Antitrust & Competition Policy Blog

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

Monday, January 21, 2019

Competition Law and Fundamental Rights

Jérémie Jourdan describes Competition Law and Fundamental Rights.

ABSTRACT: There are few competition cases where the respect for fundamental rights does not come into play. This is unsurprising, for competition law enforcement leads to the imposition of fines of a criminal nature.1 The respect for fundamental rights is thus key to the acceptability by the accused, and more broadly the public, of the very high sanctions imposed by the regulators. Fundamental rights are everywhere in the life of a case. To name just a few: the right to privacy and the right to the protection of legal professional privilege (‘LPP’) during a dawn raid, the protection against self-incrimination during an investigation, the right to be heard and its corollary the...

January 21, 2019 | Permalink | Comments (0)



ABSTRACT: New economic proofs and empirical evidence provide powerful confirmation that, even when horizontal shareholders individually have minority stakes, horizontal shareholding in concentrated markets often has anticompetitive effects. The new economic proofs show that, without any need for coordination or communication, horizontal shareholding will cause corporate managers to lessen competition to the extent they care about their vote share or re-election odds and will cause executive compensation to be less sensitive to firm performance. The new empirical evidence includes two new cross-industry studies which confirm that, just as the proofs predict, increased horizontal shareholding reduces the sensitivity of executive compensation to firm performance and increases the gap between corporate profits and investment. The new empirical evidence also includes two new industry studies that extend to the pharmaceutical industry the two prior industry studies finding that horizontal shareholding had anticompetitive effects in airline and banking markets. I also provide new analysis demonstrating that critiques of the airline and banking industry studies either conflict with the evidence or, when taken into account, increase the estimated adverse price effects from horizontal shareholding. I further provide new theoretical and factual explanations to show why, contrary to the claims of others, non-horizontal shareholder interests, vertical shareholdings, and index fund incentives do not prevent anticompetitive effects from horizontal shareholding. Finally, I provide new legal theories for tackling the problem of horizontal shareholding. I show that when horizontal shareholding has anticompetitive effects, it is illegal not only under Clayton Act §7, but also under Sherman Act §1. In fact, the historic trusts that were the core target of antitrust law were horizontal shareholders. I further show that anticompetitive horizontal shareholding also constitutes an illegal agreement or concerted practice under EU Treaty Article 101, as well as an abuse of collective dominance under Article 102. I conclude by showing that horizontal shareholding not only lessens the market concentration that traditional merger law can tolerate, but also means that what otherwise seem like non-horizontal mergers should often be treated as horizontal. Those implications for traditional merger analysis become even stronger if we fail to tackle horizontal shareholding directly.

January 21, 2019 | Permalink | Comments (0)

Antitrust Procedural Fairness


Antitrust Procedural Fairness

D. Daniel Sokol and Andrew T. Guzman

Much of antitrust law scholarship has focused on substantive legal issues - theories of harm and changing law and policy. Surprisingly, there has been very little work that is comparative, on a fundamental element that is a critical building block to effective policy - procedural fairness. Procedural fairness encompasses issues of transparency and due process.

Procedural fairness has been an important issue in global antitrust for some time. The types of due process concerns raised globally often relate to the lack of effective representation, the use of industrial policy by third parties, and procedural tools that do not allow for the most effective advocacy to lead to efficient outcomes.

This book focuses on these issues and teases out common problems and distinct issues in particular jurisdictions, allowing for a rethink of creating a more effective system for procedural fairness, and explores these issues in each jurisdiction, along with highlights of particular cases in which due process issues have emerged.

