Antitrust & Competition Policy Blog

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

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Tuesday, October 7, 2014

Vote for Best 20 Under 40 Academics in Antitrust Law and Economics - Voting Now Open!

See here for the voting based on nominations that were sent to me this past week.  The top 10 in each of law and economics will be announced as winners. Voting will be open until 11:59pm New York time on October 17.

October 7, 2014 | Permalink | Comments (15) | TrackBack (0)

Search and Ripoff Externalities

Mark Armstrong, Oxford, has a paper on Search and Ripoff Externalities.

ABSTRACT: This paper surveys models of markets in which some consumers are "savvy" while others are not. We discuss when the presence of savvy consumers improves the deals available to non-savvy consumers in the market (the case of search externalities), and when the non-savvy fund generous deals for savvy consumers (ripoff externalities). We also discuss when the two groups of consumers have aligned or divergent views about market interventions. The analysis covers two overlapping families of models: those which examine markets with price/quality dispersion, and those which exhibit forms of consumer hold-up.

October 7, 2014 | Permalink | Comments (0) | TrackBack (0)

Monday, October 6, 2014

More on Taylor Swift versus Katy Perry: An Economic Analysis with a Nod to Merger Competitive Effects Analysis and Diversion Ratios

Previously I reported on the Competition Among Pop Stars: The Rumored Katy Perry Fued with Taylor Swift.  Today on the drive to school (roughly 7:15am) there was fighting in the car among the girls. I couldn't figure out who started it and didn't really care since my first thoughts were on quiet and safety.  To stop the screaming in the back seat, I turned on the radio and we heard songs by both Katy Perry and Taylor Swift.  Then the older girls and I had a discussion of what makes songs popular and about the idea behind diversion ratios in a merger context.  They got it - probably better than some final exams that a number of you have graded.  The two year old didn't understand economic concepts other than basic demand - "I want more Katy Perry."  Once I dropped off the older girls at elementary school, the conversation in the car was far more basic, although my 2 year old every once in a while expressed profound thoughts. 

What is the competition in terms of recent songs by these two pop stars?

Taylor Swift - Shake It Off


Katy Perry - This is How We Do


Neither set of lyrics is likely to make the Concurrences writing award finals but I suspect that an appearance by either at the Concurrences writing award or the GCR award dinner would be the coolest musical performance in antitrust since Tad Lipsky played onstage with BB King back in the 1970s - does anyone at Latham have a bootleg of that concert?

October 6, 2014 | Permalink | Comments (0) | TrackBack (0)

2015 International Scholar in Residence Program Announcement

The Section of Antitrust Law International Scholar in Residence Program (“SAL SIR”) will provide funding of $10,000.00 USD each for up to two scholars to visit the United States to pursue competition policy-related research in the Spring of 2015. Junior faculty members (those who have been engaged in full-time teaching for five years or less) as well as current or recent Ph.D. candidates who have a demonstrated interest in the study of competition policy are invited to apply.
Applicants chosen as International Scholars in Residence (“SAL Scholars”) will be expected to visit the United States for a period between six (6) weeks and three (3) months, commencing on or after March 1, 2015, and coinciding with the 63rd Annual Spring Meeting of the Antitrust Section scheduled for April 15-17, 2015. During their time in the U.S., SAL Scholars will conduct research, meet and interact with members of the U.S. antitrust community, and attend the annual Spring Meeting in Washington, D.C. Although arrangements can be tailored to the particular needs of each scholar’s research proposal, SAL Scholars are expected to reside in Washington, D.C. for some of their time in the U.S., so they can have access to federal agency personnel as well as a range of academics, lawyers, and consulting firms. SAL Scholars can also propose short visits to state enforcement agencies or U.S. academic institutions outside of Washington, D.C., provided the visit will advance their research. Additional funding may be available to support these visits.
Application Process and Contents

  • Each Applicant must submit an application to the “SAL SIR Selection Committee” that includes the following:
    A cover letter/statement of interest describing the Applicant’s current position, research interests related to competition policy, and qualifications to serve as a SAL Scholar.
  • A current curriculum vitae.
  • A specific and significant research proposal (typically 3-5 single-spaced pages) that includes a description of steps already taken in furtherance of the research and an explanation of how the proposal would be significantly advanced through work in residence in the U.S. Proposals can include work in progress as well as new research projects. Applicants must also disclose any other sponsors of the research.
  • Two letters of recommendation from current faculty members familiar with the candidate and her/his work, evaluating the Applicant’s ability to undertake the proposed research, including the Applicant’s proficiency in English. In the case of a current faculty member or Ph.D. candidate, one of the letters should come from the Dean, Director, or Head of School of the applicant’s home institution or program, indicating: (1) the Applicant’s good standing in the institution; (2) the institution’s willingness to grant the Applicant the necessary leave time; and (3) an intention to support the Applicant’s research as a SAL Scholar, including whether any home institution funds will be provided in support of the visit. In the case of current or recent Ph.D. candidates, one letter should come from the faculty adviser who is supervising or who supervised the Applicant’s doctoral research.
  • If applicable, a statement of interest in visiting any academic institutions or enforcement agencies outside of Washington, D.C., such as the offices of a State Attorney General, along with a justification for the specific goals sought to be achieved by the “side visit” and a supportive letter of invitation from a representative of the institution to be visited.
  • A description of the particular work product that the Applicant intends to produce as a result of her/his visit, such as an article, book, book chapter, or report for use by a government or non-government agency focused on competition policy issues. Successful applicants also will agree that any work product prepared in whole or part with the support of the SAL SIR program will so indicate with the specific language approved by the Section of Antitrust Law.
  • Any other material the Applicant would like the Selection Committee to consider.

