Thursday, May 14, 2015
Oliver Bischoff, Frankfurt University of Applied Sciences; Monopolies Commission; University of Hamburg and Achim Buchwald, Monopolies Commission; Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE) address Horizontal and Vertical Firm Networks, Corporate Performance and Product Market Competition.
ABSTRACT: This paper sheds new light on the assessment of firm networks via multiple directorships in terms of corporate firm performance. Using a large sample of European listed firms in the period from 2003 to 2011 and system GMM we find a significant compensation effect on corporate firm performance for the initial negative effect of horizontal multiple directorships by product market competition. In markets with effective competition, horizontal multiple directorships turn out to be an efficient mechanism to increase firm performance and thus assure competitive advantages. By contrast, linkages between up- and downstream firms have no significant influence on financial performance, irrespective of the level of competition intensity.
Ariel Ezrachi, University of Oxford - Faculty of Law and Maurice E. Stucke, University of Tennessee College of Law have a timely paper on Artificial Intelligence & Collusion: When Computers Inhibit Competition.
ABSTRACT: One may find it hard to imagine life without the power of computers. Indeed, all areas of our livelihood are affected and have benefited from technological development and an increasingly powerful computerised environment. In line with these developments, recent years have witnessed an ever increasing reliance on big data and big analytics and investment in the development of ‘smart’, ‘self-learning’ machines. These complex machines are set to assist in decision making, prediction, planning, trade, and logistics. They are also predicted to further enhance our more immediate living environment - the way we commute, shop and communicate.
Not surprisingly, the prospect of Artificial Intelligence (AI) has long fueled human imagination. The development of self-learning and independent computers raises challenging questions as to the future of the human race and the control, or lack of it, humans would exert over machines.
Interestingly, these developments and the challenges raised by them are also relevant to the area of antitrust enforcement. Sophisticated computers are central to the competitiveness of present and future markets. With the accelerating development of AI, they are set to change the competitive landscape and the nature of competition restraints, which enforcement agencies will need to tackle.
This paper addresses these developments and considers the application of competition law to an advanced ‘computerised trade environment.’ Questions raised and discussed are neither futuristic nor speculative. The Department of Justice, for example, charged in 2015 a price-fixing scheme involving posters sold in the United States through Amazon Marketplace. To implement their agreements, the conspirators, according to the DOJ, “adopted specific pricing algorithms for the sale of certain posters with the goal of coordinating changes to their respective prices and wrote computer code that instructed algorithm-based software to set prices in conformity with this agreement.”
With the present usage of computers and anticipated technological advancements, more prosecutions involving pricing algorithms are likely. Thus the questions raised in these cases are central to our current thinking on antitrust enforcement and technological developments. Such questions concern, for example, the concept of agreement and intent in a computer dominated environment, the boundaries of legality and collusion, the antitrust liability of algorithms’ creators and users, the ability to constrain AI, the relationship between humans and computers, and the possibility of creating ethical, law abiding, machines.
After discussing in Part I the way in which computerised technology is changing the competitive landscape, we explore in Part II possible ways in which computerised agents may be involved in anticompetitive collusion. We consider varying levels of technological development, which differ in the enforcement challenges they raise. Finally, Part III reviews the antitrust policy challenges raised by advanced computers and artificial intelligence.
LEAR Competition Conference June 25-26, 2015
See here for details.
Among the covered topics:
How can we deal with vertical restraints in the e-commerce? What are the competitive effects of platform parity pricing policies? Does the transparency brought about by the Internet foster competition or increase the risk of collusive behavior? What are the effects of new media on consumer welfare both in the short and in the long run? Is consumer surplus negatively affected by the concentration in the control over personal data?
The sixth edition of the Lear Conference will focus on how this influence is shaping the economic practice, the way firms compete and antitrust enforcement. The conference will cover a wide range of related topics, such as competition among electronic platforms, access to personal data, vertical restraints in e-commerce, competition in search engine market, and across-platform parity agreements, among others.
By bringing together a number of excellent speakers in the field, the Lear Conference 2015 will promote a thorough and lively discussion on these crucial topics.
Stay tuned for the Lear conference 2015!
