Antitrust & Competition Policy Blog

History-Friendly Model of the Evolution of the Pharmaceutical Industry: Technological Regimes and Demand Structure

Posted by D. Daniel Sokol

Christian Garavaglia (University of Milano-Bicocca, Faculty of Statistics - KITeS, Bocconi University, Milan, Italy), Franco Malerba (KITeS, Bocconi University, Milan, Italy - Bocconi University, Department of Economics), Luigi Orsenigo (KITeS, Bocconi University, Milan, Italy - DIMI, University of Brescia), and Michele Pezzoni (KITeS, Bocconi University, Milan, Italy - DIMI, University of Brescia) have a new paper on  History-Friendly Model of the Evolution of the Pharmaceutical Industry: Technological Regimes and Demand Structure.

ABSTRACT: This paper examines how the nature of the technological regime governing innovative activities and the structure of demand interact in determining market structure, with specific reference to the pharmaceutical industry. The key question concerns the observation that - despite high degrees of R&Dand marketing-intensity - concentration has been consistently low during the whole evolution of the industry. Standard explanations of this phenomenon refer to the random nature of the innovative process, the patterns of imitation and the fragmented nature of the market into multiple, independent submarkets. We delve deeper into this issue by using an improved modified version of our previous “history-friendly” model of the evolution of pharmaceuticals. Thus, we explore how changes in the technological regime and/or in the structure of demand may generate or not substantially higher degrees of concentration. The main resu! lts are that, while technological regimes remain fundamental determinants of the patterns of innovation, demand structure plays indeed a crucial role in preventing the emergence of concentration through a partially endogenous process of discovery of new submarkets. However, it is not simply market fragmentation as such that produces this result, but rather the entity of the “prize” that innovators can gain relative to the overall size of the market. Similarities and differences with other approaches are also discussed.

The Institutional Design of European Competition Policy

Posted by D. Daniel Sokol

Antonio Manganelli, Antonio Nicita, and Maria Alessandra Rossi (EUI) explore The Institutional Design of European Competition Policy.

ABSTRACT: This paper analyzes the institutional design of the European competition policy system. Besides the multi-level public enforcement, the paper describes other two fundamental dimensions of the European competition policy system: the relationship between public and private enforcement and that between competition law enforcement and sector specific regulation, with particular regards with the Electronic Communications sector. The main effort of the paper consists in representing the EU Competition policy system as a web of vertical and horizontal relationships among a large set of actors, sometimes coordinated by formal or informal mechanisms but still characterized by competence overlaps and strategic interdependencies. Finally the paper aims at assessing the relevant economic trade-offs associated to these overlaps and interactions in terms of efficiency and effectiveness of the system, giving some policy suggestions for! the future evolution of its overall design.

Advances in price time series tests for antitrust market definition

Posted by D. Daniel Sokol

Willem H. Boshoff (Department of Economics, University of Stellenbosch) describes Advances in price time series tests for antitrust market definition.

ABSTRACT: Market definition is an important first step in any competition policy investigation. In competition policy, a market represents the set of products (product market) or regions (geographic market) that constrain the market power of the firm being investigated. Various quantitative tools have been developed for market definition. Econometric tests on price co-movement represent one such set of tools: two regions or products are considered part of the same market if their prices co-move. However, price co-movement tests, especially the more advanced econometric tests, have been criticized in the competition policy literature. This paper applies a range of tools, including correlation analysis, Granger-causality tests, unit root tests and the recent autoregressive distributed lag (ARDL) bounds test, to data from the 2006-2008 competition investigation into business practices in the South African dairy industry. The paper ar! gues that different price tests ask different questions and that it is not useful to argue, say, that the market suggested by a more advanced price test differs from the market suggested by a simple correlation statistic. The paper also responds to the continued practice of criticizing price co-movement for market definition on the basis of the poor performance of conventional price tests: many conventional tests have long been shown to suffer from small-sample power and size problems, but critics fail to account for recent improvements in this regard. The paper concludes that while no single price test offers conclusive evidence on the market, the combination of results offer a rich picture useful for market definition purposes.

Getting The Deal Through: Intellectual Property and Antitrust 2011

Posted by D. Daniel Sokol

Global Competition Review is pleased to announce the publication of Getting The Deal Through: Intellectual Property and Antitrust 2011. This fully revised and updated 5th edition offers the reader coverage of 23 jurisdictions worldwide, including new chapters on Bosnia and Herzegovina, Chile, Poland and South Africa. Key questions are answered by leading practitioners, providing international analysis in areas of law and policy for corporate counsel, cross-border legal practitioners and business people. Click here to purchase a copy of the 2011 edition or subscribe online.

