Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Monday, November 26, 2012

The Effects of Introducing Advertising in Pay TV: A Model of Asymmetric Competition between Pay TV and Free TV

Posted by D. Daniel Sokol

Helmut M. Dietl (Department of Business Administration (IBW), University of Zurich), Markus Lang (Department of Business Administration (IBW), University of Zurich), Pannlang Lin (Department of Business Administration (IBW), University of Zurich) describe The Effects of Introducing Advertising in Pay TV: A Model of Asymmetric Competition between Pay TV and Free TV.

ABSTRACT: This paper develops a theoretical model of asymmetric competition between a pay TV and a free TV broadcaster. Our model shows that the pay TV broadcaster has incentives to place advertising on its channel if the marginal return on advertising exceeds the viewers' disutility from advertising. In this case, however, the pay TV advertising level is always below the corresponding level on free TV. The pay TV advertising level can increase with a higher viewer disutility from advertising but the pay TV channel will never attract a larger viewership than the free TV channel. Furthermore, we show that introducing advertising on pay TV induces a decrease of the subscription fees on this channel and a decrease in the advertising level of the free TV channel. Moreover, pay TV viewer demand can increase if the pay TV broadcaster places advertising on its channel. If the viewer disutility of advertising is suffciently large, aggrega! te broadcaster profits increase through the introduction of advertising in pay TV, while aggregate consumer surplus always increases.

November 26, 2012 | Permalink | Comments (0) | TrackBack (0)

Two-Sided Platform Competition in the Online Daily Deals Promotion Market

Posted by D. Daniel Sokol

Byung-Cheol Kim (School of Economics, Georgia Institute of Technology), Jeongsik "Jay" Lee (Scheller College of Business, Georgia Institute of Business) and Hyunwoo Park (School of Industrial and System Engineering) explain Two-Sided Platform Competition in the Online Daily Deals Promotion Market.

ABSTRACT: We empirically investigate the platform competition in the online daily deals promotion market that is characterized by intense rivalry between two leading promotion sites, Groupon and LivingSocial, that broker between merchants and consumers. We find that deals offered through Groupon, the incumbent, sell more and generate higher revenues than those offered by LivingSocial, the entrant. We show that the greater network size in the consumer side entirely explains the incumbent's lead in the merchant side performance, indicating the existence of cross-side network effects at the aggregated market level. However, this performance advantage is dampened by the entrant's competitive chasing at local markets through offers of greater discounts and lower prices. Moreover, the incumbent advantage quickly attenuates as the merchants repeat promotions over time. These countering forces appear to prevent this market from achieving ! a tipping equilibrium. Our findings thus help explain why different market structures arise in two-sided markets with network externalities.

November 26, 2012 | Permalink | Comments (0) | TrackBack (0)

6th Annual Private Antitrust Enforcement Conference : Tuesday, December 4, 2012

Posted by D. Daniel Sokol

Event Date:
Tuesday, December 4, 2012
Location:
National Press Club, Washington DC

On Tuesday, December 4, 2012, the American Antitrust Institute will host its 6th Annual Private Antitrust Enforcement Conference at the National Press Club in Washington D.C. Tuition for this program is $250 with a discounted rate of $50 for government employees, educators, public interest advocates, and students. This conference has been approved for 6.5 CLE credits by the Pennsylvania Continuing Legal Education Board.

REGISTER HERE.

The complete agenda and supporting materials are available for download below.

This event is presented with support from:

  • Adams Holcomb LLP
  • Advanced Analytics Consulting Group
  • Berger & Montague, P.C.
  • Berman DeValerio
  • Blecher & Collins
  • Bolognese & Associates, LLC
  • Cafferty Clobes Meriwether & Sprengel LLP
  • Cohen Milstein Sellers & Toll PLLC
  • Cuneo Gilbert & LaDuca
  • Dickstein Shapiro LLP
  • Econ One
  • Epiq Systems
  • Expedia
  • Fan Freedom Project
  • Faruqi & Faruqi, LLP
  • Gustafson Gluek PLLC
  • Kurtzman Carson Consultants LLC
  • Lieff Cabraser Heimann & Bernstein, LLP
  • MLEX Market Intelligence
  • NastLaw, LLC
  • OnPoint Analytics, Inc.
  • Robbins Geller Rudman & Dowd LLP
  • Robins Kaplan Miller & Ciresi LLP
  • Rust Consulting/Kinsella Media
  • Spector Roseman Kodroff & Willis

 

