Tuesday, January 25, 2011

Vertical control of a distribution network - an empirical analysis of magazines

Posted by D. Daniel Sokol

Stijn Ferrari (National Bank of Belgium and Catholic University of Leuven) and Frank Verboven (Catholic University of Leuven) addresses Vertical control of a distribution network - an empirical analysis of magazines.

ABSTRACT: How does an upstream firm determine the size of its distribution network, and what is the role of vertical restraints? To address these questions we develop and estimate two models of outlet entry, starting from the basic trade-o¤ between market expansion and fixed costs. In the coordinated entry model the upstream firm sets a market-specific wholesale price to implement the first-best number of outlets. In the restricted/free entry model the upstream firm has insufficient price instruments to target local markets. It sets a uniform wholesale price, and restricts entry in markets where market expansion is low, while allowing free entry elsewhere. We apply the two models to magazine distribution. The evidence is more consistent with the second model where the upstream firm sets a uniform wholesale price and restricts the number of entry licenses. We use the model to assess the profitability of modifying the vertical rest! raints. A government ban on restriced licensing would reduce profits by a limited amount, so that the business rationale for restricted licensing should be sought elsewhere. Furthermore, introducing market-specific wholesale prices would implement the first-best, but the profit increase would be small, providing a rationale for the current uniform wholesale prices.

January 25, 2011 | Permalink | Comments (0) | TrackBack (0)

Mergers and Partial Ownership

Posted by D. Daniel Sokol

Øystein Foros (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration), Hans Jarle Kind (Dept. of Economics, Norwegian School of Economics and Business Administration), and Greg Shaffer (University of Rochester and University of East Anglia) address Mergers and Partial Ownership.

ABSTRACT: In this paper we compare the profitability of a merger between two firms (one firm fully acquires another) and the profitability of a partial ownership arrangement between the same two firms in which the acquiring firm obtains corporate control over the pricing decisions of the acquired firm. We find that joint profit can be higher in the latter case because it may result in a greater dampening of competition with respect to an outside competitor. We also derive comparative statics on the prices of the acquiring firm, the acquired firm, and the outside firm and use them to explain puzzling features of the pay-TV markets in Norway and Sweden.

January 25, 2011 | Permalink | Comments (0) | TrackBack (0)

State aids law and the application of competition law to exclusive rights

Posted by D. Daniel Sokol

State aids law and the application of competition law to exclusive rights
CENTRE FOR LAW AND ECONOMICS FACULTY OF LAWS
8 Masters level seminars
from 27 January - 17 March 2011
on Thursday from 6 - 8pm
at the UCL Faculty of Laws
Convened by Dr Ioannis Lianos (UCL)

About the Course
The course will examine the EU competition law provisions that apply to State anticompetitive practices.
In particular, the course will focus on the State aids control in the European Union and on the application of EU competition law to public undertakings and undertakings operating services of general economic interest. This is an area of particular practical importance in Europe and beyond as almost all economies have an hybrid nature, with an important part of economic activity being performed or controlled by
the State. The course will provide a clear practical analysis of this complex area of EU competition law focusing on compliance.

By the end of the course, participants should be able to:
● demonstrate a critical knowledge of EU competition law applied to the State (in particular State aids control and competition rules that apply to public undertakings)
● understand the underpinning theories and policies that explain European regulation of State activities in competitive markets

Course Outline:
27 January State Aids I: Foundations of State aids law
Overview of the system of State aid control under Arts 107-108 TFEU; definition of
state aid; effect, aims and causes of State aids; forms of state aids
Taught by Kelyn Bacon

3 February State Aids II: Foundations of State aids law
Advantage, beneficiary of aid, private operator in a market economy test, compensation for public service obligations
Taught by Kelyn Bacon

10 February State Aids III: Tax Exemptions
Tax exemptions, parafiscal and other tax charges, differential taxation, regional taxation, general fiscal measures.
Taught by Kelyn Bacon