More price competition can benefit spatial duopolists when the consumer preferences are uncertain

Posted by D. Daniel Sokol

Michal Krol (Manchester - Economics) has posted More price competition can benefit spatial duopolists when the consumer preferences are uncertain.

ABSTRACT: This note considers the e¤ect of the demand faced by Hotelling duopolists varying in both location and responsiveness to price changes. The latter may increase on average, but still make the firms better off due to the equilibrium product differentiation increasing sufficiently to relax the intensi…ed second-stage price competition. Furthermore, a social planner could always improve welfare via a pro- portional transport tax schedule contingent on the realization of the uncertainty.

Best Competition Conference in Asia for 2011 - A Global Competition Law and Economics Series Conference: Competition Law and the State, 18 & 19 March 2011, Hong Kong

Posted by D. Daniel Sokol

A Global Competition Law and Economics Series Conference:
Competition Law and the State
18 & 19 March 2011, Hong Kong

Conference Schedule
Friday 18 March 2011
08:30	Registration
09.00	Welcome and Introduction Professor Dame Hazel Genn DBE QC (Dean, UCL Faculty of Laws) & Professor Johannes Chan (Dean, The University of Hong Kong Faculty of Law) Dr Ioannis Lianos (UCL, Co-Director, Global Competition Law and Economics Series) Professor Daniel Sokol (University of Florida, Co-Director, Global Competition Law and Economics Series)
09:15	Official Address:
	Mr Gregory So (Under Secretary for Commerce and Economic Development, Hong Kong Special Administrative Region)
09:30	KEYNOTE ADDRESS: Government in Markets Keynote Speaker: John Fingleton (Chairman, UK Office of Fair Trading) Chair: Judge Frederic Jenny (Cour de Cassation and Chairman, OECD Competition Committee) Respondents: Allan Fels (Dean, Australian and New Zealand School of Government (ANZSOG)) William Kovacic (Commissioner, Federal Trade Commission) Eduardo Pérez Motta (President, Federal Competition Committee, Mexico) Followed by discussion
10:45	COFFEE BREAK
11:00	SESSION 1: Controlling anticompetitive action by the State: ex ante approaches (competition advocacy, competitive neutrality, competition law assessment of projected legislation) Chair: William Kovacic (Commissioner, Federal Trade Commission) Panelists: Joseph P Bauer (Professor of Law, The University of Notre Dame Law School) Michiyo Hamada (Commissioner, Japan Fair Trade Commission (JFTC)) Gert-Jan.Koopman (Deputy Director General (State Aids) European Commission - OECD) Simon Milnes (Infrastructure, Competition and Consumer Division, the Australian Treasury) Eduardo Pérez Motta (President, Federal Competition Committee, Mexico)
13:00	The Baker & McKenzie Speakers' Lunch Light Lunch for other attendees
14:00	SESSION 2: Competition law and state regulation: Setting the stage and focus on state-owned companies Chair: Gert-Jan.Koopman (Deputy Director General (State Aids) European Commission - OECD) Panelists: Gregory Leonard (Senior Vice-President, NERA) Yena Lim Hua Yen (Chief executive, Competition Commission of Singapore) Tony Prosser (Professor of Law, University of Bristol, Law School) Huang Yong (Professor of Law, University of International Business and Economics (UIBE) School of Law, Beijing) Georgina Foster (Partner, Baker & McKenzie LLP (Sydney))
15:45	COFFEE BREAK
16:00	SESSION 3: Controlling anticompetitive action by the State: ex post approaches (state aids, state action doctrine, state sponsored cartels and anticompetitive practices) Chair: Dhanendra Kumar (Chairman, Competition Commission of India) Panelists: Thomas Cheng (Assistant Professor of Law, The University of Hong Kong Faculty of Law) Michal Gal (Professor of Law, University of Haifa) Damien Geradin (University of Tilburg & Covington & Burling LLP) Gavin Robert (Partner, Linklaters LLP) Willard Tom (General Counsel, US Federal Trade Commission )
17:30	COFFEE BREAK
17:45	SESSION 4: Authorities Roundtable Exemptions from the application of competition law / the challenge of applying competition law to foreign state activities: comparative and international perspectives Chair: Allan Fels (Dean, Australian and New Zealand School of Government (ANZSOG)) Panelists: Gert-Jan.Koopman (Deputy Director General (State Aids) European Commission - OECD) Dhanedra Kumar (Chairman, Competition Commission of India) Zhu Zhong Liang (Anti-Monopoly Bureau, MOFCOM) Yena Lim Hua Yen, (Chief Executive, Competition Commission of Singapore)
19:30	Close of Day one
Saturday 19 March - Competition law and the challenge of the evolving definition and structure of State activities
09:30	Registration and refreshments
10:00	SESSION 5: Competition law, regulation and the challenge of private interests: Self-regulation by professional associations and legitimate lobbying Chair: Eduardo Pérez Motta (President, Federal Competition Committee, Mexico) Panelists: Assimakis Komninos (Commissioner, Hellenic Competition Commission) Ioannis Lianos (UCL Faculty of Laws) Paul Lugard (TBC) (former Head of Antitrust, Philips; Vice-Chair, Competition Commission BIAC; Lecturer Tilburg University) D. Daniel Sokol, (Professor of Law, Levin College of Law, University of Florida) Mark Williams (Professor of Law, The Hong Kong Polytechnic) Shiying Xu (Institute of Competition Law, East China University of Political Science and Law)
11:30	Coffee Break
11:45	SESSION 6 The interaction between competition law and regulatory alternatives (case studies: broadcasting, energy, digital media) Chair: Gert-Jan Koopman (Deputy Director General (State Aids), European Commission) Panelists: Nick Economides (Professor of Law, Stern Business School, NYU) Geoff Edwards (Charles River Associates) Leigh Hancher (University of Tilburg & Allen & Overy LLP) Mark Whitener (Senior Counsel, General Electric)
13:15	LUNCH
14:15	SESSION 7: The interaction between competition law and regulatory alternatives II (case studies: healthcase, environmental regulation, financial services and crisis regulation) Chair: Yena Lim Hua Yen, (Chief Executive, Competition Commission of Singapore) Panelists: Alberto Heimler (Professor of Economics, Advanced School of Public Administration, Government of the Italian Republic) Clara Ingen-Housz (Partner, Baker & McKenzie LLP (Hong Kong)) Ioannis Kokkoris (University of Reading Law School ) William Kovacic (Commissioner, Federal Trade Commission) Franz Jürgen Säcker (Professor of Law, Freien Universität Berlin)
16:15	Break
16:30	DISCUSSION: Extensions - The evolving role of the State and the impact of competition law in a globalized world: institutional solutions for dealing with tragic choices Chair: Emeritus Professor Valentine Korah (UCL Faculty of Laws) Moderator: Judge Frederic Jenny (Cour de Cassation and Chairman, OECD Competition Committee) Open discussion to the floor
17:30	Concluding remarks: Thomas Cheng (HKU), Ioannis Lianos (UCL) & Daniel Sokol (Florida)
17:45	End of conference