Table of Contents

1. Introduction, Andrew T. Guzman and D. Daniel Sokol
2. The Case for Global Best Practices in Antitrust Due Process and Procedural Fairness, D. Daniel Sokol
3. Procedural Fairness in Antitrust Enforcement: The U.S. Perspective, Christopher Yoo and Hendrik Wendland
4. Due Process in EU Competition Proceedings, Marek Martyniszyn
5. Procedural Fairness in Chinese Antitrust, Mary Ma and D. Daniel Sokol
6. Due Process and Transparency Requirements for Investigating Competition Cases in Taiwan, Andy C. M. Chen
7. Procedural Fairness in Hong Kong Competition Law, Kelvin Hiu Fai Kwok and Thomas K. Cheng
8. Procedural Fairness in Japan: Administrative Fines as a Window, Tadashi Shiraishi
9. Procedural Fairness in India, Avirup Bose and Sagardeep Rathi
10. Due Process of Law and the Brazilian Antitrust Agency, Paula A. Forgioni and Alessandra Forgioni
11. Procedural Fairness and Transparency in Australian Merger Regulation and the use of Enforceable Undertakings, Wendy Ng
12. Accountability, Private Rights of Action and Canadian Competition Institutions, Edward M. Iacobucci
13. Form Follows Function, Sean Heather
14. Due Process in Competition Law Proceedings: Practical Considerations of a Consensus Awaiting Convergence, Paul O'Brien

January 21, 2019 | Permalink | Comments (0)

Swedish Court Establishes Novel Form of Abuse and Objective Justification – Tobacco Marketing Regulation Excused Restriction of Competitors' Opportunities of Marketing in Coolers Lent to Dealers

Kristian Hugmark and Måns Gottfries explain Swedish Court Establishes Novel Form of Abuse and Objective Justification – Tobacco Marketing Regulation Excused Restriction of Competitors' Opportunities of Marketing in Coolers Lent to Dealers.

ABSTRACT: The case concerned Swedish Match, a major supplier of snus (a moist tobacco product). The Swedish Competition Authority (‘SCA’) launched an investigation in July 2012 to determine whether Swedish Match had abused its dominant position by restricting the opportunities of its competitors to market their products. In February 2017, the Patent and Market Court (the ‘Court’) found that Swedish Match had abused its dominant position, and imposed fines of close to SEK 38 million. However, on 26 July 2018, the Patent and Market Court of Appeal (the ‘Appeal Court’) overturned the judgment, absolving Swedish Match of any liability.

January 21, 2019 | Permalink | Comments (0)

Towards a Theory of Platform Dynamics

Luis Cabral writes Towards a Theory of Platform Dynamics. Abstract: I introduce a dynamic framework to analyze platforms.

The (single) platform owner sets prices at the beginning of each period. Agents (buyers, sellers, readers, consumers, merchants, etc) make platform membership decisions occasionally. I show that optimal platform pricing addresses two externalities: across sides and across time periods. This results in optimal prices which depend on platform size in a non-trivial way. By means of numerical simulations, I examine the determinants of equilibrium platform size, showing that the stationary distribution of platform size may be bi-modal, that is, with some probability the platform remains very low or takes very long to increase in size. I also contrast the dynamics of proprietary vs non-proprietary (i.e., zero-priced) platforms; and consider the specific case of asymmetric platforms (one side cares about the other but not vice-versa).

January 21, 2019 | Permalink | Comments (0)

Friday, January 18, 2019

Empirical Properties of Diversion Ratios

Christopher T. Conlon and Julie Holland Mortimer write on Empirical Properties of Diversion Ratios.

Abstract: A diversion ratio, which measures the fraction of consumers that switch from one product to an alternative after a price increase, is a central calculation of interest to antitrust authorities for analyzing horizontal mergers. Two ways to measure diversion are: the ratio of estimated cross-price to own-price demand derivatives, and second-choice data. Policy-makers may be interested in either, depending on whether they are concerned about the potential for small but widespread price increases, or product discontinuations. We estimate diversion in two applications -- using observational price variation and experimental second-choice data respectively -- to illustrate the trade-offs between different empirical approaches. Using our estimates of diversion, we identify candidate products for divestiture in a hypothetical merger.

January 18, 2019 | Permalink | Comments (0)

Innovation Economics for Antitrust Lawyers Conference Concurrences + King's College London Friday, 1 March 2019 from 09:00 to 19:00 (GMT)

Concurrences Review, in partnership with King’s College London, will hold the 3rd edition of their annual joint conference: Innovation Economics for Antitrust Lawyers. The conference will take place on Friday 1 March 2019 from 9am to 7pm.


