a market economy. As such, state owned enterprises (“SOEs”) play a much bigger role in China than in developed economies.

Article Seven of China’s AML has received considerable amount of criticism as it does not clearly stipulate which are those industries concerning the lifeline of the national economy and national security. While SOEs dominate in these industries, SOEs are also active in many arguably nonstrategic industries, such as real estate development.

This paper examines the SOEs and their effect on China’s competition policy and projects future relations between SOEs and antitrust policy in China.

October 23, 2012 | Permalink | Comments (0) | TrackBack (0)

Monday, October 22, 2012

A Spatial Econometric Analysis of the Effect of Vertical Restraints and Branding on Retail Gasoline Pricing

Posted by D. Daniel Sokol

Stephen Hogg (UQ), Stan Hurn (QUT), Stuart McDonald (UQ) and Alicia Rambaldi offer A Spatial Econometric Analysis of the Effect of Vertical Restraints and Branding on Retail Gasoline Pricing.

ABSTRACT: This paper builds an econometric model of retail gas competition to explain the pricing decisions of retail outlets in terms of vertical management structures, input costs and the characteristics of the local market they operate within. The model is estimated using price data from retail outlets from the South-Eastern Queensland region in Australia, but the generic nature of the model means that the results will be of general interest. The results indicate that when the cost of crude oil and demographic variations across different localities are accounted for, branding (i.e. whether the retail outlet is affiliated with one of the major brand distributers - Shell, Caltex, Mobil or BP) has a statistically significant positive effect on prices at nearby retail outlets. Conversely, the presence of an independent (non-branded) retailer within a locality has the effect of lowering retail prices. Furthermore, the results of this research show that service stations participating in discount coupon schemes with the two major retail supermarket chains have the effect of largely off-setting the price increase derived from branding affiliation. While, branding effects are not fully cancelled out, the overall effect is that prices are still higher than if branding did not occur.

October 22, 2012 | Permalink | Comments (0) | TrackBack (0)

Second-Degree Price Discrimination on Two-Sided Markets

Posted by D. Daniel Sokol

Enrico Bohme, Johann Wolfgang Goethe-University, Frankfurt addresses Second-Degree Price Discrimination on Two-Sided Markets.

ABSTRACT: The present paper provides a descriptive analysis of the second-degree price discrimination problem on a monopolistic two-sided market. By imposing a simple two-sided framework with two distinct types of agents on one of its market sides, it will be shown that under incomplete information, the extent of platform access for high-demand agents is strictly reduced below the benchmark level (complete information). In addition, the paper’s findings imply that it is feasible in the optimum to charge higher payments from low-demand agents if the extent of interaction with agents from the opposite market side is assumed to be bundle-specific.

October 22, 2012 | Permalink | Comments (0) | TrackBack (0)

Search with Learning

Posted by D. Daniel Sokol

Babur De los Santos (Department of Business Economics and Public Policy, Indiana University Kelley School of Business), Ali Hortacsu (University of Chicago and NBER) and Matthijs R. Wildenbeest (Department of Business Economics and Public Policy, Indiana University Kelley School of Business) discuss Search with Learning.

ABSTRACT: This paper provides a method to estimate search costs in an environment in which consumers are uncertain about the price distribution. Consumers learn about the price distribution by Bayesian updating their prior beliefs. The model provides bounds on the search costs that can rationalize observed search and purchasing behavior. Using individual-specific data on web browsing and purchasing behavior for electronics sold online we show how to use these bounds to estimate search costs. Estimated search costs are sizable and are found to relate to consumer characteristics in intuitive ways. The model outperforms a standard sequential search model in which the price distribution is known to consumers.

October 22, 2012 | Permalink | Comments (1) | TrackBack (0)

Assessment of Information Technology Mergers in China

Posted by D. Daniel Sokol

Ninette Dodoo & Angie Ng (both Clifford Chance) provide an Assessment of Information Technology Mergers in China.

ABSTRACT: In the four years since the enactment of China’s Anti-Monopoly Law (AML), the Ministry of Commerce (MOFCOM) has attracted attention with its conditional clearance of mergers in the information technology (IT) sector. Amongst the 15 conditional clearances to date, three decisions involve transactions in the IT industry. These are Seagate Technology PLC’s (Seagate) acquisition of the hard disk drive (HDD) business of Samsung Electronics Co., Ltd. (Samsung); Western Digital Corp.’s (Western Digital) acquisition of the HDD business of Hitachi Global Storage Technologies (HGST), later renamed Viviti Technologies Ltd.; and Google Inc.’s (Google) acquisition of Motorola Mobility (Motorola). Yet, these cases are but a few of the transactions, regulations and industrial policies that are shaping how competition law will be applied to the IT sector in China.

This article provides an overview of MOFCOM’s three conditional clearance decisions in the IT sector, considers MOFCOM’s approach to horizontal and nonhorizontal mergers in this sector, and draws out some of the implications for future IT mergers in the China context.