In judging the proposals received, the SAL SIR Selection Committee will be guided by the following factors: the strength and specificity of the research proposal, the likelihood that the Applicant’s overall research goals could better be realized through participation in the program, evidence of past scholarly productivity, the letters of recommendation, the mix of research topics selected for support under the program as a whole, and diversity in terms of home institutions, national origin, race, religion, and gender.
Although SAL Scholars will be responsible for making all of their own travel and accommodation arrangements, the Section of Antitrust Law will assist in providing guidance on making arrangements to secure work space to aid in research at a Washington, D.C.-area academic institution. Successful applicants will be strongly encouraged to apply to the Visiting Researcher Program at Georgetown University Law Center, which provides research space and support to international scholars. For more information, see The Section of Antitrust Law will also help to facilitate meetings and interviews with a range of enforcers, academics, and private consultants who can advise SAL Scholars on their specific research topics.

Eligibility Criteria and Personal Responsibilities

As indicated above, to be eligible for consideration, applicants should be current Ph.D. candidates or recent recipients of a Ph.D. or a junior faculty member (engaged in full-time teaching for five years or less), who have a demonstrated interest in the study of competition policy and proficiency in English. Applicants need not be current members of the American Bar Association or the Section of Antitrust Law. SAL Scholars shall be responsible for determining their liability, if any, for taxes in their home jurisdiction as well as in the United States.

Deadline for Applications

The deadline for submitting an application to be considered for appointment as an SAL SIR for the 2014-15 academic year is October 31, 2014. The SAL SIR Selection Committee hopes to announce its selections by mid November 2014. Applications should be submitted to Deborah D. Morgan, Assistant Director, American Bar Association, Section of Antitrust Law, preferably via email at, or, if necessary by mail to:

Deborah D. Morgan Assistant Director Section of Antitrust Law American Bar Association 321 North Clark Street Chicago, IL 60654-7598

SAL SIR Selection Committee:

Professor Harry First, New York University School of Law, New York, NY Professor Andrew I. Gavil, Director, Office of Policy Planning, U.S. Federal Trade Commission, on leave from Howard University School of Law, Washington D.C. Professor Richard J. Gilbert, Department of Economics, University of California, Berkeley Professor Alison Jones, King’s College London, School of Law

October 6, 2014 | Permalink | Comments (0) | TrackBack (0)

Antitrust and the Patent System: A Reexamination

Herb Hovenkamp (Iowa) has an important paper on Antitrust and the Patent System: A Reexamination. Recommended!