This 3rd edition will be an opportunity to focus on some of the most sensitive topics in current competition law around three panels:


- Banking and Big Data: Should Incumbents Get Access to Fintechs’ Data?

- Post-Mortem Analysis of Cleared Mergers: Where is the Innovation?

- Killer Acquisitions: Can they be Prevented?


Speakers include:


- William E. Kovacic | Professor, King’s College London | Non-Executive Director, CMA, London

- Richard Whish QC (Hon) | Emeritus Professor, King’s College London

- Adam Land | Senior Director of Remedies Business and Financial Analysis, CMA, London

- Sheldon Mills | Director of Competition, Financial Conduct Authority, London

- Colin Raftery | Senior Director of Mergers, CMA, London


You can find the detailed program on the dedicated website:


January 18, 2019 | Permalink | Comments (0)

Labor Market Power

David Berger (Northwestern University); Kyle Herkenhoff (University of Minnesota); Simon Mongey (Federal Reserve Bank of Minneapolis) identify Labor Market Power.

Abstract: As U.S. Senator Corey A. Booker wrote in an open letter to the acting Attorney General and Acting Chairman of the FTC, ``A growing body of evidence suggests that the rise of concentration across U.S. industries has helped create a labor market in which fewer workers are able to fairly bargain with their employers to set their wages on competitive terms.''\footnote{See the article and link to Senator Booker's letter here: \citet{booker2017market}, \url{}} Similarly, \citet{furman2016beyond} calls for additional research on the affects of labor market concentration on wages and job flows. \textbf{Objective:} The aim of our project is to measure the impact of labor market power amongst employers on employment, wages, investment, and labor market flows. \textbf{Contribution:} Recent studies have focused almost exclusively on the role of product market power as measured by national sales concentration (e.g. \citet{gutierrez2016investment}, \citet{autor2017fall} and \citet{de2017rise}). Studies that have thought about input market power---a more local phenomenon when inputs are non-traded, such as labor---have focused on relatively narrow industries (for a summary of the recent theory see \citet{manning2003monopsony} and for a summary of recent empirics see Section 4.2 in \citet{alan2011imperfect}). Our contribution is to develop an identification strategy which isolates the affects of labor market power (e.g. \textit{monopsony} and \textit{oligopsony}) on employment, wages, investment, and labor market flows for a broad range of industries. We measure the impact of labor market power on wages using a novel identification strategy. The insight is to isolate firms that are in tradable sectors (e.g. textiles, manufacturing etc.) and then use within-firm variation in market power across regions after a merger. For measurement and identification of mergers, wages, and job flows, we plan to use the LEHD and LBD Census micro-data (we currently have active RDC projects with access to both datasets). By focusing on tradable sectors, we remove the role of product market power. Prices are set outside of the local labor market, and so a merger will not alter prices or product market power. However, the merger will change the number of employers who are hiring within a given region, thus altering labor market power. This allows us to pinpoint the impact of monopsony and oligopsony on the real economy. We develop a model of oligopsony in the labor market, adapting the \citet{atkeson2008pricing} model of imperfect product market competition to a general equilibrium labor market. We model a finite number of firms that hire within a given industry in a given region. The model yields several testable implications: \begin{enumerate} \item The wage bill and employment decline as labor markets become more concentrated. \item Pass-through to wages from idiosyncratic shocks to the firm decrease as labor markets become more concentrated.

January 18, 2019 | Permalink | Comments (0)

Multiproduct retailing and buyer power: The effects of product delisting on consumer shopping behavior

Jorge Florez-Acosta (Universidad del Rosario - Universidad Nacional de Rosario [Santa Fe]); Daniel Herrera-Araujo (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique) explain Multiproduct retailing and buyer power.