 

Register here. 

EU Distribution Law - 5th Ed.

Posted by D. Daniel Sokol

Fifth Edition

EU Distribution Law

Joanna Goyder

The new edition of EU Distribution Law, published six years after the previous edition, is concerned with the competition rules prohibiting anti-competitive agreements and behaviour affecting trade between Member States, and the special rules which protect commercial agents. Under EU law such anti-competitive agreements may be void and substantial fines imposed and liability in damages may result. To minimise their risk companies and their advisers must therefore understand the current rules and exemptions.

 

In 2010 fully revised EU legislation and guidelines governing distribution and supply agreements came into effect. New features include an increased focus on powerful buyers and on internet sales, and there is also a more generous approach to resale price maintenance. [At the same time the special regime for the motor vehicle sector was significantly amended.] The European Commission, as well as national courts and competition authorities, actively apply EU competition rules in this area, so companies need to take the new rules fully into account. Furthermore, the continuing enlargement of the EU, most recently in 2007 to 27 Member States, and the ever-expanding case law of the European courts, means that EU law has an ever wider and more pronounced impact.

 

This comprehensively rewritten and updated new edition of a well-known text combines expert commentary with clear, practical advice on the law affecting distribution agreements, exclusive supply, purchase agreements, franchising, agency and selective distribution.

 

This book will be essential reading for commercial and competition lawyers, and the legal departments of manufacturers, suppliers, distributors and retailers currently trading or intending to trade within the European Union.

 

Joanna Goyder is a Barrister working for Freshfields Bruckhaus Deringer LLP in Brussels.

 

Feb 2011   374pp   Hbk   9781849461467   £95 / €125

Discount rate to e-mail list subscribers: £71 / €94

Click here to order online

Information Exchanges Among Competitors under the New Horizontal Guidelines – A Few Further Thoughts

Posted by D. Daniel Sokol

Andreas Reindl provides Information Exchanges Among Competitors under the New Horizontal Guidelines – A Few Further Thoughts. 