DownloadSize
DownloadSize
Agenda 553.52 KB
Speaker Bios 634.01 KB
9:25 a.m. Panel Materials – AAI Jury Instruction Project 926.75 KB
9:45 a.m. Panel Materials– Employment Antitrust Litigation 1.89 MB
11:00 a.m. Panel Materials – Current Status and Trends in Use of Truncated or "Quick Look" Analysis 1.73 MB
12:30 p.m. Luncheon Address Materials 177.59 KB
2:00 p.m. Panel Materials – Litigation in Regulated Industries 7.24 MB
3:30 p.m. Panel Materials – Class Action Developments 453.22 KB


November 26, 2012 | Permalink | Comments (0) | TrackBack (0)

Net Neutrality, Foreclosure and the Fast Lane: An empirical study of the UK

Posted by D. Daniel Sokol

Laura Nurski (Center for Economic Studies, Faculty of Business and Economics, KU Leuven) explores Net Neutrality, Foreclosure and the Fast Lane: An empirical study of the UK.

ABSTRACT: Consumers buy internet access from Internet Service Providers (ISPs) to reach online content providers. Under net neutrality, an ISP is not allowed to discriminate between content providers, even though it might have an incentive to do so. An ISP might want to sell a “fast lane” to content providers or use quality degradation to foreclose content providers that compete with the ISP's own content. Discarding net neutrality will have two effects on consumers: (i) consumers will reoptimize their choice of online content, at constant ISP choices; and (ii) consumers will reoptimize their choice of ISP. I empirically investigate whether an ISP has an incentive to break net neutrality, taking into account both channels of consumer response. I combine a novel data set on UK household content and ISP choices with data on ISP presence in local markets, as well as speeds and prices. Preliminary results indicate that a fast lane! increases consumers' surplus, industry revenues and advertising revenues. In contrast, foreclosure seems an unlikely scenario since it reduces the foreclosing ISP's revenues from selling broadband by more than it can recuperate through advertising on online content.

November 26, 2012 | Permalink | Comments (0) | TrackBack (0)

Hiring: Post Doctoral Research Fellow at UEA's CCP

Posted by D. Daniel Sokol

Faculty of Social Sciences
ESRC Centre for Competition Policy (CCP)
Post Doctoral Research Fellow
Ref: RA894
£30,122 to £35,938 per annum

The ESRC Centre for Competition Policy seeks a Post Doctoral Fellow with demonstrated research potential, who wishes to develop an academic career. The position would suit a candidate who has recently finished their PhD or a candidate looking to pursue a specific research project. The Centre is a focus of research into Competition and Regulation across a range of disciplines, and welcomes applications in the area of competition or regulation policy from candidates with a strong background in competition law, industrial economics, or Political Science. Candidates must have submitted their thesis for a doctoral degree prior to their appointment, or have been awarded a doctoral degree within the past four years and satisfy all other essential criteria in the person specification. This full-time post is available fixed term for 1 year with effect from 1 January 2013. Closing date 12 noon 30 November 2012

November 26, 2012 | Permalink | Comments (1) | TrackBack (0)

Network of Industrial Economists Winter Conference 14th December 2012

Posted by D. Daniel Sokol

The Centre for Competition Policy of the University of East Anglia reports:

On 14th December 2012 we are delighted to be hosting the Network of Industrial Economists (NIE) Winter Conference. The 1-day event will be looking at Competition Issues in the Health Sector.

Our venue is 10-11 Carlton House Terrace, London - a classically-styled terrace and home to The British Academy.

The draft programme appears below: if you would like to attend please use the booking form which can be accessed via the navigation to your left.

09:45-10:15

Registration, coffee/tea available

10:15-10:30

Welcome

10:30-12:30

Session 1Health Sector Competition Issues

Moderator: Bruce Lyons, University of East Anglia, School of Economics and Deputy Director of the ESRC Centre for Competition Policy.

Hugh Gravelle, University of York, Centre for Health Economics, "Competition, prices, and quality: Australian GPs"

Gautam Gowrisankaran, University Arizona, Department Economics, "Mergers when prices are negotiated: Evidence from the hospital industry"

12:30-13:30

Lunch

13:30-14:45

Session 2: New Researcher Presentations

Moderator: Franco Mariuzzo, University of East Anglia, School of Economics & ESRC Centre for Competition Policy

Charlotte Davies, University of East Anglia, Medical School "Market structure in medical devices: An example of the hip prostheses market"

Sotiris Vandoros, London School of Economics Health, "tbc"

Kathleen Nosal, University of Mannheim, Department of Economics, "Estimating switching costs for Medicare advantage plans"

14:45-15:00

Break, coffee/tea available

15:00-17:00

Session 3: Pharmaceutical Sector Competition Issues

Moderator: Morten Hviid, University of East Anglia, Norwich Law School and Director of ESRC Centre for Competition Policy