ABSTRACT: Since the federal antitrust laws were first passed  they have cycled through extreme positions on the relationship between competition law and the patent system.  Previous studies of antitrust and the patent system have generally assumed that patents are valid, discrete, and generally of high quality in the sense that they further innovation.  As a result, increasing the returns to patenting increases the incentive to do socially valuable innovation.   Further, if the returns to the patentee exceed the social losses caused by increased exclusion, the tradeoff is positive and antitrust should not interfere.  If a patent does nothing to further innovation, however, then any amount of social loss from increased monopoly is harmful.  In that case there is no additional benefit from innovation down the road.  Since only a subset of patents are worthless, however, this naturally invites the question whether considerations of patent social value are a reasonable element of competition policy.
At various points in their history both antitrust law and patent law have engaged in considerable overreaching.  Beginning in the late 1970s, however, antitrust law went through a lengthy and still ongoing process of court-imposed discipline that has brought its rules more closely into alignment with its stated concern, which is increasing consumer welfare by promoting competition.  Antitrust cases are far more difficult to win,  the per se rule is less frequently used, and we have considerably heightened the requirements of allegation and economic proof.    By contrast, patent law has continued on an expansion course that is only now showing some signs of abating.  Patent law largely still awaits the consumer welfare revolution that  has already occurred in antitrust doctrine.  Writing in the mid-sixties Ward S. Bowman and Robert H. Bork warned of a "crisis in antitrust," presaging the significant reform that was to follow.  Today we are facing a crisis in patent law.
This article first examines antitrust and patent law as regulatory institutions with legislative mandates to regulate in their given areas, but subject to limitations that all regulatory institutions face -- namely, high cost, imperfect information, and special interest capture.  One failed approach to this regulatory enterprise  was the view that the patentee acts improperly when it engages in activity "beyond the scope" of the patent.  The flip side is that activity that is not "beyond the scope" is permissible.   A  more sensible way to view the interaction between the patent and antitrust regulatory systems is to divide patent activity into two parts: pre-issuance and post-issuance conduct.  Secondly one must look for explicit statutory authorization of the conduct in question.  Post-issuance conduct that is not statutorily authorized is generally amenable to antitrust scrutiny.   Next I examine the antitrust and patent systems as regulatory institutions, finding that today the presence of special interest capture is far stronger in the patent system than the antitrust system, although that may not always have been the case.   After that I turn to the very different ways that antitrust and the patent system approach economic policy.  The antitrust system is empirical, market based, and  acutely sensitive to market diversity.  In sharp contrast, the patent system is dominated by a much more myopic set of queries concerned with the boundaries of individual property rights and largely indifferent to market performance and diversity.
Finally this article develops a set of rules for evaluating specific disputes that implicate both antitrust and the patent system, focusing mainly on the difference between pre-issuance patent conduct, which is intensely regulated, and post-issuance conduct; as well as the differences between practices that are expressly authorized by the Patent Act and those that are not.  Given the level of producer capture exhibited by the Patent Act, the search for express authorization is particularly important.  A regulatory statute that bargains away the public interest must be followed, but silence and ambiguity should be construed against the interests in control of the legislative process.  These principles are applied to a number of practices, including price-fixing in patent licenses, vertical practices, pay-for-delay settlements and other naked market division agreements, and improper patent enforcement actions.

October 6, 2014 | Permalink | Comments (1) | TrackBack (0)

Patent Trolls: Evidence from Targeted Firms

Lauren Cohen, Harvard Business School; National Bureau of Economic Research (NBER), Umit G. Gurun, University of Texas at Dallas - Naveen Jindal School of Management, and Scott Duke Kominers, Harvard University analyze Patent Trolls: Evidence from Targeted Firms.

ABSTRACT: We provide theoretical and empirical evidence on the evolution and impact of non-practicing entities (NPEs) in the intellectual property space. Heterogeneity in innovation, given a cost of commercialization, results in NPEs that choose to act as “patent trolls" that chase operating firms' innovations even if those innovations are not clearly infringing on the NPEs' patents. We support these predictions using a novel, large dataset of patents targeted by NPEs. We show that NPEs on average target firms that are flush with cash (or have just had large positive cash shocks). Furthermore, NPEs target firm profits arising from exogenous cash shocks unrelated to the allegedly infringing patents. We next show that NPEs target firms irrespective of the closeness of those firms' patents to the NPEs', and that NPEs typically target firms that are busy with other (non-IP related) lawsuits or are likely to settle. Lastly, we show that NPE litigation has a negative real impact on the future innovative activity of targeted firms.

October 6, 2014 | Permalink | Comments (0) | TrackBack (0)

Sunday, October 5, 2014

New CPI Antitrust Chronicle Issue: Cost-Benefit Analyses for Health Care

New CPI Antitrust Chronicle Issue: Cost-Benefit Analyses for Health Care
In this issue:

Obama Care has brought a classic cost-benefit question in health care to the forefront: How to improve health care while controlling costs? We present a number of analyses, first looking at whether increased insurance coverage compensates for potential losses. Then we discuss several ways a more classic antitrust conflict—preserving competition vs. encouraging efficiency—is playing out. Our articles analyze possible changes in the traditional ways to pay for health care, discuss a denied merger despite acknowledging the combination would improve health care quality, and debate possible additional regulations and even price controls. And we note the conflict is not just between government and private entities—but also between different federal government agencies, and state and federal authorities. Resolution looks to be very tough.

Cost-Benefit Analyses for Health Care
  1. Rosa Abrantes-Metz, Albert Metz, Sep 30, 2014

    Health Care Benefits vs. Costs: Are We Making the Right Choices?

    In fact the two goals—reducing health care costs and increasing insurance coverage—are generally incompatible. Rosa Abrantes-Metz (Global Economics Group) & Albert Metz (Moody's).

  2. Kent Bernard, Sep 30, 2014

    Patient Outcomes vs. Competition: Squaring the Circle in FTC v. St. Lukes

    The way that we as a society pay for health care serves to reinforce the traditional antitrust approach, but if the changes envisioned by the health care reform laws actually come to pass, antitrust may have to make a major adjustment. Kent Bernard (Fordham)

  3. Kenneth Field, Sep 30, 2014

    Redefining Care and Competition Models in Health Care

    Focusing on the narrow efficiencies defense ignores potential common ground that deserves further development and discussion. Ken Field (Jones Day)

  4. Dionne Lomax, Helen Kim, Sep 30, 2014

    The Evolution of Efficiencies and Treatment of Quality of Care Defenses in Light of Changing Health Care Industry Dynamics

    It is clear that the FTC is skeptical of a hospital merger’s ability to reduce costs and improve quality. Dionne Lomax & Helen Kim (Mintz, Levin)

  5. George Paul, Andrew Mann, Sep 30, 2014

    Is the Affordable Care Act the Catalyst to Merger Efficiency Reform?