Keynote speakers and discussants David Abecassis (Analysys Mason); Svend Albaek (DG Comp); Elena Argentesi (Lear and University of Bologna); Susan Athey (Stanford University); Paolo Buccirossi (Lear); Emilio Calvano (CSEF- University of Naples Federico II); Kate Collyer (Competition and Market Authority); Marco D’Ostuni (Cleary Gottlieb Steen & Hamilton); (John Fingleton (Fingleton Associates); Sven-Olof Fridolfsson (Swedish Competition Authority); Joshua Gans (University of Toronto); Damien Geradin (George Mason University and Tilburg University); Justus Haucap (DICE); Alberto Heimler (Scuola Superiore della Pubblica Amministrazione – SNA); Ali Hortacsu (Chicago University); Michael Katz (University of California, Berkeley); Jonathan Levin (Stanford University); Preston McAfee (Microsoft); Antonio Nicita (AGCOM and University of Rome La Sapienza); Veronica Pinotti (McDermott & Will Emery); Martino Sforza (McDermott & Will Emery); Simone Sole (Mediaset); Giancarlo Spagnolo (Stockholm School of Economics); Tommaso Valletti (Imperial College London); Hal Varian (Google); Simonetta Vezzoso (University of Trento) and others.
DAY 1 – Thursday, June 25th, 2015
|9:00 – 10:00||Welcome coffee and registration|
|10.00 – 13.00||
The Economics of Peer-to-Peer Markets In the last few years a new set of Internet marketplaces has begun to challenge existing businesses such as the taxi and hotel industry. Some of these businesses, such as Airbnb and Uber, have come under intense regulatory scrutiny. Why have these businesses emerged and what problems do their marketplaces have to solve? To what extent are these new peer-to-peer markets an improvement on traditional business models? What are the parallels and differences with earlier Internet marketplaces for e-commerce, consumer lending and skilled labor? Finally, how should regulatory policy treat peer-to-peer marketplaces, especially when they are competing against established industries? This talk will describe recent research in this area, and try to draw some tentative conclusions.
Keynote Speaker: Jonathan Levin (Stanford University)
Discussion: • John Fingleton (Fingleton Associates) • Kate Collyer (Competition and Markets Authority)
Media and the Internet The Internet has largely changed the way people become informed and has led to the appearance of new operators. Among these, there are news aggregators such as Google News and Yahoo! News. News aggregators have had a significant impact on competition in the media markets and several competition authorities have conducted investigations to ascertain whether their conducts were compliant with antitrust rules. Traditional news operators have complained that news aggregators, which do not often pay for the content they display on their website, undermine the incentive of authors and other market participants to create content. The same criticism may hold true for other media, such as TV or cinema, with respect to websites that allow end consumers to watch TV programs or movies without any contractual relationship with the content creator. What are the effects of these new media on consumer welfare in the short and in the long run? Do news aggregators or video portals compete in the same relevant market as the traditional media? Do they enjoy a significant market power? Is the application of competition law the proper remedy for any market distortion that may result from their activity?
Chair: Veronica Pinotti (McDermott Will & Emery)
Keynote Speaker: Susan Athey (Stanford University)
Discussion: • Antonio Nicita (AGCOM and University of Rome La Sapienza) • Simone Sole (Mediaset)
|14.30 – 18.30||
Search and Competition The markets for search-based and online advertising differentiate themselves among many levels with respect to most markets. These features include network effects, double-sidedness, and high levels of R&D and innovation. Antitrust enforcement has thus a difficult job. With respect to recent notorious cases such as Google’s, what are the effects of an antitrust intervention on innovation? Do competitors in the search engine market work properly and in the interest of consumers? Does Google enjoy monopoly power?
Keynote Speaker: Hal Varian (Google)
Discussion: • Justus Haucap (Dusseldorf Institute for Competition Economics)
Internet as a distribution channel: dynamics and policy challenges
In the past decades, the Internet has become a very active distribution channel, disrupting traditional modes of distribution, bringing benefits to consumers as well as generating new business opportunities for firms. The market structure of distribution has changed dramatically in many sectors, and suppliers have had to rethink their distribution strategies. These changes give rise to new concerns on the much-debated antitrust issue of Vertical Restraints (VRs). VRs may be introduced in order to improve the vertical structure by reducing transaction costs, improving the stability of supplies, and as a device to align the two firms’ interests. Certain types of VRs may also soften competition. The nature of competition taking place in the digital environment as well as competition between traditional and on-line retailers has not been fully understood yet. Antitrust agencies and courts are still exploring this new field, and this could generate uncertainty in decisions and judgments.