17 February State Aids IV: Case studies in State aid law.
The objective of this seminar will be to focus on some practical but complex questions and fact patterns in order to illustrate the principles learned in the previous seminars
Taught by Alexandros Stratakis

24 February State Aids V: Enforcement of State aid law
The administrative procedure before the Commission, the role of the European
Court, and the role of national courts
Taught by Kelyn Bacon

3 March State Aids VI: An economic approach to state aids law – a compliance toolkit
The first half of the seminar will focus on the evolution of state aids law towards an
economic approach and will illustrate how economic arguments might be employed in a practical context. The second half of the seminar will focus on the issue of compliance to state aids law and will develop a set of clear principles to be aware of in order to avoid being caught under the prohibition of the treaty!
Taught by Ioannis Lianos and Alexandros Stratakis

10 March Exclusive rights and the application of Article 106(1)
The seminar will delve into the analysis of the case law of the European court and
the European Commission on the scope of the prohibition principle included in
Article 106(1) TFEU.
Taught by Juliette Twumasi-Anokye

17 March Exclusive rights and the application of Article 106(2)
Member States can argue that exclusive rights are essential for the provision of
services of general economic interest and other public interest objectives in order
to benefit from the exception to the prohibition rule under Article 106(2) TFEU. This
lecture will analyze the case law and will also provide clear and practical advice for a more effective use of Article 106(2).
Taught by Juliette Twumasi-Anokye

About the Teachers:
Kelyn Bacon is a senior junior with extensive experience in competition and EU law. She has appeared in numerous landmark cases in the High Court, Court of Appeal, House of Lords, CFI and ECJ, as well as the Competition Appeal Tribunal and proceedings before the Competition Commission and European Commission. Her clients have included major domestic and international private clients such as GE, Microsoft, Intel, Umbro, Adidas, Visa, BUPA, O2, Vodafone and BSkyB, as well as government departments and sectoral regulators. She also regularly appears for the UK government in preliminary references to the ECJ Kelyn is currently acting for Intel in its appeal to the European Court against an Article 102 infringement decision, for Meridiana in European Court proceedings relating to State aid granted to Alitalia, and for the OFT in the Construction Cartel appeals in the Competition Appeal Tribunal. Kelyn is cited in Chambers and Partners as one of the leading juniors in Competition/EU law, Administrative and Public law and Telecommunications, and in the Legal 500 as one of the leading juniors in EU and competition law. She was awarded ‘Competition/EU Junior of the Year’ at the 2008 Chambers Bar Awards. Kelyn is the editor and main co-author of European Community Law of State Aid (OUP, 2009) and numerous other publications in state aids law and competition law in general.

Dr. Ioannis Lianos is a Reader in Competition Law and Economics at UCL Laws, director of the UCL Centre for Law and Economics and co-director of the Jevons Institute of Competition Law and Economics. He has published extensively prize-winning monographs, articles in journals such as Antitrust Law Journal, Journal of Competition Law and Economics, Common Market Law Review, Cambridge Yearbook of European Legal Studies, Columbia Business Law Review and collected volumes. Ioannis is actively involved in competition policy as a non-governmental advisor at the ICN, a research partner with UNCTAD in Geneva or having contributed to European Commission’s consultations. His main research interest is the analysis of economic evidence by courts and competition authorities. Ioannis is a qualified attorney at the Paris and Athens bars.

Alexandros Stratakis is a Senior Associate in the EU, Competition and Trade Department of Baker & McKenzie, London. His practice covers EU, UK, (including Greek and Cypriot) competition law, State aid and regulatory law as well as general EU Law. He has provided advice on a wide variety of complex competition (merger control, Articles 101 and 102 TFEU) and state aid issues and represented clients before antitrust authorities and European and national courts. In the area of State aid, Alex has advised governments, governmental organizations and private companies active on various industries. Alex was admitted to practice in Greece (Athens Bar Association) in 2004 and in England and Wales in 2009. He holds an LL.B (Athens Law School) and a MJur (LL.M) in European and Comparative Law (University of Oxford). He also holds an LL.M (James Ken Scholar) from Columbia Law School, New York.