Pierre Dubois, Toulouse School of Economics & CEPR, "The effects of price regulation on pharmaceutical industry margins: A structural estimation for anti-ulcer drugs"

Farasat Bokhari, University of East Anglia, School of Economics & ESRC Centre for Competition Policy, "Specifications in demand systems for drugs: logits v. aids"

 

17:00-17:30

Closing Remarks:

TBC

 

 

November 26, 2012 | Permalink | Comments (0) | TrackBack (0)

For a Rigorous 'Effects-Based' Analysis of Vertical Restraints Adopted by Dominant Firms: An Analysis of the EU and Brazilian Competition Law

Posted by D. Daniel Sokol

Damien Geradin (Covington, U Tilburg) explains For a Rigorous 'Effects-Based' Analysis of Vertical Restraints Adopted by Dominant Firms: An Analysis of the EU and Brazilian Competition Law. ABSTRACT: This study concerns the way agreements between a dominant supplier and its customers that restrict the ability of those customers to buy from the dominant firm’s rivals, including exclusive dealing, conditional rebates and tying and bundling (hereafter, “vertical restraints”) have been assessed by the EU and Brazilian competition authorities and courts.

For several decades, vertical restraints have been a subject of debate among lawyers and economists, and views as to how such restraints should be assessed have fluctuated. In recent years, however, a consensus has emerged that per se rules of illegality (or of legality) should not be applied to vertical restraints. Instead, such restraints should be assessed pursuant to an effects-based analysis balancing their pro- and anti-competitive effects. The difficulty, however, is to devise legal tests that allow this balancing to take place in a coherent and rigorous manner.

Following an analysis of the economics of vertical restraints, this paper shows that the European Commission, which has the power to enforce EU competition rules, has recently opted for an effects-based approach to vertical restraints, and has developed a Guidance Paper that offers a legal and economic methodology describing how it intends to analyse such restraints. This paper shows, however, that the EU courts are still reluctant to follow such a methodology preferring instead to continue to apply formalistic rules.

The situation is different in Brazil where, at least since the enactment of Law 8.884 in 1994, there has been a consensus that vertical restraints had to be analysed under an effects-based approach. However, such an approach has been pursued through balancing tests relying on qualitative criteria and intuitive reasoning, rather than and a rigorous and structured assessment, including quantitative elements, hence leading to inconsistency and uncertainty. The Brazilian competition law system would thus benefit from the adoption of guidelines, which as in the case of the EU Guidance Paper, provides a clear legal and economic methodology as to how an effects-based approach should be implemented.

This paper also analyses the extent to which the legal and institutional framework in place in the EU and in Brazil is well suited to the implementation of a rigorous effects-based approach relying on economic analysis. There is no doubt that the mature EU system possesses the legal and institutional framework to apply such a rigorous approach, the problem being however that the EU courts, which are composed of generalist judges, are still reluctant to pursue it. The European Commission, which is a sophisticated institution, can however pursue an economic based approach.

Although the Brazilian competition law system is not yet fully mature, it has gone a long way, and the entry into force of the new Brazilian Competition Act 12.529/2011 and the setting up of the New CADE will further contribute to its development. The paper argues that the Brazilian system would greatly benefit from the adoption of guidelines, which, like the European Commission Guidance Paper, would offer a clear legal and economic methodology to implement an effects-based approach to vertical restraints.

November 26, 2012 | Permalink | Comments (0) | TrackBack (0)

Sunday, November 25, 2012

Joint State and Federal Enforcement of the Antitrust Laws: More Historic than Conflicting

Posted by D. Daniel Sokol

James A. Donahue, III (Pennsylvania Office of Attorney General) addresses Joint State and Federal Enforcement of the Antitrust Laws: More Historic than Conflicting.

ABSTRACT: The concept of a statute to temper or eradicate the market power of trusts and cartels of businesses that agreed not to compete against one another first arose in state legislatures, notably Missouri and Kansas, prior to the passage of the Sherman Act in 1890. These statutes codified and expanded common law prohibitions on monopolies and restraints of trade that had their foundation in the common law of England.

The Sherman Act and the Clayton Act, passed in 1912, vested, in the federal government, the authority the states had exercised to break up trusts and monopolies. With the passage of these laws state enforcement waned until the passage of the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

That act provided funding for states to start, or restart, an antitrust enforcement unit. The event prompting such funding was the rejection of several classes where consumers were the ultimate victims of an antitrust violation, but the court refused to certify a class. The Hart-Scott-Rodino Act addressed that problem through two prongs, one funding state antitrust enforcement and another allowing Attorneys General to bring damages actions as parens patriae on behalf of natural person consumers for violations of the Sherman and Clayton Acts.

November 25, 2012 | Permalink | Comments (0) | TrackBack (0)