ABSTRACT: In December 2010 the Commission adopted the revised Horizontal Guidelines with a new chapter on information exchanges. The draft Guidelines already proposed sound principles for the analysis of information exchanges, as I explained in my earlier comment. I believe that the final text is a further improvement on the draft Guidelines in some important aspects. The Commission deserves credit for being open and receptive to comments and for taking suggestions on board, to a much greater extent than during recent other drafting exercises.

In this contribution I briefly comment on the substantially revised and expanded discussion in the Horizontal Guidelines on how to handle unilateral information disclosures, a complex question of great practical relevance for market participants. I will also provide some thoughts on the conceptual/systemic question, which has been highlighted by the Horizontal Guidelines and the debate surrounding them, whether European competition law continues to compartmentalize analysis in light of applicable Commission instruments and neglects general principles that should uniformly inform all competition analysis.

Spatial Cournot Competition and Consumers’ Heterogeneity: A Note

Posted by D. Daniel Sokol

Corrado Benassi (Dipartimento di Scienze Economiche, Alma Mater Studiorum - Università di Bologna; The Rimini Centre for Economic Analysis) theorizes Spatial Cournot Competition and Consumers’ Heterogeneity: A Note.

ABSTRACT: We consider the standard model of spatial Cournot competition and show that a necessary condition for dispersion equilibria is that the distribution be not unimodal.

Product differentiation decisions under ambiguous consumer demand and pessimistic expectations

Posted by D. Daniel Sokol

Michal Król (Economics, The University of Manchester) addresses Product differentiation decisions under ambiguous consumer demand and pessimistic expectations.

ABSTRACT: This paper examines the e¤ects of violating the common prior assumption embedded in the Product differentiation and location deci- sions under demand uncertainty model by Meagher and Zauner (Journal of Economic Theory [2004]). In particular, a situation is discussed in which the firms do not know the exact distribution of the location and price elasticity of consumer demand, but resolve the resulting ambiguity using the Arrow and Hurwicz -maxmin criterion When the firms are sufficiently pessimistic ( is high enough), the results are in contrast with the existing literature. In particular, an increase of demand location uncertainty decreases the equilibrium product differentiation, as well as the resulting second-stage equilibrium prices and profits for any realisation of consumer demand, although the e¤ect is dampened by a possibility of higher price elasticity of demand. Furthermore, pessimism could serve as a form of strategic deterrence, because any …rm that can commit itself to a more pes- simistic approach increases its equilibrium share of the market and becomes better o¤ at the competitor’s expense. However, this generates a Prisoner's Dilemma situation, since both firms lose when they both become more pes-simistic, suggesting that the presence of ambiguity can make the market more competitive.

Regulated Competition Under Increasing Returns to Scale

Posted by D. Daniel Sokol

Thomas Greve, University of Copenhagen - Department of Economics and Hans Keiding, University of Copenhagen - Department of Economics discuss Regulated Competition Under Increasing Returns to Scale.

ABSTRACT: This paper proposes a mechanism for the regulation of firms in the context of asymmetric information with the aim to induce firms to report its private information truthfully and to save information rents. Baron and Myerson (1982) have considered this problem and derived an optimal policy for regulating a monopolist with unknown costs. They show that it was possible to create a regulatory mechanism that induced the firm to report its private information truthfully. To secure this, a part of the mechanism is to pay the firm a subsidy. This article presents a regulatory mechanism which explores competition in the context of an industry characterized by increasing returns to scale. In contrast to the model in this article, the Baron and Myerson model doesn’t consider increasing returns to scale. In equilibrium each firm chooses to report truthfully without receiving any subsidy. However, the use of competition gives rise to an efficiency lost.

Modeling Processor Market Power and the Incidence of Agricultural Policy: A Non-parametric Approach

Posted by D. Daniel Sokol

Rachael E. Goodhue, University of California at Davis-Agricultural and Resource Economics and Carlo Russo, Università degli Studi di Cassino-Facoltà di Economia discuss Modeling Processor Market Power and the Incidence of Agricultural Policy: A Non-parametric Approach.