Keynote Speaker: Ali Hortacsu (Chicago University)
Discussion: • Svend Albaek (European Commission – DG COMP) • Andrea Pezzoli (AGCM)*
|18.45 – 20.00||
Sightseeing* & Aperitif
* For those curious to explore more of what Rome has to offer, there will be a private visit of Villa Farnesina, a Renaissance creation of unequalled beauty and refinement decorated with the famous “Triumph of Galatea” by Raffaello
DAY 2 – Friday June 26th, 2015
|9.30 – 11.00||
Across-Platform Parity Agreements It is widespread among online platforms to require their sellers not to offer better prices or conditions on other selling platforms; this clause is often referred to as Price Parity clause, or Retail Most Favoured Nation due to its similarities to the MFN clause. Despite much analysis efforts made from several agencies around the world, there is still scant literature on the topic. Some initial reflections on their competitive effects are provided in a recent report prepared by Lear for the OFT (Lear, 2012). They defined these pricing arrangements as Across-Platforms Parity Agreements (APPA). An MFN is a clause normally embedded in long-term contracts between two firms for the provision of intermediate goods or raw materials whereby the supplier undertakes to apply to the buyer the best price conditions among those applied to any other buyer. Although some similarity exists between MFNs and APPAs, the two have to be distinguished and it would be wrong to derive clear policy implications from the literature on MFNs. Since 2010, this clause has been enforced by prominent platforms such as Amazon, booking.com, HRS (the German leading OTA), Apple on its iBookstore and many more. Whether such clause should raise any competitive concern is still a much-debated issue among both policymakers and academics.
Chair: Tommaso Salonico (Freshfields Bruckhaus Deringer LLP)
Keynote Speaker: Paolo Buccirossi (Lear)
Discussion: • Giancarlo Spagnolo (Stockholm School of Economics and University of Rome Tor Vergata) • Sven-Olof Fridolfsson (Swedish Competition Authority)
11.30 – 13.00
Two-Sided Platforms and Competition Policy: What have we really learned? Multi-sided platforms create value by bringing two or more different types of economic agents together and allowing them to interact. These platforms play critical roles in many economically important industries such as Internet-based ones. By smoothing direct connections between multiple types of affiliated customers, MSPs most often lead to network effects. From a theoretical point of view, MSPs subvert classical economic models. This very nature may affect antitrust analysis in all of its aspects, from cartels to monopolizations because the interrelationship between pricing and output has to be accounted for on all sides and exploitation of one side of the market is not necessarily an indicator of market power. To what extent the development of two-sided market theory has influenced actual antitrust practice? Has that influence been beneficial?
Chair: Alberto Heimler (Scuola Superiore della Pubblica Amministrazione – SNA)
Keynote Speaker: Michael Katz (University of California, Berkeley)
Discussion: • Tommaso Valletti (Imperial College of London and University of Rome Tor Vergata) • Simonetta Vezzoso (Università degli Studi di Trento)
|14.30 – 18.00||
Competition in Advertising Markets Advertising markets, including over the air TV, Internet display advertising and search advertising, have a very complex structure. Consumers are not typically paying for content so there is no price signal – competition for users is in product quality and reputation. Web search product quality involves algorithms, an extensive web crawl, information retrieval technology and voluminous, fresh data. Reaching their target audiences may require advertisers to advertise on all platforms, creating pressure for standardization to minimize costs, which conflicts with innovation.
Chair: Marco D’Ostuni (Cleary Gottlieb Steen & Hamilton)
Keynote Speaker: Preston McAfee (Microsoft)
Discussion: • Elena Argentesi (Lear and Università di Bologna) • Martino Sforza (McDermott & Will Emery)
Recommendation Systems Competition Recommender Systems are software tools and techniques providing suggestions for items to which consumers are potentially interested. Billions of consumers rely daily on these systems to decide what music to listen to (iTunes), which movie to watch (Netflix), what product to purchase (Amazon) or which restaurant to patronize (Yelp). By controlling consumers’ informational environment these agents can distort consumption choices. What are their incentives? Is recommendation bias a manifestation of market power? To what extent is competition a disciplining force?
Keynote Speaker: Emilio Calvano (CSEF-University of Naples Federico II)
Personal Data and Competition Consumer data have always represented a valuable asset for marketeers and firms alike. Indeed, better information on consumers let firms tailor their offer to address specific customer needs. This can benefit both firms and consumers and eventually increase total welfare. Thanks to technological advances, it is now possible to collect an even increasing amount of personal information and this is particularly true for all those market and non-market activities that are mediated through technology. Firms that hold and control a high volume of quality personal data can offer better products and services (to customers or, as it is common within an ad-funded business model, to advertisers) and, as a consequence, reap higher profits, as they “monetize” the information they have collected. Some critics argue that such a control might be detrimental to the competitive process as the firm that control key information might foreclose actual or potential competitors from the market. This might be particularly relevant when consumer data have been acquired through potentially anticompetitive practices (exclusivity agreements) and in a context in which the quality and value of collected data is subject to network externalities (the more sources used to collect information the higher the quality and value of the collected information). Should the private control over online detailed consumer level data raise specific anticompetitive constraints? Is there the risk to foreclose efficient competitors if they have no access to the bulk of information held by incumbents? Is the consumer surplus negatively affected by the concentration in the control over personal data?