ABSTRACT: The effects of product delisting on consumer shopping behavior. Abstract: This paper empirically examines the effects of product delisting on consumer shopping behavior in a context of grocery retailing by large multiproduct supermarket chains. A product is said to be delisted when a supermarket stops supplying it while it continuous being sold by competing stores. We develop a model of demand in which consumers can purchase multiple products in the same period. Consumers have heterogeneous shopping patterns: some find it optimal to concentrate purchases at a single store while others prefer sourcing several separate supermarkets. We account for this heterogeneity by introducing shopping costs, which are transaction costs of dealing with suppliers. Using scanner data on grocery purchases by French households in 2005, we estimate the parameters of the model and retrieve the distribution of shopping costs. We find a total shopping cost per store sourced of 1.79 e on average. When we simulate the delisting of a product by one supermarket, we find that customers' probability of sourcing that store decreases while the probability of sourcing competing stores increases. The reduction in demand is considerably larger when consumers have strong feelings of loyalty for the delisted brand. This suggests that retailers may be hurting themselves, and not only manufacturers, when they delist a product. However, when customers are loyal to the store, such effects are lower, suggesting that inducing store loyalty in customers (through strong private labels and loyalty programs, for example) appears to have an effect on vertical negotiations and, in particular, it enables powerful retailers to impose vertical restraints on manufacturers.

January 18, 2019 | Permalink | Comments (0)

Thursday, January 17, 2019

Law Student Writing Competition Share this: The Law Student Writing Competition encourages and rewards student-written articles in the area of antitrust law, competition policy, and consumer protection law. Deadline for Submission: Tuesday, January 31

Law Student Writing Competition

The Law Student Writing Competition encourages and rewards student-written articles in the area of antitrust law, competition policy, and consumer protection law.

Deadline for Submission: Tuesday, January 31, 2019



2018 Winner

Clayton J. Masterman is a fifth-year student in Vanderbilt Law School’s J.D./Ph.D. program in law and economics. He has served as an Articles Editor on the Vanderbilt Law Review, a Janet D. Steiger Fellow in the Office of the Attorney General of Tennessee, and as a summer legal intern in the Federal Trade Commission’s Bureau of Competition. He holds a Bachelor of Arts in Economics and Mathematics from Vassar College.

Clayton’s winning article is titled “The Customer Is Not Always Right: Balancing Worker and Customer Welfare in Antitrust Law,” and was published in 69 VAND. L. REV. 1387 (2016).

In Summer 2018, Clayton will be a summer associate at Skadden, Arps, Slate, Meagher & Flom LLP’s Washington, D.C. office. After graduation, he will be clerking for Judge Gregg J. Costa of the Fifth Circuit Court of Appeals.

The Law Student Writing Competition encourages and rewards student-written articles in the area of antitrust law, competition policy, and consumer protection law.

How to Enter:

  1. Write an article about antitrust. 
    Law students currently enrolled or graduating can write eligible articles of general interest to the antitrust law community, including: Civil and Criminal Antitrust LawCompetition PolicyConsumer Protection, and International Competition Law

  2. Have it published. 
    Articles published in ABA-accredited schools’ law reviews or journals between January 1, 2017 and March 31, 2019 qualify.  

  3. Get nominated. 
    Each publication’s Editor-in-Chief may nominate one article for the award. E-mail the article and a completed entry form by January 31, 2019 to Deborah Morgan

More Details:

The winner will be announced by March 1, 2019. The $2,500 award will be presented at the Antitrust Section's Spring Meeting (March 27-29, 2019) in Washington, DC. The winner will receive an invitation to the Meeting, as well as transportation and accommodations (if living outside DC area).

Eligible papers include published notes, comments and articles, and should generally be 20-30 pages in length, with footnotes. Joint papers and unpublished work, including work that was prepared for a class, seminar or independent study are not eligible.

Click for complete writing competition details.

January 17, 2019 | Permalink | Comments (0)

How EU Markets Became More Competitive Than US Markets: A Study of Institutional Drift

Germán Gutiérrez and Thomas Philippon discuss How EU Markets Became More Competitive Than US Markets: A Study of Institutional Drift.