    The healthcare industry is teed up to provide enough data points to really move the needle in terms of analyzing out-of-market efficiencies—and any developments in this arena will have implications outside the healthcare context. George L. Paul & Andrew K. Mann (White & Case)

  6. J. Mark Waxman, Sep 30, 2014

    Integrating to Enhance Value and Quality vs. Preserving Competition to Maintain Lower Prices

    Unfortunately, there is no bright line to indicate where the balance lies between the desire for efficiency and population health management and the need to retain a competitive environment as a check on pricing decisions. J. Mark Waxman (Foley & Lardner)

October 5, 2014 | Permalink | Comments (0) | TrackBack (0)

Friday, October 3, 2014

Tips for Fasting for Yom Kippur

I found these tips for fasting on the Judaism 101 website:

The Meal Before

Your last meal before Yom Kippur should be chosen carefully.

Don't Overeat
Some people seem to think that they can "make up for" not eating on Yom  Kippur by having a big meal the night before. This is a very bad idea, and  actually makes it harder to fast. Have you ever noticed how you feel  particularly hungry the morning after a large meal? Eat a normal sized meal.
Eat Foods That Are Easy To Digest
Don't eat anything that will sit in your stomach like a rock, give you  heartburn or leave you feeling hungry. The specifics here vary significantly  from person to person. Think of foods that don't leave you feeling hungry the  morning after. For example, it is commonly said that the problem with Chinese  food is, three hours later you're hungry again. If that's true for you, then  don't eat Chinese for your last meal!
Get Plenty of Protein and Complex Carbohydrates
These are the foods that will stick with you during the next day and give  you the long-term energy you need.

During Yom Kippur

Even after the fast has started, there are things you can do to ease your fast.

Go to Synagogue
Aside from the fact that you're supposed to be there praying and repenting  anyway <grin>, this will actually make it easier to fast. Being in a room  with people who are also fasting, being away from all of the day-to-day  temptations to eat, will make it easier for you to fast.
Don't Talk About Food or Hunger
During Yom Kippur when I was in college, my classmates continually talked  about how hungry they were, almost bragging about it, as if it were some kind  of badge of honor showing what good Jews they were to suffer this way. Don't  fall into this trap! Talking about your hunger will only focus your attention  on it and make it harder to fast. Don't talk about or think about what you are going to eat to after the fast.  When you think about food, your body prepares itself to receive that food, and  that preparation causes the feeling that most Americans think of as hunger. You should also avoid being around people who are talking about these things.
Take a Nap in the Afternoon
During the break between services in the afternoon, it is more or less  traditional to take a nap (though some sources disapprove of this practice). I  highly recommend this, as it does ease the fast. Have you ever noticed that  full feeling that you have when you wake up from an afternoon nap?
Sniff Spices
I was introduced to this practice in an Orthodox service a few years ago:  during the break between services in the afternoon, we passed around and  sniffed from a b'samim box (a container of spices used in the havdalah ritual  at the end of shabbat). I was surprised to find that sniffing these spices  (cinnamon and cloves) eased my hunger somewhat. I have also used cardamom


October 3, 2014 | Permalink | Comments (0) | TrackBack (0)

Promoting Innovation

Spencer Weber Waller, Loyola University of Chicago, School of Law - Institute for Consumer Antitrust Studies and Matthew Sag Loyola University Chicago School of Law are Promoting Innovation.

ABSTRACT: The economist Joseph Schumpeter recognized two essential facts of modern capitalism: the sudden displacement of the old by the new, a process he eloquently termed “creative destruction”; and the significance of innovation over incremental improvements in allocative efficiency to long-run economic growth. The twin Schumpeterian insights are now well accepted.  How these insights should be incorporated into laws regulating the marketplace, such as antitrust and intellectual property, is far less clear.
Antitrust minimalists and skeptics tend to equate Schumpeter with laissez faire.  After all, if even the most entrenched market behemoths are vulnerable to seismic shifts in technology, are not all supposed monopolies merely fleeting? We disagree. This view misreads Schumpeter and misunderstands markets and business strategy. Modern businesses are well aware of the threat of disruptive outsiders and, left unchecked, will do their utmost to prevent future waves of creative destruction from threatening the status quo. We propose thinking of creative destructive and competition policy as a two-stage process rather than a single event where the victor enjoys the spoils of innovation indefinitely without legal constraints. Instead, competition law as we currently understand it would remain in place while being somewhat more forgiving as to the acquisition of market power, yet still vigilant in policing the maintenance of such power.
We focus on historical, current, and hypothetical examples from US and EU competition and intellectual property law to show how contemporary law has already incorporated many of these insights and the law can maximize consumer welfare by doing so more thoroughly.  Under such a two-step approach, some areas of antitrust and IP law would expand, some would contract, but all areas of the law would more clearly promote innovation and help create real Schumpeterian antitrust.