Keynote Speaker: Joshua Gans (University of Toronto)
Discussion: • Damien Geradin (George Mason University and Tilburg University) • David Abecassis (Analysys Mason)
English is the official language of the Conference. There will be simultaneous translation into English and Italian at the plenary sessions.
Italian lawyers get 13 credits from the BAR Association for attending
* Please note that this is a draft program, hence still subject to minor changes.
Register before 17 May to qualify for an Early Bird registration discount!
Special admission offer of 250 Euros for PhD and Master’s students.
Please, click here to register for Antitrust Economics 2.0.
To learn more about the Lear Concerence 2015 email us to firstname.lastname@example.org
Villa Farnesina, Palazzina dell’Auditorio Via della Lungara 230 – Rome
Villa Farnesina is situated in the area of Trastevere, opposite the Corsini Palace. The Sienese banker, Agostino Chigi, named “magnifico” by his contemporaries, acquired the villa, which had been completed in 1509 by Baldassarre Peruzzi, a Sienese architect of great renown. The villa, a wonderful example of Renaissance art, was decorated by such famous painters as Raffaello, Sebastiano del Piombo, Giovanni Antonio Bazzi (called Sodoma), Giulio Romano and Peruzzi himself, and it was furnished with such magnificence that it aroused general admiration. In the rooms of the Villa high prelates, noblemen, poets, men of letters and artists used to meet; comedies were performed there and sumptuous banquets were held. After Agostino Chigi’s death, the villa was bought by Cardinal Alessandro Farnese (from whom the Villa takes its name). It passed to the Bourbon family in 1714; and finally a long lease of the villa at ground rent was given to the Spanish Ambassador Bermudez de Castro, Duke of Ripetta, who later redeemed it. The Italian State bought the Villa from the Duke’s heirs and in 1928 it was destined to become the home of the Reale Accademia d’Italia. After the suppression of the Accademia d’Italia in 1944, the villa became the property of the Lincei Academy, which, by law, had succeeded the suppressed Academy.
To read more click here http://bit.ly/1OE7u7E
Einer Elhauge, Harvard Law School and Barry J. Nalebuff , Yale University - Yale School of Management discuss The Welfare Effects of Metering Ties. Worth downloading!
ABSTRACT: Critics of current tying doctrine argue that metering ties can increase consumer welfare and total welfare without increasing output and that they generally increase both welfare measures. Contrary to those claims, we prove that metering ties lower consumer welfare and total welfare unless they increase capital good output. We further provide conditions under which metering ties always harm consumer welfare for all uniform and lognormal distributions of consumable usage rates. Finally, we show that with a lognormal distribution, metering ties also lower total welfare absent a large dispersion in desired usage of the metered good. These findings support current tying doctrine, which presumptively condemns ties with market power absent proof of an offsetting procompetitive justification.
Ming Hu, University of Toronto - Rotman School of Management and Yun Zhou, University of Toronto - Rotman School of Management theorize about Dynamic Matching in a Two-Sided Market.
ABSTRACT: Motivated by the rise of the sharing economy, we consider an intermediary firm's problem of dynamically matching demand and supply of heterogeneous types over a discrete-time horizon. More specifically, there are two finite disjoint sets of demand and supply types. Associated with each possible matching of a demand type and a supply type is a reward. In each period, demand and supply of various types arrive in random quantities. The firm's problem is to decide on the optimal matching policy to maximize the total discounted rewards minus costs, given that unmatched demand and supply will incur waiting or holding costs, and will be carried over to the next period with abandonments.