Abstract: Until the 1990's, US markets were more competitive than European markets. Today, European markets have lower concentration, lower excess profits, and lower regulatory barriers to entry. We document this surprising outcome and propose an explanation using a model of political support. Politicians care about consumer welfare but also enjoy retaining control over industrial policy. We show that politicians from different countries who set up a common regulator will make it more independent and more pro-competition than the national ones it replaces. Our comparative analysis of antitrust policy reveals strong support for this and other predictions of the model. European institutions are more independent than their American counterparts, and they enforce pro-competition policies more strongly than any individual country ever did. Countries with ex-ante weak institutions benefit more from the delegation of antitrust enforcement to the EU level. Our model also explains why political and lobbying expenditures have increased much more in America than in Europe, and using data across industries and across countries, we show that these expenditures explain the relative rise of concentration and market power in the US.

January 17, 2019 | Permalink | Comments (0)

Conglomerate Mergers and Entry in Innovative Industries

Federico Etro (Department of Economics, University Of Venice Cà Foscari; University of Florence; C.R.A) studies Conglomerate Mergers and Entry in Innovative Industries.

Abstract: I study a merger between producers of complement inputs facing entry of superior inputs, with investment by the incumbents in deterministic cost reduction and by the entrants in probabilistic innovation, and competition in prices. The merger is profitable by solving Cournot complementarity problems in investment and pricing, and has positive (negative) effects on R&D by the incumbents (entrants). With inelastic demand the merger harms consumers if the incumbents are efficient enough even without bundling, and always when a commitment to bundling is adopted. Instead, with a demand elastic enough, the merger increases consumer surplus even when a commitment to pure bundling is feasible.

January 17, 2019 | Permalink | Comments (0)

Relevant Market Definition and Multi-Sided Platforms Post Ohio v. American Express: Evidence From Recent NCAA Antitrust Litigation

Ted Tatos, Empirical Analytics explores Relevant Market Definition and Multi-Sided Platforms Post Ohio v. American Express: Evidence From Recent NCAA Antitrust Litigation.

ABSTRACT: The treatment of multi-sided platforms in antitrust litigation has received increasing attention as of late, particularly evidenced in the Ohio v. American Express litigation. The potential implications of the Supreme Court’s recent ruling have garnered interest from legal scholars, litigators, and economists alike, particularly those actively involved in antitrust issues. Some have cautioned that the ruling represents the gutting of antitrust law , while others have maintained that its scope is limited and unlikely to effect a broad change in antitrust jurisprudence. To illuminate the potential nature of parties’ multi-sided platform arguments in future litigation, this article details how the multi-sided platform argument was addressed in In Re NCAA Grant-in-Aid Litigation (NCAA GIA), for which trial began in September 2018 and its implications for future litigation. In this litigation, Plaintiffs have challenged the National Collegiate Athletic Association (NCAA) cartel’s restriction on athlete compensation at the cost-of-attendance and its prohibition on payment in exchange for athletic participation (“pay-for-play”). The NCAA GIA case involves two key issues that lie at the forefront of current antitrust interest in anticompetitive conduct: the use of monopsony power to restrain wages and the complication of relevant market definition by indirect network externalities that often characterize multi-sided platforms.

January 17, 2019 | Permalink | Comments (0)

Wednesday, January 16, 2019

Product Market Competition and the Profitability Premium

Yao Deng, University of Minnesota - Twin Cities, Carlson School of Management identifies Product Market Competition and the Profitability Premium.

ABSTRACT: This paper studies the impact of product market competition on the well documented positive relation between firms' current profitability and future stock returns. I find that this positive relation is only robust in competitive industries. A long-short portfolio sorted on profitability earns an average monthly return of 1.1% in competitive industries, and only 0.14% in concentrated industries. Firms' differential exposures to investment-specific technology shocks explain this gap. To understand this, I build a production-based asset pricing model with imperfect competition. Market power both reduces a firm's exposure and inhibits its investment response to these shocks. Empirical tests confirm the model's predictions.