Dr Juliette Twumasi-Anokye is a lawyer by profession and is currently a Principal for Postcomm the UK independent regulator and advisory body on postal services. Her role involves providing specialist legal advice to the regulator. She has several years experience in competition law, competition policy and economic regulation. She has advised on major cases including cartels, abuse of dominant positions, vertical price restraints, competition in professional services, price controls and the establishment of regulatory frameworks. She has a particular interest in Article 106(2), services of general economic interest, utility regulation, and the application of competition law in the public services sector. Previously, Juliette worked as a Principal Case Officer at the Office of Fair Trading, and as a solicitor in private practice. She holds a PhD from King’s College London (Thesis: competition law and public services: a reconciliatory approach) and an LLM from University College, London.

Download Ucl_stateaids_2011

January 25, 2011 | Permalink | Comments (0) | TrackBack (0)

A Test of Monopoly Price Dispersion Under Demand Uncertainty

Posted by D. Daniel Sokol

Brad Humphreys (University of Alberta, Department of Economics) and Brian Soebbing (University of Alberta, Physical Education and Recreation offer A Test of Monopoly Price Dispersion Under Demand Uncertainty.

ABSTRACT: Dana (2001) developed a model of price dispersion under demand uncertainty. The model predicts that, in the face of uncertain demand and inflexible prices, monopolists maximizes pro fits using ex ante price discrimination. We test the predictions of this model using a unique data set from Major League Baseball (MLB). Estimation of a two-way fixed effects model indicate that ticket price dispersion changes systematically with demand uncertainty in MLB, verifying the predictions of the model.

January 25, 2011 | Permalink | Comments (0) | TrackBack (0)

Monday, January 24, 2011

Welcome Shearman & Sterling Antitrust Blog - Antitrust Unpacked

Posted by D. Daniel Sokol

Law firm Shearman & Sterling has a new antitrust blog called Antitrust Unpacked.  Welcome to the blogosphere. 

January 24, 2011 | Permalink | Comments (0) | TrackBack (0)

Towards Analysis of Vertical Structure of Industries: a method and its application to U.S. industries

Posted by D. Daniel Sokol

Sadao Nishimura (Nazan University) writes Towards Analysis of Vertical Structure of Industries: a method and its application to U.S. industries.

ABSTRACT: In this paper we present a method to analyse vertical structure of industries. A product of an industry has a hierarchical value structure with layers, each of which consists of value added injected by various production stages (current and previous) of various industries. This vertical structure makes it possible to measure value added (VA) levels (vertical positions) of VA receivers (stages of use industries), while products of supply industries and their value added flow into these stages of industries which have respective VA levels. These flows are value added contributions by supply industries. By calculating each industry's VA contributions and corresponding target VA levels, it is possible to evaluate vertical structure of industries in the whole economy. We applied this method to 1998--2008 U.S. Input-Output Tables. Resulting average VA contribution levels and graphs of VA contributions are displayed.

January 24, 2011 | Permalink | Comments (0) | TrackBack (0)

Strategic profit sharing leads to collusion in Bertrand oligopolies

Posted by D. Daniel Sokol

José Luis Ferreira and Roberts Waddle (both Universidad Carlos III de Madrid) investigate Strategic profit sharing leads to collusion in Bertrand oligopolies.

ABSTRACT: One simple way to endogenize the degree of cross ownership in an industry is that rms give away part of their pro ts. We show that this possibility of unilaterally giving pro ts away to the rival previous to Bertrand competition opens the door to multiple equilibria. In the symmetric duopoly with con- stant marginal costs any price between the cost and the monopolistic price can be sustained in a subgame perfect equilibrium. Thus, tacit collusion in the one shot game can be achieved. Further, any market share can also be sustained for any equilibrium price. These results are extended to more than two rms and to asymmetric costs.