For this general dynamic matching problem, we obtain a set of distribution-free structural results. First, using only matching rewards, we define a partial order between pairs of demand and supply types (which do not necessarily share a common demand or supply type). With this notion of partial order, we show it is optimal to prioritize the matching of the dominating pair over the dominated pair, and to greedily match a perfect pair that dominates all other pairs sharing a common demand or supply type. Second, we impose a reward structure in which types have (unidirectional) "taste" differences. For these horizontally differentiated types, we show that there exists a matching priority hierarchy related to "taste" locations: for any given demand (or supply) type, the closer its distance to a supply (or demand) type, the higher the priority to match the closer pair. Along the priority hierarchy, the optimal matching policy has a match-down-to structure for any pair of demand and supply types: there exist state-dependent thresholds; if the levels of demand and supply are higher than the thresholds, they should be matched down to the thresholds; otherwise, they should not be matched. Third, we impose a reward structure in which types have "quality" differences. For these vertically differentiated types, the optimal matching policy has an even simpler top-down matching structure (in short, "line up, match up"): line up demand types and supply types in descending order of their "quality" from high to low; match them from the top, down to some level. When demand and supply types have the same abandonment rate, the match-down-to levels have monotonicity properties with respect to the system state, and the one-step-ahead heuristic policy has a simplified state-dependent structure. Lastly, we study the deterministic counterpart of the stochastic problem and show that its solution can be obtained by solving a linear program or approximated by another linear program with much fewer decision variables. It is asymptotically optimal to re-solve the linear program successively for the current time and state and apply the solution as a heuristic policy, when the time and the arrivals of demand and supply are scaled up proportionally.
Wednesday, May 13, 2015
Thomas G. McGuire, Harvard Medical School - Department of Health Care Policy, Keith Drake, Greylock McKinnon Associates, Einer Elhauge, Harvard Law School, Raymond S. Hartman, Greylock McKinnon Associates, and Martha Starr, American University - Department of Economics discuss Resolving Reverse-Payment Settlements with the Smoking Gun of Stock Price Movements.
ABSTRACT: The Supreme Court recently held that in reverse payment settlements of drug patent disputes, anticompetitive effects can be inferred if the reverse payment exceeds the patent holder’s anticipated litigation costs, absent some offsetting justification. Application of this standard is problematic because defendants usually (a) obscure the amount of the reverse payment and (b) claim their settlement was justified by risk aversion. Further, even if a net reverse payment can be proven, it is little help in estimating the period of delay or damages. This Article offers another type of evidence that demonstrates and quantifies anticompetitive effects. An otherwise unexplained bump in the patent holder’s stock price shows that the settlement created new future profits by extending the period without generic competition beyond what the stock market expected. The stock market test has several advantages: it rebuts the risk aversion claim (which cannot explain the stock price rise); it more effectively (though still conservatively) captures damages than the magnitude of the reverse payment; and, finally, it relies on the behavior of objective traders rather than deal makers with well-understood incentives to obscure the presence of a payment. We conduct a stock market event study on one of the early instances of a reverse-payment settlement to illustrate how the method works.
David Fielding (Department of Economics, University of Otago, New Zealand) and Shef Rogers (Department of English and Linguistics, University of Otago, New Zealand) explore Monopoly Power in the Eighteenth Century British Book Trade.
ABSTRACT: In conventional wisdom, the reform of! British copyright law during the eighteenth century brought an end to the monopoly on the sale of books held by the Stationers Company, and the resulting competition was one of the driving forces behind the expansion of British book production during the Enlightenment. In this paper, we analyze a new dataset on eighteenth century book prices and author payments, showing that the legal reform brought about only a temporary increase in competition. The data suggest that by the end of the century, informal collusion between publishers had replaced the legal monopoly powers in place at the beginning of the century. The monopoly power of retailers is not so easily undermined.
Sofronis Clerides, University of Cyprus - Department of Economics; Centre for Economic Policy Research (CEPR); University of Bologna - Rimini Center for Economic Analysis (RCEA), Manthos D. Delis, University of Surrey - Surrey Business School, and Sotirios Kokas, University of Essex - Essex Business School offer A New Data Set on Competition in National Banking Markets.
ABSTRACT: We estimate the degree of competition in the banking sectors of 148 countries over the period 1997–2010 using three methods: the Lerner index, the adjusted Lerner index, and the profit elasticity. Marginal cost estimates required for all methods are obtained using a flexible semi‐parametric methodology. All three indices show that competitive conditions in banking deteriorated during the period 1997–2006, improved until 2008, and deteriorated again thereafter. Levels of competition differ across regions and income groups, but there is gradual convergence over time. Banking system is less competitive in sub‐Saharan Africa and low income countries and more competitive in Europe and Central and South Asia and OECD countries.