January 16, 2019 | Permalink | Comments (0)

Conference: Collusion, Algorithms and Competition Law 23 November 2019



Collusion, Algorithms and Competition Law

Welcome Message


23 November 2019

Dear Colleagues and Friends,​

In 2007, the International Programs in Law of the Kyushu University's Faculty of Law started to organize the Kyushu University's Annual Law Symposium. In 2019, we will organize the 12th edition. The theme chosen for this edition is "Collusion, Algorithms and Competition Law."


The use of algorithms in pricing strategies has received special attention among competition law scholars. There is an increasing number of scholars who argue that the pricing algorithms, facilitated by increased access to data, could move in the direction of collusive price setting. Though this claim is being made, there is still uncertainty. Scholars purport that algorithms are not able to collude. Other take the collusion for granted and suggest solutions to this new problem. In short, the scholarly community is still divided on the issue of  algorithmic collusion.

To bring some clarify in the debate, we are inviting scholars from different disciplines to look at the above-described problematic of algorithmic collusion.   

The symposium receives financial support from the Japanese Society for the Promotion of Science as part of the Kakenhi Project Kiban C project no. 18K01300, titled "Artificial Intelligence, Price Setting Strategies and Antitrust Law: Towards a Regulatory Framework."  


Sincerely Yours,


Associate Professor - Faculty of Law

Kyushu University 

January 16, 2019 | Permalink | Comments (0)

The New Media Economics of Video-on-Demand Markets: Lessons for Competition Policy

Oliver Budzinski, Ilmenau University of Technology and Nadine Lindstädt, University of Southern Denmark - Department of Environmental and Business Economics explore The New Media Economics of Video-on-Demand Markets: Lessons for Competition Policy.

ABSTRACT: The markets for audiovisual content are subject to dynamic change. Where once “traditional” (free-to-air, cable, satellite) television was dominating, i.e. linear audiovisual media services, markets display nowadays strong growth of different types of video-on-demand (VoD), i.e. nonlinear audiovisual media services, including both Paid-for VoD like Amazon Prime and Netflix and Advertised-financed VoD like YouTube. Competition policy decisions in such dynamic markets are always particularly challenging. The German competition authority was presented such a challenge when, at the beginning of the 2010s, German television providers sought to enter online VoD markets with the help of cooperative platforms. We review the antitrust concerns that were raised back then in an ex post analysis. In doing so, we first discuss the dynamic development of the German VoD markets during the last decade. In the second part of this paper, we derive four aspects, in which the previous antitrust analysis cannot be upheld from today’s perspective. First, relevant implications of modern platform economics were neglected. Second, some inconsistencies in the assessment of the two projects appear to be inappropriate. Third, the emerging competitive pressure of international VoD providers was strongly underestimated. Fourth, the question of market power in online advertising markets looks very different at the end of the decade.

January 16, 2019 | Permalink | Comments (0)

Putting Technology to Good Use for Society: The Role of Corporate, Competition and Tax Law

John Armour, University of Oxford - Faculty of Law, University of Oxford - Said Business School, European Corporate Governance Institute (ECGI), Luca Enriques, University of Oxford Faculty of Law, European Corporate Governance Institute (ECGI), Ariel Ezrachi, University of Oxford - Faculty of Law, and John Vella, Oxford University Centre for Business Taxation, University of Oxford - Faculty of Law are Putting Technology to Good Use for Society: The Role of Corporate, Competition and Tax Law.

ABSTRACT: Innovation and its main output, technology, are changing the way we work, socialise, vote, and live. New technologies have improved our lives and made firms more productive, overall raising living standards across the world. Thanks to progress in information technology, the rate of change is accelerating. Disruption and disequilibrium are the new normal. In this essay, prepared as a chapter for the first phase of the British Academy ‘The Future of the Corporation’ initiative, we reflect upon the role that corporate, competition and tax law can play both to facilitate innovation and simultaneously assuage emergent societal risks arising from new technologies. We consider means of enhancing investment in research and development (‘R&D’) and optimising corporate organisation. But we also reflect on the risks associated with innovation, such as the use of technology to exploit consumers, manipulate markets or distort, unwittingly or not, the political process. Finally, we consider the way in which the environment for business law reform is subject to new political risks following the challenge to the liberal order from populism and the rising power of dominant technology companies.