October 3, 2014 | Permalink | Comments (0) | TrackBack (0)

Back to the front: 2014 Twenty Under Forty Antitrust/Competition Academics - Nominations Are Open

Who are the top 20 academics in antitrust/competition law and economics around the world?  I am accepting nominations and will have a web vote next month.  Please post nominations in the comment box below or email mail. I want a list of people based on quality of scholarship as the sole criterion.  I want only full time academics in permanent positions.  Please list the person's name and their school affiliation. Nominations close on Monday October 6. Please send in names before then.


Nominees that have been sent to me include:

Rebbeca Haw Allensworth - Vanderbilt

Christina DiPasquale - Emory

Christine Durrance - UNC Chapel Hill

Niamh Dunne - Kings College

Gus Hurwitz - Nebraska

Marek Martyniszyn - Queens College

Josh Wright - George Mason

Angela Zhang - Kings College

Pinar Akman - Leeds

John Asker - UCLA

Thomas Cheng - Hong Kong University

Julie Clarke - Deakin University

Pablo Ibanez Colomo - LSE

Kati Cseres - University of Amsterdam

Liyang Hou - Shanghai Jiaotong University

Kai Huschelrath - University of Mannheim

Ioannis Lianos - UCL

Kasturi Moodaliyar - University of Witwatersrand

John Newman - University of Memphis

Oke Odudu - Cambridge

Andreas Stephan - University of East Anglia

Glen Weyl - University of Chicago

Peter Wheelan - Leeds

Mor Bakhoum - Munich Intellectual Property Law Center

Ambarish Chandra - University of Toronto

Nathan Miller - Georgetown

Ali Yurukoglu - Stanford

Simon Loertscher - University of Melbourne

Murat Mungan - FSU

Maria Elina Cruz - Catholic University of Chile

Dennis Gartner - University of Bonn

Heiko Gerlach - University of Queensland

Iwan Bos - Maastricht

Catherine Tucker - MIT

Daryl Lim - John Marshall

Burton Ong - National University Singapore

Sherman Jiang Shan - UIBE 

Ben Handel - Berkeley


October 3, 2014 | Permalink | Comments (3) | TrackBack (0)

George Washington Law Review 2014 Symposium: The FTC at 100

Save the date for the GW Law Review‘s Annual Symposium, The FTC at 100: Centennial Commemorations and Proposals for Progress, which will be held on Saturday, November 8, 2014, in Washington, DC. This year’s symposium, hosted in conjunction with GW Law Professor and former FTC Chairman William E. Kovacic, aims to celebrate the successes of our nation’s oldest federal regulatory agency and confront the challenges it faces moving forward.

Click Here to RSVP for the November 8, 2014 Panel Discussions

Friday, November 8, 2014

6 PM: Welcome Event: Conversation Between Justice Stephen G. Breyer of the United States Supreme Court and Dean Alan Morrison of The George Washington University Law School

Saturday, November 8, 2014

9 AM: Registration

9:30 AM: Opening Remarks

10:15 AM: Panel 1 – The FTC and Administrative Law

  • Moderator: Tim Wu, Isidor and Seville Sulzbacher Professor of Law, Columbia Law School
  • Discussant: Jeffrey S. Lubbers, Professor of Practice in Administrative Law, American University, Washington College of Law
  • Richard J. Pierce, Jr., Lyle T. Alverson Professor of Law, The George Washington University Law School
  • Daniel A. Crane, Associate Dean for Faculty and Research and Frederick Paul Furth, Sr. Professor of Law, University of Michigan
  • David A. Hyman   , H. Ross & Helen Workman Chair in Law and Professor of Medicine, University of Illinois College of Law

11:30 AM: Panel 2 – The FTC and Competition Law

  • Moderator: Joshua D. Wright, George Mason Law School and FTC Commissioner
  • Discussant: Jonathan B. Baker, Professor of Law, American University, Washington College of Law
  • Andrew Gavil   , FTC Director of the Office of Policy Planning and Professor of Law, Howard University Law School
  • Hillary Greene, Professor of Law, University of Connecticut School of Law
  • D. Daniel Sokol, Professor of Law, University of Florida, Levin College of Law
  • Ilene Knable Gotts, Partner, Wachtell, Lipton, Rozen & Katz

1:00 PM: Banquet Lunch and Keynote by the Honorable Douglas H. Ginsburg of the Court of Appeals for the District of Columbia Circuit