CUTS/CIRC 4th Biennial Competition, Regulation & Development Conference, 2015
Relevance of Competition and Regulatory Reforms in Pursuing the Post-2015 Development Agenda in Developing Countries
Nairobi, 12-13 December 2015
CALL FOR PAPERS
CUTS and CIRC are pleased announce a ‘Call for Papers’ for the 4th Biennial Competition Regulation & Development Conference 2015 to be held on 12-13 December, 2015 in Nairobi (Kenya). Interested scholars and practitioners (working on Competition and Regulatory reforms from a developing/least developed country perspective) are invited to submit a 500 word abstract for a chance to participate in this Conference and present their paper.
The abstract should be based on any one of the four knowledge sessions of the Conference (below) and submitted to Mr Kshitiz Sharma (email@example.com) by 15th June 2015 (2300hrs India Standard Time, IST), along with a brief 2-page CV of the author. Authors are requested to mention the specific ‘Knowledge Session’ that their paper is based on while submitting the abstract.
Authors of selected abstracts would be invited to submit full conference papers (3,000 to 4,000 words) for a chance to participate in this conference. On successful selection, the organisers will provide support to the author (air travel, accommodation and meals) to participate in the conference, and present the paper.
II. Conference programme (Knowledge Sessions)
The conference programme has been segregated into the following four ‘knowledge sessions’. The abstract/paper should target any one of them.
Interested scholars/practitioners should visit http://www.cuts-ccier.org/pdf/CFP-4thBiennial_Conference.pdf for the detailed Call for Papers, which explains issues covered under each knowledge session. Key questions are provided under each session, to guide the authors for their abstract/papers. The draft conference programme can be seen at: http://www.cuts-ccier.org/pdf/Agenda-4thBiennial_Conference.pdf
III. Important Dates and Deadlines
The following dates/deadlines need to be noted:
IV. Further information and Contacts
For further information/questions, please email Mr. Kshitiz Sharma (firstname.lastname@example.org)
Laura Onofri, University of Venice Ca Foscari and Vasco Boatto, University of Padua analyze Cournot Oligopoly, Homogeneous Products and Grappa Market: An Econometric Study.
ABSTRACT: In this study, using scanner data, collected from super-market transactions in 2009, we estimate an eight equations simultaneous model with a 3SLS routine, with the objective to empirically analyze the Grappa market structure. Results show that the supply side of the Grappa market is characterized by an oligopolistic structure, where the dominant firms compete as oligopolists a la Cournot with homogeneous products. Firms’ competition is mostly played on the quantity grounds and mostly disregards product differentiation strategies. The dominant firms produce and supply a “cheap”, homogenous product. Interpretation of the results focus on cultural consumption of this very “ancient” liquor and corroborate previous studies, where hedonic analysis of the demand side has shown consumers’ very low/null implicit prices for the product differentiated characteristics.
Tuesday, May 12, 2015
Victor Aguirregabiria and Junichi Suzuki (both University of Toronto) review Empirical Games of Market Entry and Spatial Competition in Retail Industries.
ABSTRACT: We survey the recent empirical literature on structural models of market entry and spatial competition in oligopoly retail industries. We start with the description of a framework that encompasses various models that have been estimated in empirical applications. We use this framework to discuss important specification assumptions in this literature: firm heterogeneity; specification of price competition; structure of spatial competition; firms' information; dynamics; multi-store firms; and structure of unobservables. We next describe different types of datasets that have been used in empirical applications. Finally, we discuss econometric issues that researchers should deal with in the estimation of these models, including multiple equilibria and unobserved market heterogeneity. We comment on the advantages and limitations of alternative estimation methods, and how these methods relate to identification restrictions. We conclude with some issues and topics for future research.
Concurrences + George Mason University School of Law
Friday, May 29, 2015 from 8:30 AM to 6:30 PM (EDT)
REGISTRATION & CONTINENTAL BREAKFAST
Bruce KOBAYASHI | Professor | Director, Global Antitrust Institute, George Mason University School of Law
Douglas H. GINSBURG | Judge, US Court of Appeals for the District of Columbia Circuit | Professor of Law, George Mason University School of Law
OPENING KEYNOTE SPEECH
Maureen OHLHAUSEN | Commissioner, US Federal Trade Commission, Washington DC
USE AND ABUSE OF ECONOMIC EVIDENCE IN ANTITRUST CASES
Francine LAFONTAINE | Director, Bureau of Economics, US Federal Trade Commission, Washington DC
John HARKRIDER | Partner, Axinn, Veltrop & Harkrider, Washington DC
Pierre-Yves CREMIEUX | Managing Principal, Analysis Group, Boston
Eduardo PEREZ-MOTTA | Founding partner of Agon, Mexico City
Moderator: Douglas H. GINSBURG | Judge, US Court of Appeals for the District of Columbia Circuit | Professor of Law, George Mason University School of Law
MARKET DEFINITION V. MARKET POWER: CAN THEY BE RECONCILED?