January 24, 2011 | Permalink | Comments (0) | TrackBack (0)

Hotelling competition with multi-purchasing

Posted by D. Daniel Sokol

Simon P. Anderson (Dept. of Economics, University of Virginia), Øystein Foros (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration), and Hans Jarle Kind (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration) address Hotelling competition with multi-purchasing.

ABSTRACT: We analyze a Hotelling model where consumers either buy one out of two goods (single-purchase) or both (multi-purchase). The firms’ pricing strategies turn out to be fundamentally different if some consumers multi-purchase compared to if all single-purchase. Prices are strategic complements under single-purchase, and increase with quality. In a multi-purchase regime, in contrast, prices are strategically independent because firms then act monopolistically by pricing the incremental benefit to marginal consumers. Furthermore, prices can decrease with quality due to overlapping characteristics. Higher preference heterogeneity increases prices and profits in equilibrium with single-purchase, but decreases them with multi-purchase.

January 24, 2011 | Permalink | Comments (0) | TrackBack (0)

Japanese antitrust law; recent developments and an agenda for the years ahead

Posted by D. Daniel Sokol

Hiroshi Yamada (JFTC) explains Japanese antitrust law; recent developments and an agenda for the years ahead.

ABSTRACT: Did you know that the Japan Fair Trade Commission (JFTC) was the first authority in the world which challenged Intel, the largest computer chip manufacturer? In 2005, JFTC issued a cease-and-desist order against the Japanese subsidiary of the company on the ground that it had been foreclosing the market by providing excessive rebate and monetary incentives to Personal Computer Manufactures. The conduct fell under the category of ‘private monopolization’, prohibited by Japanese competition law, equivalent to so-called unilateral conduct regulation. Following this, the Korea Fair Trade Commission in 2008 fined Intel Corporation 25 million dollars and in the following year the European Union (EU) fined Intel 1.5 billion dollars, for abusing its dominant position by using a similar method as above. And the US Federal Trade Commission (FTC) this year (2010) reached a settlement with Intel who had allegedly employed exclusionary conduct and thereby violated the FTC Act.

January 24, 2011 | Permalink | Comments (0) | TrackBack (0)

Sunday, January 23, 2011

Israeli Antitrust Authority Looking for a New Head -- Why Not Look Abroad?

Posted by D. Daniel Sokol

Ha'aretz reports on some interesting developments in the search for a new head of the Israeli Antitrust Authority.  I have a basic point for our Israeli readership -- do you remember Jacob Frankel and Stanley Fischer?  Both were former US profs (Chicago and MIT respectively) who did stints at the IMF as chief economist before heading the Israel Central Bank and both performed well in their Central Bank posts.  There are lots of American (and European and Canadian -- even South American and South African) law and econ academics and practitioners with lots of experience in this area who would make a great agency head.  A number of them speak and write Hebrew well too. Moreover, there are a number of Israeli IO econ profs and law professors in Europe, Canada and the US in case the Israelis prefer to choose an "internal" candidate.  If I were the Israeli government, I might give someone like Dan Rubinfeld, Dennis Carlton, Steve Salop, Eleanor Fox, Harry First, Ilene Gotts, Barbara Rosenberg, Dave Lewis, Alberto Heimler, Ariel Ezrachi or Bill Blumenthal a call asap.

HT (Ted Banks)

January 23, 2011 | Permalink | Comments (1) | TrackBack (0)

Friday, January 21, 2011

Introducing the Harvard Business Law Review

Posted by D. Daniel Sokol

Harvard Law School has launched a new law review, Harvard Business Law Review.  Already in publication is a piece by Herb Hovenkamp and Christina Bohannan on Concerted Refusals to License Intellectual Property Rights.

January 21, 2011 | Permalink | Comments (0) | TrackBack (0)

Vertical Separation as an Appropriate Remedy

Posted by D. Daniel Sokol

Boaz Moselle (LECG) and David Black discuss Vertical Separation as an Appropriate Remedy.