2:30 PM: Panel 3 – The FTC as a Consumer Protection and Privacy Agency

  • Moderator: Maureen K. Ohlhausen, FTC Commissioner
  • Discussant: Lydia Parnes   , Partner, Wilson Sonsini, Goodrich & Rosati
  • Daniel J. Solove, John Marshall Harlan Research Professor of Law, The George Washington University Law School and Woodrow N. Hartzog, Associate Professor, Samford University, Cumberland School of Law
  • J. Howard Beales, III, Professor of Strategic Management and Public Policy, The George Washington University School of Business and Timothy J. Muris, University Foundation Professor of Law, George Mason University Law School
  • David Vladeck, Georgetown University Law Center

3:45 PM: Panel 4 – The Future of the FTC Roundtable

  • Moderator: William E. Kovacic, Global Competition Professor of Law and Policy, The George Washington University Law School
  • Bill Blumenthal   , Partner, Sidley Austin and Former General Counsel of the FTC
  • Eleanor M. Fox, Walter J. Derenberg Professor of Trade Regulation, New York University School of Law
  • Thomas Krattenmaker, Former Professor of Law, Georgetown University Law Center and Former Dean, William & Mary Law School
  • Stephen Calkins, Professor of Law, Wayne State University Law School and Competition Authority of Ireland

5:00: Evening Reception

*Subject to revision. All events to be held at the George Washington University Law School.  For more information, please contact Kolya Glick, Law Review Senior Projects Editor, at

October 3, 2014 | Permalink | Comments (0) | TrackBack (0)

Newspapers and Magazines

Ambarish Chandra, University of Toronto - Rotman School of Management and Ulrich Kaiser, University of Zurich; Centre for European Economic Research (ZEW); University of Copenhagen - Centre for Industrial Economics; Government of the Kingdom of Denmark - Centre for Economic and Business Research provide an overview of Newspapers and Magazines.

ABSTRACT: We review the Economics literature on Newspapers and Magazines. This is a vast and challenging literature to discuss, and our emphasis will be on the newspaper industry, especially in the United States, given that this has been the focus of current research in the area. We first discuss the structure of print media markets, describing the rise in the number of daily newspapers during the early 20th century and then the steady decline since the 1940s. We discuss newspapers and magazines in the context of two-sided markets, noting that empirical papers on the newspaper industry were some of the earliest studies to use the techniques of two-sided market estimation. We also discuss a literature on some unusual pricing behavior in newspaper and magazine markets. We then review the research on advertising in print media, particularly the question of whether readers see print advertising as a good or a bad. We summarize the current research on antitrust-related issues in newspaper markets, including mergers, Joint Operating Agreements and vertical price restrictions. We then review recent research on how print media have been affected by the growth of the Internet. Finally, we offer suggestions for future research and provide some thoughts on the future of this industry.

October 3, 2014 | Permalink | Comments (0) | TrackBack (0)

Competition Policy and the Great Depression: Lessons Learned and a New Way Forward

Alan Meese, William & Mary has written on Competition Policy and the Great Depression: Lessons Learned and a New Way Forward.

ABSTRACT: Using the Great Depression as a case study, the Article examines the link between competition policy and macroeconomic stability.  This study sheds important light on claims that protection for economic liberty and resulting free competition exacerbated the Depression as well as modern arguments that coercive interference with free-market outcomes can speed recovery from the recent Great Recession.

Many equate competition policy with antitrust law.  However, this Article widens the focus beyond antitrust.  This wider focus reveals that, at least before the Depression, there were two other important sources of competition policy.  Thus, while antitrust law protected free competition from undue private restraint, the Dormant Commerce Clause and Due Process Clauses furthered free competition by prohibiting undue state and federal restraints on economic liberty.  As of 1929, then, these three sources of law combined to create and enforce a unified and doctrinally symbiotic commitment to free competition as the norm governing American economic life.

Unfortunately, relaxation of antitrust’s anti-collusion standards in the late 1920s and early 1930s paved the way for the 1933 National Industrial Recovery Act (NIRA), FDR’s stimulus plan.  In particular, the NIRA fostered collective wage and price setting and banned forms of normal competition, thereby protecting incumbent firms from more efficient rivals.  Antitrust’s surprising embrace of collusive practices also presaged judicial repudiation of due process protection for economic liberty, first in Nebbia v. New York, 291 U.S. 502 (1934), and then in West Coast Hotels v. Parish, 300 U.S. 379 (1937).

While the Court unanimously overturned the NIRA in Schechter Poultry v. United States, 295 U.S. 495 (1935) Congress and many states responded by enacting various statutes interfering with free competition, some of which survive to this day.  In particular, the 1935 National Labor Relations Act (NLRA) mandated collective bargaining with labor cartels known as unions, thereby displacing free competition in wage setting, while the 1938 Fair Labor Standards Act further displaced such competition by imposing minimum wages.  Shortly thereafter, the Supreme Court invoked Nebbia-like reasoning when holding that neither the antitrust laws nor the dormant Commerce Clause prevents states from organizing and enforcing cartels that would otherwise unreasonably restrain interstate commerce and thus violate the Sherman Act.  See Parker v. Brown, 317 U.S. 341 (1943).  This “state action” exemption applied, the Court said, even though California producers exported nearly all their raisins to other states. 