January 16, 2019 | Permalink | Comments (0)

'Fulfilled by Amazon': A Strategic Perspective of Competition at the E-commerce Platform

Guoming Lai, University of Texas at Austin - Red McCombs School of Business, Huihui Liu, China University of Petroleum, Beijng - Academy of Chinese Energy Strategy, and Wenqiang Xiao, New York University (NYU) - Department of Information, Operations, and Management Sciences discuss 'Fulfilled by Amazon': A Strategic Perspective of Competition at the E-commerce Platform.

ABSTRACT: This paper examines the economic effects of the fulfillment services offered by Amazon (FBA) to the third-party sellers on its retail platform (Amazon 2018). Logistics is critical for e-commerce. By FBA, the service levels of the third-party sellers are substantially improved, and so is their competitiveness. We develop a strategic competition model to understand why Amazon is willing to provide such services to its potential competitors. Interestingly, we find that although FBA may intensify the service competition, it can mitigate the price competition, besides the direct revenue Amazon collects from the services. The latter effects dominate the former when the cross-service sensitivity of the consumers is either sufficiently low or sufficiently high. Therefore, not only the third-party sellers but also Amazon can benefit from FBA. Moreover, since the sales of Amazon's products may increase due to FBA, its OEM suppliers can gain from FBA too. This finding extends to the setting where Amazon's OEM suppliers may strategically adjust their wholesale prices in response to the change of the downstream competition due to FBA. In fact, this wholesale price effect can help Amazon when FBA is detrimental given that the suppliers may lower their wholesale prices. Of course, it can also reduce the benefit of FBA for Amazon when the suppliers increase their wholesale prices.

January 16, 2019 | Permalink | Comments (0)

Tuesday, January 15, 2019

An Entry Game with Learning and Market Competition

Chia-Hui Chen, Institute of Economic Research, Kyoto University, Junichiro Ishida, Osaka University - Institute of Social and Economic Research, and Arijit Mukherjee, University of Nottingham - School of Economics theorize An Entry Game with Learning and Market Competition.

Abstract: This paper provides a dynamic game of market entry to illustrate entry dynamics in an uncertain market environment. Our model features both private learning about the market condition and market competition, which give rise to the first-mover and second-mover advantages in a unified framework. We characterize symmetric Markov perfect equilibria and identify a necessary and sufficient condition for the first-mover advantage to dominate, which elucidates when and under what conditions a firm becomes a pioneer, an early follower or a late entrant. We also derive equilibrium payoff bounds to show that pioneering entry is generally payoff-enhancing, even though it is driven by preemption motives, and discuss efficiency properties of entry dynamics.

January 15, 2019 | Permalink | Comments (0)

Global Alcohol Markets: Evolving Consumption Patterns, Regulations, and Industrial Organizations

Kym Anderson, University of Adelaide - Centre for International Economic Studies (CIES); Centre for Economic Policy Research (CEPR); Australian National University Giulia Meloni, KU Leuven - Centre for Institutions and Economic Performance (LICOS) Johan Swinnen, University of Leuven Global offer Alcohol Markets: Evolving Consumption Patterns, Regulations, and Industrial Organizations.

ABSTRACT: For millennia, alcoholic drinks have played an important role in food security and health (both positive and negative), but consumption patterns of beer, wine, and spirits have altered substantially over the past two centuries. So too have their production technologies and industrial organization. Globalization and economic growth have contributed to considerable convergence in national alcohol consumption patterns. The industrial revolution contributed to excess consumption by stimulating demand and lowering the cost of alcohol. It also led to concentration in some alcohol industries, especially brewing. In recent years, the emergence of craft producers has countered firm concentration and the homogenization of alcoholic beverages. Meanwhile, governments have intervened extensively in alcohol markets to reduce excessive consumption, raise taxes, protect domestic industries, and/or ensure competition. These regulations have contributed to, and been affected by, the evolving patterns of consumption and changing structures of alcohol industries.

January 15, 2019 | Permalink | Comments (0)