ABSTRACT: In this article, we discuss the use by competition and regulatory authorities of vertical separation as a tool to promote competition in industries where a vertically integrated firm owns a monopoly or quasi-monopoly input (e.g. the ‘local loop’ in telecoms, or the transmission grid in electricity). There are a range of vertical separation options, from the least intrusive (‘accounting separation’), through to the most intrusive (full ownership separation). The case for or against a vertical separation remedy in any particular instance depends on an assessment of a trade-off between the benefits of increased competition, and the economic costs. These costs can include loss of coordination of activities between the separated entities, ‘hold-up problems’, and ‘double marginalisation’. To illustrate the costs and benefits, we describe the application of accounting and legal separation in the water sector in Great Britain, functional separation for the telecommunications sector in the UK, and ownership separation of an electricity network in Germany.

January 21, 2011 | Permalink | Comments (0) | TrackBack (0)

Buyer Power and Price Discrimination: The Case of the UK Care Homes Market

Posted by D. Daniel Sokol

Ruth Hancock (UEA-Medicine) and Morten Hviid (UEA-Law) explain Buyer Power and Price Discrimination: The Case of the UK Care Homes Market.

ABSTRACT: UK Local Authorities purchase care home places on behalf of a large group of people following a means test of their income and wealth. All other buyers of care home services are atomistic. The care home market is characterised by a large number of small providers. Local authorities may thus have buyer power. We show that any abuse of this buyer power may lead to some people, “the squeezed middle” not being served. We quantify the size of the squeezed middle and assess the implications of the form of the means test for local authorities' ability to exercise buyer power.

January 21, 2011 | Permalink | Comments (0) | TrackBack (0)

Thursday, January 20, 2011

Market Strucutre, Screening Activity and Bank Lending Behavior

Posted by D. Daniel Sokol

Nikolaos Papanikolaou (Luxembourg School of Finance, University of Luxembourg) describes Market Strucutre, Screening Activity and Bank Lending Behavior.

ABSTRACT: In this paper we construct a theoretical model of spatial banking competition that considers the differential information among banks and potential borrowers in order to investigate how market structure affects the lending behavior of banks and their incentives to invest in screening technology. Consistent with the prevailing view in the relevant literature, our results reveal that competition reduces lending cost, which, in turn, encourages the entry of new customers in the loan market. Also, that the transportation cost that potential borrowers have to pay in order to reach the bank of their interest is decreased with the degree of competitiveness. Importantly, we demonstrate that market structure exerts a considerable positive effect on banks’ incentives to screen their loan applicants since banks are found to invest more in screening as competition in the market becomes higher. This is to say, banks resort to screening that serves as a buffer mechanism against bad credit which entails higher risk and which is more likely under competitive conditions. Overall, our findings provide support to a rather close link between the degree of competition, bank lending activity, and the investment of banks in screening technology.

January 20, 2011 | Permalink | Comments (0) | TrackBack (0)

Market Structure, Countervailing Power and Price Discrimination: The Case of Airports

Posted by D. Daniel Sokol

Jonathan Haskel (Imperial College London and CEPR), Alberto Iozzi (Faculty of Economics, University of Rome "Tor Vergata"), and Tommaso Valletti (Faculty of Economics, University of Rome "Tor Vergata") explain Market Structure, Countervailing Power and Price Discrimination: The Case of Airports.

ABSTRACT: We study bargained input prices where up and downstream firms can choose alternative vertical partners. We apply our model to bargained airport landing fees where a number of interesting policy questions have arisen. For example, what is the impact of joint ownership of airports? Does airline countervailing power stop airports raising fees? Should airports be prohibited, as an EU directive intends, from charging differential prices to airlines? Our major findings are (a) an increase in upstream concentration or in the substitutability between airports always increases the landing fee; (b) the effect of countervailing power, via an increase in downstream concentration, depends on the competition regime between airlines and whether airports can price discriminate: airline concentration reduces the landing fee when downstream competition is in quantities, but if downstream competition is in prices only where airports cannot! discriminate. Furthermore, only in a specific case (Bertrand competition, uniform landing fees and undifferentiated goods) will lower fees pass through to consumers. (c) With Cournot competition, uniform landing fees are always higher than discriminatory fees, while the reverse is true with Bertrand competition. We also look at the incentives for airport expansion which raise quantities of passengers paying a given landing fee, but alters the nature of airline competition, which changes the landing fee.