By the mid-1940s the pre-Depression commitment to free-market competition was a thing of the past, as states and the federal government were free to displace free-market outcomes by statute.  While proponents advocated the NIRA and other coercive interference with free markets as recovery measures, both theory and empirical evidence establish that these policies, including cartelization of labor via collective bargaining, deepened and lengthened the Depression.  If history is any guide, then, free competition did not cause the recent Great Recession.  Moreover, policies that displace free competition by, for instance, imposing minimum wages, condemning efficient conduct as “exclusionary,” or bolstering collective bargaining will only slow recovery. 

This paper ends by sketching various lessons from the New Deal experience and advocating a return to the pre-Depression commitment to free-market competition.  Antitrust regulation of private markets cannot ensure free competition if states and the national government can impose price and output restrictions that would be felonies if imposed by private parties.  Restoration of free competition as the national norm requires a new symbiosis, whereby state and federal efforts to displace market outcomes are tested by the same skepticism as similar efforts by private parties.  Antitrust experts can assist in developing this new symbiosis by devoting more intellectual energy to expanding the domain of antitrust by, for instance, advocating the elimination of various exemptions, particularly Parker’s state action exemption that currently shelters state-created cartels from the Sherman Act.

October 3, 2014 | Permalink | Comments (0) | TrackBack (0)

Thursday, October 2, 2014

Competition and Price Discrimination When Consumers are Heterogeneous on Multiple Dimensions

Mara Lederman, University of Toronto - Rotman School of Management and Ambarish Chandra, University of Toronto - Rotman School of Management address Competition and Price Discrimination When Consumers are Heterogeneous on Multiple Dimensions.

ABSTRACT: It is now well accepted that firms can price discriminate even in non-monopoly settings. However, the precise relationship between competition and the menu of prices charged to different customer segments is less well understood. In this paper, we revisit this relationship in the context of the airline industry - long recognized as one in which firms price discriminate - in an attempt to reconcile the conflicting findings and arguments from previous work. Our study uses a new empirical setting as well as a new data source but builds on a longstanding theoretical framework. We begin by developing a simple model which shows that, when consumers are heterogeneous in terms of both their underlying value for a good and their degree of brand loyalty, competition may increase price differences between some customer types while simultaneously decreasing it between others. We then investigate this empirically using data on tickets targeted at different types of travellers. We find that greater competition increases dispersion between certain types of tickets but decreases it between others. Our findings highlight the fact that predicting the relationship between competition and price discrimination requires a careful understanding of the basis of price discrimination in the particular setting.

October 2, 2014 | Permalink | Comments (0) | TrackBack (0)

Network Effects in Alternative Fuel Adoption: Empirical Analysis of the Market for Ethanol

Scott Shriver, Columbia Business School discusses Network Effects in Alternative Fuel Adoption: Empirical Analysis of the Market for Ethanol.

ABSTRACT: This paper investigates the importance of network effects in the demand for ethanol-compatible vehicles and the supply of ethanol fuel. An indirect network effect, or positive feedback loop, arises in this context due to spatially-dependent complementarities in the availability of ethanol fuel and the installed base of ethanol-compatible vehicles. Marketers and social planners are interested in whether these effects exist, and if so, how policy might accelerate adoption of the ethanol fuel standard within a targeted population. To measure these feedback effects, I develop an econometric framework that considers the simultaneous determination of ethanol-compatible vehicle demand and ethanol fuel supply in local markets. The demand-side of the model considers the automobile purchase decisions of consumers and fleet operators, and the supply-side model considers the ethanol market entry decisions of competing fuel retailers. The framework extends extant market entry models by endogenizing the market size shifting fuel retailer profits. I estimate the model using zip code panel data from four states over a nine year period. The model estimates provide evidence of a network effect. Under typical market conditions, entry of an additional ethanol fuel retailer leads to a 6% increase in the probability of ethanol-compatible vehicle purchase. The entry model estimates imply that the first entrant requires a local installed base of approximately 300 ethanol-compatible vehicles to be profitable. As an application, I demonstrate that subsidizing fuel retailers to offer ethanol in selective geographic markets can be an effective policy to indirectly increase ethanol-compatible vehicle sales.

October 2, 2014 | Permalink | Comments (0) | TrackBack (0)

Anticompetitive Injunctions, Unprotected Market Entry, and Diagonal Integration in Patent Disputes

Erik N. Hovenkamp, Northwestern University Department of Economics and Thomas F. Cotter, University of Minnesota Law School have a very interesting paper on Anticompetitive Injunctions, Unprotected Market Entry, and Diagonal Integration in Patent Disputes. Highly recommend!