October 22, 2012 | Permalink | Comments (0) | TrackBack (0)

The Goals of Antitrust - October 26, 2012 - George Washington University School of Law

Posted by D. Daniel Sokol

Jack Kirkwood, Bob Lande and Barak Orbach, with the help of Bill Kovacic have put together a really great (free with no registration needed) conference this Friday at GW.

The Goals of Antitrust

October 26, 2012

George Washington University School of Law

8:20-8:50: Continental Breakfast

8:50-9:00 Opening Remarks

9:00-10:30 First Session

Jonathan Baker, American University Washington College of Law

Pursuing Antitrust’s Goals in a Political Context

Joshua Wright, George Mason University School of Law & Douglas Ginsburg, United States Court of Appeals for the District of Columbia Circuit, NYU School of Law

The Goals of Antitrust: Why Welfare Trumps Choice

Robert Lande, University of Baltimore School of Law

A Traditional and Textualist Analysis of the Antitrust Statutes: Efficiency, Wealth Transfers, and Consumer Choice

10:45-12:15 Second Session

Roger Blair, the University of Florida Department of Economics & Daniel Sokol, University of Florida Levin College of Law

Welfare Standards in U.S. and EU Antitrust Enforcement

Dale Collins, Shearman & Sterling

The Revealed Choice of Antitrust Norms

Maurice Stucke, University of Tennessee College of Law

Should Antitrust Promote Happiness?

12:15-1:30 Lunch

Keynote Speaker: William Kovacic, George Washington University School of Law

The Lifecycle of Goals in Systems of Competition Law

1:30-3:00: Third Session

Harry First, NYU School of Law & Spencer Waller, Loyola University of Chicago School of Law

Antitrust’s Democracy Deficit

John Kirkwood, Seattle University School of Law

Protecting Consumers and Small Suppliers from Anticompetitive Conduct: The Goal With the Widest Support

Alan Meese, William & Mary Law School

Reframing the (False?) Choice Between Purchaser and Total Welfare: Removing the Blinders Imposed by the Partial Equilibrium Tradeoff Model

3:15-4:45: Fourth Session

Einer Elhauge, Harvard Law School

Ironically, Total Welfare Is Advanced Better by a Consumer Welfare Test

Barak Orbach, University of Arizona College of Law

Goals for Antitrust

Steven Salop, Georgetown University Law Center

Merger Settlement and Enforcement Strategy for Optimal Deterrence and Maximum Welfare

October 22, 2012 | Permalink | Comments (0) | TrackBack (0)

Price Stickiness in Customer Markets with Reference Prices

Posted by D. Daniel Sokol

Nicolas Vincent (HEC Montreal) describes Price Stickiness in Customer Markets with Reference Prices.

ABSTRACT: Price rigidity is often modeled by assuming that firms face a fixed cost of price change. However, in surveys, firms report that the main reason they wish to keep prices stable is for fear of antagonizing customers. Moreover, marketing studies show that most consumers engage in very little product comparison on a typical shopping trip. In this paper, we explore the implications of these observations for price rigidity. In our model, comparing prices and characteristics of alternative brands is time-consuming. While some consumers behave as bargain hunters with zero opportunity cost form shopping, most are loyal to firms as long as posted prices are not raised. A price increase is interpreted as a signal that a better alternative may be available and triggers consumer search. Firms do not face menu costs and are free to change nominal prices, but understand that their pricing decisions will affect their customer base and hence future profits. We show that this micro-founded mechanism is akin to a nominal rigidity and naturally generates price stickiness. It is also compatible with the observation of frequent sales at the retail level and can rationalize the decreasing or flat hazard functions observed empirically.

October 22, 2012 | Permalink | Comments (0) | TrackBack (0)

Sunday, October 21, 2012

Introducing The Notre Dame Research Program on Law and Market Behavior (ND LAMB)

Posted by D. Daniel Sokol

Avishalom Tor (Notre Dame) is the new Director of The Notre Dame Research Program on Law and Market Behavior (ND LAMB).

Mission: The Research Program on Law and Market Behavior (ND LAMB) at Notre Dame Law School is dedicated to promoting foundational research that contributes to scholarly and policy thinking about a range of important and timely issues at the intersection of law and market behavior. Specifically, ND LAMB promotes high-impact, interdisciplinary research across a number of interrelated legal fields that study these issues—most notably, corporate governance, antitrust, intellectual property, property and contract, and market regulation more generally. In pursuing its research agenda, the Program draws extensively on relevant extra-legal research in disciplines ranging from psychology to economics, business, and beyond. ND LAMB focuses, moreover, on promoting original legal scholarship that emphasizes observational and experimental empirical methods, through conferences, workshops, visitors and speakers, research support and collaborations with relevant programs and institutes worldwide.

October 21, 2012 | Permalink | Comments (0) | TrackBack (0)