January 20, 2011 | Permalink | Comments (0) | TrackBack (0)

Why are some coalitions more successful than others in setting standards? Empirical evidence from the Blu-ray vs. HD-DVD standard war

Posted by D. Daniel Sokol

Zouhaïer M'chirgui (CREM, LAREQUAD - Euromed Management - Euromed Management), Olivier Chanel (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579), and Didier Calcei (Groupe ESC Troyes - ESC Troyes - ESC Troyes) ask Why are some coalitions more successful than others in setting standards? Empirical evidence from the Blu-ray vs. HD-DVD standard war.

ABSTRACT: Standard-setting coalitions are increasingly composed of rival firms from different sectors and are characterized by simultaneous and/or sequential cooperation and competition among their members. This paper examines why firms choose to belong to two standard-setting coalitions instead of one and what determines the success of a standard coalition. We test empirically for network effect, experience effect, and coopetitive effect in the Blu-ray vs. HD-DVD standard war. We find that the higher the similarity of the members in the coalition, the greater the probability of standard coalition success. Furthermore, relatedness leads to a greater probability of joining both competing coalitions, but at a given degree of knowledge difference, an opposite effect exists.

January 20, 2011 | Permalink | Comments (0) | TrackBack (0)

Central banks and competition authorities: institutional comparisons and new concerns

Posted by D. Daniel Sokol

John Vickers (Oxford - Economics) has an interesting paper on Central banks and competition authorities: institutional comparisons and new concerns.

ABSTRACT: The establishment of independent authorities for monetary policy and for competition policy was part of the institutional consensus of the Great Moderation. The paper contrasts how policy has operated in the two spheres, especially as regards the role of law. It then discusses the application of competition policy to banks before and during the crisis, and relationships between competition and financial stability. Finally, the paper considers whether the financial crisis - which has led, at least temporarily, to unorthodox and less independent monetary and competition policies - has undermined the long-term case for independence. The conclusion is that it has not. While regulation of the financial system clearly requires fundamental reform, sound money and markets free from threats to competition remain fundamental to long-run prosperity; those ends are best pursued by focused and independent monetary and competition policies.

January 20, 2011 | Permalink | Comments (0) | TrackBack (0)

Wednesday, January 19, 2011

Economic Doctrines and Approaches to Antitrust

Posted by D. Daniel Sokol

Economic Doctrines and Approaches to Antitrust
Event
 
There is considerable disagreement on optimal antitrust policy both within the United States and between the United States and other nations. These fundamental disagreements over the right approach to competition don't stem principally from politics, rather they stem from doctrine---- the overarching view of antitrust held by regulators and other policymakers. In a new report, ITIF examines the four principle antitrust doctrines, how they influence approaches to and positions on particular antitrust issues (e.g., monopoly, collusion, pricing, and mergers), and how the field of antitrust can move forward to better cope with the challenges of the 21st century, innovation-based global economy.
 
Please join ITIF for the release of a new report on the role of economic thinking in antitrust.

Date & Time:
Friday, January 28, 2011
9:00 - 10:30 AM (add to calendar)

Location:
Jenner & Block
1099 New York Avenue NW, Suite 900
Washington,DC 20001-4412 (map)

Presenters:
Robert Atkinson
President and Founder, Information Technology and Information Foundation

David Audretsch
Distinguished Professor, Indiana University

Respondents:
Seth Bloom
General Counsel, Senate Antitrust Subcommittee, Staff of Senator Kohl, Chairman

Joseph Farrell
Director of the Bureau of Economics, Federal Trade Commission

Janet L. McDavid
Partner, Hogan Lovells
 
Register for the event.