Gregory J. WERDEN | Senior Economic Counsel, US Department of Justice, Washington DC
Lawrence J. WHITE | Professor of Economics, Stern School of Business, New York University
George CARY | Partner, Cleary Gottlieb Steen & Hamilton, Washington DC
Loren SMITH | Senior Vice President, Compass Lexecon, Washington DC
John FINGLETON | CEO, Fingleton Associates, London
Moderator: Joshua D. WRIGHT | Commissioner, US Federal Trade Commission, Washington DC | Professor of Law, George Mason University School of Law
LUNCH KEYNOTE SPEECH
ANTONIN SCALIA| Associate Justice, Supreme Court of the United States
COORDINATION ISSUES: INFORMATION EXCHANGE AND PRICE SIGNALING
Oliver RICHARD | Director, Center for Economics, US Government Accountability Office, Washington DC
William H. PAGE | Professor, Levin College of Law, University of Florida
Kai-Uwe KÜHN | Associate Professor of Economics, University of Michigan | Senior Consultant, CRA
Moderator: Paul FRIEDMAN | Partner, Dechert, Washington DC
NEGOTIATING SETTLEMENTS & REMEDIES: DO YOU REALLY NEED TO CONSENT?
William E. KOVACIC | Professor, George Washington University Law School, Washington DC
Joseph FARRELL | Professor of Economics, University of California, Berkeley | Partner, Bates White
Carlos MENA LABARTHE | Head of the Investigative Authority, Mexican Competition Authority, Mexico City
Charles F. RULE | Former Assistant Attorney General for Antitrust, US Department of Justice, Washington DC | Global Antitrust Institute Board of Advisors
Moderator: Deborah L. FEINSTEIN | Director, Bureau of Competition, US Federal Trade Commission, Washington DC
CORPORATE LIABILITY & INDIVIDUAL LIABILITY: DOUBLE-PAYING?
Keith N. HYLTON | Professor of Law, Boston University School of Law
Daniel RUBINFELD | Professor of Law, New York University School of Law
John TERZAKEN | Partner, Allen & Overy, Washington DC
Moderator: J. Frederick MOTZ | Senior Judge, United States District Court for the District of Maryland
CLOSING KEYNOTE SPEECH
Mattias Lang considers Legal Uncertainty.
ABSTRACT: This article considers legal uncertainty in competition law. Contrary to perceived wisdom, I show that the uncertainty itself might have positive welfare effects, if it is sufficiently small. Legal uncertainty functions as a screening device provided that the threshold of legality is uncertain. Then, near the threshold, firms decision whether to pursue controversial business practices varies with their type. This allows mitigating the policy restrictions, as the competition authority cannot perfectly observe the types of the firms. Such an effect might influence the trade-off between per-se rules and rules of reason in competition law. In an extension, I discuss the effects of introducing ambiguity about the fine. I prove that this ambiguity mitigates enforcement problems if auditing costs are sufficiently high.
Georg Clemens, DICE and Holger A. Rauy University of Erlangen-Nuremberg, Germany ask Do Leniency Policies facilitate Collusion? Experimental Evidence.
ABSTRACT: This paper experimentally analyzes the cartel coordination challenge induced by the discrimination of cartel ringleaders in leniency policies. Ringleaders often take a leading role in the coordination and formation of a cartel. A leniency policy which grants amnesty to all "whistleblowers" except for ringleaders may therefore reduce the incentive to become a ringleader and may disrupt cartel formation. We analyze discriminatory and non-discriminatory leniency policies in a multi-stage cartel formation experiment where multiple ringleaders may emerge. Although theory predicts that cartels will always be reported, whistleblowing rarely occurs. Paradoxically the discriminatory leniency policy induces more firms to become ringleaders, which ultimately facilitates coordination in the cartel.
Markus Dertwinkel-Kalty Christian Weyz (both DICE) explore Remedies vs. Extreme Options in Merger Control.