ABSTRACT: The current approach for determining when courts should award injunctions in patent disputes involves a myopic focus on the hardships an injunction might impose on the litigants and the public. This article demonstrates, however, that courts sometimes could rely instead on a consideration far more relevant to the patent system's goal of promoting dynamic welfare: the extent to which the right to exclude was actually a necessary quid pro quo for the plaintiff's decision to bring its products to market. We begin with a discussion of a recent Federal Circuit decision, Trebro Mfg. Inc. v. FireFly Equipment, LLC, in which the court held that injunctive relief may be appropriate when a defendant infringes a patent that the plaintiff-competitor does not practice, and against which it lacked any legal protection when it entered the market in which the parties now compete. We then present a simple economic model demonstrating that under these circumstances — which are increasingly common in industries with rich markets for secondhand patents, resulting in the formation of what we refer to as “diagonally integrated” nonpracticing entities — injunctive relief poses a threat to consumer welfare that is not offset by any plausible benefit to innovation. The model’s implications extend to a range of topics at the core of contemporary patent policy debates, including patent privateering, FRAND-encumbered standard essential patents, and preemptive patenting. In addition, we show that diagonally integrated NPEs are more likely to seek high licensing fees and aggressively seek injunctive relief than are conventional, “unintegrated” NPEs.

October 2, 2014 | Permalink | Comments (0) | TrackBack (0)

Vertically Differentiated Mixed Oligopoly with Quality‐Dependent Fixed Costs

Stefan Lutz, University of Manchester - School of Economic Studies and Mario Pezzino, University of Manchester explain Vertically Differentiated Mixed Oligopoly with Quality‐Dependent Fixed Costs.

ABSTRACT: The paper studies duopolistic competition when firms face fixed quality‐dependent costs of production and one of the two firms targets (at least in the long run) welfare maximization. We show that mixed oligopoly is in general socially desirable compared with a private duopoly regardless of the type of competition in the short run and the equilibrium quality ranking. In addition, the nationalization of one of the firms seems to be a more efficient regulatory instrument than the adoption of minimum quality standard or subsidization of the high‐quality provider.

October 2, 2014 | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 1, 2014

The European Commission's Approach to Long-term Contracts: an Economist's View

David Spector,Paris School of Economics, CNRS. explores The European Commission's Approach to Long-term Contracts: an Economist's View.

ABSTRACT: In recent decisions, the Commission has taken a hard stance vis-a-vis dominant firms using long-term contracts which, it contended, deterred rivals from effectively competing on relevant markets. Yet long-term contracts may have procompetitive effects, which pleads in favour of a fine-tuned enforcement.

October 1, 2014 | Permalink | Comments (0) | TrackBack (0)

Sports and Antitrust Law

The ABA has a new book on Sports and Antitrust Law.

BOOK ABSTRACT: Sports and Antitrust Law presents a legal overview of sports-related topics and offers an exciting new resource on the most current cases and issues, both for the seasoned practitioner and the novice antitrust sports lawyer. This book provides a framework for understanding the ever-evolving area of sports law and its intersection with antitrust law. Sports and Antitrust Law addresses such topics as general sports-related antitrust principles, the history of sports law, and recurring issues in professional sports. In six chapters, Sports and Antitrust Law examines the following topics: Chapter I discusses exemptions, including the everevolving labor exemption most relevant to the major sports leagues. Chapter II addresses the threshold issue of what is not covered by the Sherman Act namely, non-commercial restraints and on-field" rules and discipline. Chapter III presents the basic analytical framework of the Sherman Act's application to the sports industry: the elements of Section 1 and Section 2 claims, the singleentity doctrine, and modes of analyses (per se, quick look," and full rule of reason for Section 1 cases and Section 2 analytical principles). Chapter IV focuses on the application of these principles to specific recurring issues and subjects, including market definition, market power, and a number of challenged restraints" (e.g., involving players, teams, equipment, broadcasts). Chapter V explores sports issues in private litigation, including standing, class actions, injunctions, and damages. Chapter VI discusses the development of sports antitrust law in Canada.

October 1, 2014 | Permalink | Comments (0) | TrackBack (0)

The Commission Investigation into Pay TV Services: Open Questions

Pablo Ibanez Colomo, LSE describes The Commission Investigation into Pay TV Services: Open Questions.

ABSTRACT: In January 2014, the Commission launched an investigation into pay TV services in the context of a review of EU copyright rules and following the ruling in Murphy, where the ECJ held that exclusive territorial licensing agreements may be restrictive by object. Vice-President Almunia's statement expresses concerns with restraints limiting the passive sales of pay TV services and with the ‘portability’ of subscriptions across borders. The Commission envisions a form of cross-border competition between pay TV operators that is not easy to reconcile with the observable industry dynamics. It is not clear to what extent the suggested approach considers the ‘economic and legal context’ in which agreements between studios and broadcasters are concluded.

October 1, 2014 | Permalink | Comments (0) | TrackBack (0)