January 19, 2011 | Permalink | Comments (0) | TrackBack (0)

Cournot oligopoly interval games

Posted by D. Daniel Sokol

Aymeric Lardon (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines) discusses Cournot oligopoly interval games.

ABSTRACT: In this paper we consider cooperative Cournot oligopoly games. Following Chander and Tulkens (1997) we assume that firms react to a deviating coalition by choosing individual best reply strategies. Lardon (2009) shows that if the inverse demand function is not differentiable, it is not always possible to define a Cournot oligopoly TU(Transferable Utility)-game. In this paper, we prove that we can always specify a Cournot oligopoly interval game. Furthermore, we deal with the problem of the non-emptiness of two induced cores: the interval gamma-core and the standard gamma-core. To this end, we use a decision theory criterion, the Hurwicz criterion (Hurwicz 1951), that consists in combining, for any coalition, the worst and the better worths that it can obtain in its worth interval. The first result states that the interval gamma-core is non-empty if and only if the oligopoly TU-game associated with the better worth of every coalition in its worth interval admits a non-empty gamma-core. However, we show that even for a very simple oligopoly situation, this condition fails to be satisfied. The second result states that the standard gamma-core is non-empty if and only if the oligopoly TU- game associated with the worst worth of every coalition in its worth interval admits a nonempty gamma-core. Moreover, we give some properties on every individual profit function and every cost function under which this condition always holds, what substantially extends the gamma-core existence results in Lardon (2009).

January 19, 2011 | Permalink | Comments (1) | TrackBack (0)

Economics for Competition Lawyers

Posted by D. Daniel Sokol

Gunnar Niels, Helen Jenkins, and James Kavanagh
Oxford University Press
744 pages | 246x171mm
978-0-19-958851-0 | Paperback | March 2011 (estimated)
BOOK ABSTRACT:
  • Written specifically for lawyers in a practical and accessible style which facilitates understanding by non-specialists
  • Offers coverage of the major topics in competition law: market definition, mergers, state aid, remedies, cartels and cartel damages
  • Authored by respected economic experts who are well-versed in simplifying complex economic arguments for the courts
  • Starts with first principles, allowing practitioners to develop their understanding of economics from the ground up
  • Gives insight into how to get the best from an expert economist in the course of a case
  • Structured in a modular format for ease of reference
Why, in the context of a damages claim, are competitive industries more likely to pass on cost increases to consumers than less competitive industries? When can a merger or joint venture result in lower prices, even if there are no cost efficiencies? How can it be rational for a network provider to offer its services below cost in the early stages of network development, regardless of whether there are competing networks?

Economics for Competition Lawyers answers all these questions and explains the underlying economic principles most relevant for competition law. An accessible practitioner textbook, written in the tone of an economic expert's report to a high court judge, the book is aimed specifically at competition lawyers, be they solicitors, barristers, in-house counsel, lawyers at government agencies, judges, or students.

Practitioners of competition law worldwide need at least a basic grasp of economics, and some of the most successful competition lawyers are those with a solid foundation in economics. This is not only because the most basic premise of competition law - "competition is good, monopoly is bad' - comes from economic theory, but also because economics provides many of the standard tools now commonly applied in competition investigations, such as the SSNIP test for market definition. Also, the substantive standards applied to mergers and business practices increasingly take account of economic effects on the market, and this requires reference to economic "theories of harm".

This book therefore explains from first principles the economics that underpin market definition, market power/dominance, mergers, and anti-competitive practices, and shows how this knowledge can be applied in competition cases. For example, it goes beyond the standard explanation of the SSNIP test to cover issues such as when and how to define separate markets because of price discrimination. Likewise, on the matter of market shares, the book goes back to first principles to explain in which circumstances it is more appropriate to measure market shares by capacity than by turnover. It uses plain English and real-world examples, not abstruse theory, to explain the key points. It also offers valuable insight into how to best use economics, or economic experts, in the course of a case.

January 19, 2011 | Permalink | Comments (0) | TrackBack (0)