ABSTRACT: We investigate how remedies in merger control affect information acquisition by ! an antitrust agency. We identify conditions under which an ''extreme options'' regime which does not allow for remedies improves information acquisition by the agency which increases consumer surplus. The legislator (''principal'') and the agency share the same objective function with the only exception that the latter must bear information costs. When remedies are not feasible, then the agency's incentive to acquire information is relatively large as a false decision tends to have large adverse effects. When remedies are feasible, the intermediate option does not involve such risks, so that incentives to acquire information decreases. However, our results depend crucially on the institutional environment. In the case of an adversial system, information acquisition incentives are not per se lower if remedies are feasible.
Monday, May 11, 2015
Enrico Bohme, Goethe University Frankfurt examines Second-Degree Price Discrimination on Two-Sided Markets.
ABSTRACT: The paper provides an analysis of the second-degree price discrimination problem on a monopolistic two-sided market. In a simple framework with two distinct types of agents on market side 1, we show that under incomplete information the extent of platform access for high-demand agents is strictly reduced below the benchmark level with complete information. In addition, the paper finds that it is feasible in the monopoly optimum that the bundle for low-demand agents is more expensive than the one for high-demand agents if the extent of interaction with agents from the opposite market side is assumed to be bundle-specific.
Justus Haucap, Ulrich Heimeshoff, Manuel Siekmann (all DICE) discuss Price dispersion and station heterogeneity on German retail gasoline markets.
ABSTRACT: Price levels and movements on gasoline and diesel markets are heavily debated among consumers, policy-makers, and competition authorities alike. In this paper, we empirically investigate how and why price levels differ across gasoline stations in Germany, using eight months of data from a novel panel data set including price quotes from virtually all German stations. Our analysis specifically explores the role of station heterogeneity in explaining price differences across gasoline stations. Key determinants of price levels across fuel types are found to be ex-refinery prices as key input costs, a station's location on roads or highway service areas, and brand recognition. A lower number of station-specific services implies lower fuel price levels, so does a more heterogeneous local competitive environment.
Wilko Bolt and David Humphrey are Assessing bank competition for consumer loans.
ABSTRACT: We assess the competitiveness of the $400 billion dollar U.S. bank consumer loan market by comparing results from different competition measures-HHI, Lerner Index, H-Statistic along with three others, two of which are related to frontier analysis. These measures are typically weakly related to one another and only half of them identify banks with the highest loan price and spread as also being the least competitive. This is the opposite of what would be expected. The states where the most and least competitive banks are located are noted. The most populous states with the largest banks are underrepresented.
Martin Labaj (University of Economics in Bratislava, Faculty of National Economy, Department of Economic Policy), Karol Morvay, Peter Silanie and Christoph Weiss study Market Structure in Transition: Entry and Competition in Slovakia.
ABSTRACT: The present paper provides first empirical evidence on the relationship between market size and the number of firms for a transition economy. We estimate size thresholds required to support different numbers of firms for seven retail and professional service industries in a large number of distinct geographic markets in Slovakia. The empirical analysis is carried out for three time periods (1995, 2001 and 2010) characterizing different stages of the transition process. Our results suggest that the relationship between market size and the number of firm has changed substantially over time. While entry threshold ratios tend to be larger than one and decline with the number of firms in most professions in 1995, the estimation result! s obtained for 2010 suggest entry threshold ratios much closer to one. This finding is consistent with observations suggesting a significant decline in entry barriers as well as an intensification of competition over time.
Friday, May 8, 2015
A primer on damages of cartel suppliers: Determinants, standing US vs. EU and econometric estimation
Eckart Bueren and Florian Smuda offer A primer on damages of cartel suppliers: Determinants, standing US vs. EU and econometric estimation.
ABSTRACT: While private actions for damages against price-cartels by direct and indirect customers receive much attention, it is largely unresolved to what extent other groups that are negatively affected may claim compensation. This paper focuses on probably the most important one: suppliers to a downstream sellers' cartel. The paper shows graphically and analytically that cartel suppliers are negatively affected by the conspiracy depending on three effects: a direct quantity, a price and a cost effect. The article then examines whether suppliers are entitled to claim ensuing losses as damages in the US and the EU, with exemplary looks at England and Germany, thereby delineating the boundaries of the right to damages in different legal systems. We find that, while the majority view in the US denies standing, the emerging position in the EU, considering also recent case law and the forthcoming Damages Directive, allows for approving cartel supplier damage claims. We argue that this can indeed be justified in view of the different institutional context and the goals assigned to the right to damages in the EU. The Annex complements our result that supplier damage claims are practically viable by showing how supplier damages can be estimated econometrically with an adjusted residual demand model.