ABSTRACT: This paper examines interactions between market power and agricultural policy in the U.S. wheat flour milling industry using a non-parametric approach. The analysis focuses on marketing loan and pre-1986 deficiency payment programs; farmers’ payments from these programs are dependent on whether or not the market price exceeds a “policy” price. It assesses if the payments trigger a change in the underlying economic behavior of the milling industry, and any resulting change in the flour-wheat price margin. The analysis compares the outcomes of using constrained and unconstrained sliced inverse regressions in order to identify the significant factors affecting millers' pricing behavior. In both cases, the link functions are then estimated using a non-parametric regression of prices on these factors. Constraining the factors in the sliced inverse regression in order to generate coefficients that are easily interpreted using economic theory does not affect the results. Based on the SIR factors, millers were able to extract an additional $0.24/cwt. of flour by increasing their marketing margins in years farmers received program payments. Based on the CIR factors, the increase in the marketing margin was $0.23/cwt. In both cases the increase was approximately 10 percent of the estimated marketing margin in years farmers received program payments.

The Obama Administration's Innovation Policy

Posted by D. Daniel Sokol

The Obama Administration's Innovation Policy

Event

In his 2011 State of Union Address, President Obama warned of a "Sputnik moment" and called for the nation to confront our international economic competitiveness and innovation policy challenges. As a national debate on this challenge gets underway, ITIF will host key Obama Administration officials charged with developing and overseeing the Administration's innovation policy and top private sector leaders for a discussion of the Administration's recently updated "Strategy for American Innovation." The forum will focus on key elements of the Administration's strategy: 1) Investing in the Building Blocks of American Innovation; 2) Promoting Competitive Markets that Spur Productive Entrepreneurship and 3) Catalyzing Breakthroughs for National Priorities.

Date/Time:
Wednesday, March 9, 2011
8:30 AM-11:30 AM (add to calendar)

Location:
Hamilton Crowne Plaza
1001 14th Street NW
Washington, DC 20005 (map)

Presenters:
Aneesh Chopra
U.S. Chief Technology Officer and Associate Director for Technology in the White House Office of Science and Technology Policy

Austan Goolsbee
Chairman, Council of Economic Advisors

Phillip J. Weiser
Senior Advisor to the Director for Technology and Innovation, National Economic Council

Moderator:

Robert D. Atkinson

President and Founder, Information Technology and Innovation Foundation

Respondents:
TBD

Register for the event.

Does the Packers and Stockyards Act Require Antitrust Harm?

Posted by D. Daniel Sokol

Herb Hovenkamp (Iowa Law) asks Does the Packers and Stockyards Act Require Antitrust Harm?

ABSTRACT: The Packers and Stockyards Act was enacted in 1921. Congress was plainly influenced by the 1919 publication of a Federal Trade Commission Report on the meatpacking industry. Consistent with the FTC’s jurisdiction and concerns, the Report dealt with deceptive and unfair practices as well as practices that were believed to violate the antitrust laws. The language of the PSA does much the same, mixing the two. Of its seven specific prohibitions, three contain antitrust-like provisions requiring a lessening of competition. Two others reach unfair and tort-like conduct without any requirement of harm to competition. The remaining two reach both anticompetitive and tortuous conspiracies. One of the conspiracy provisions plainly reaches price fixing and market division agreements. The other plainly reaches a full range of tortious and anticompetitive conduct without stating a harm to competition requirement.

ACLE Conference - Call for Papers - deadline for submission is March 1 2011

Posted by D. Daniel Sokol

ACLE Conference - Call for Papers The Amsterdam Center for Law & Economics at the University of Amsterdam organizes its 7th annual Competition & Regulation meeting on the topic:   Competition Policy for Emerging Economies: When and How? May 20, 2011 University of Amsterdam   Keynote Speakers include: Frederic Jenny (ESSEC Business School) Daniel Sokol (University of Florida) Michal Gal (University of Haifa)   Roundtable discussion chaired by William Kovacic (FTC) between the keynote speakers, joined by Andrew Gavil (Howard University), Ioannis Lianos (UCL), Sean Ennis (OECD) and Hassan Qaqaya (UNCTAD).   The objective of this C&R Meeting is to bring together renowned specialists in emerging competition law enforcement and its interrelationship to economic development in conference to debate. We also welcome practitioners with a keen interest in this specialty subject, including (new) agency officials, government officials interested in competition policy as a development aid tool, competition lawyers and consultants and scholars working on these research topics. Call for Papers – NOW OPEN Academics, private practitioners and competition officials, both with a legal and an economic background, are encouraged to submit their research for inclusion in the conference program. We welcome all original research (in progress).   Submissions for inclusion in the program (full papers or abstracts) may be sent together with the author’s address information to: [email protected]   The deadline for submission is March 1 2011. Decisions on acceptance to the program will be communicated mid March.    Call for Papers    The scientific program committee, which consists of Maarten Pieter Schinkel (chair), Rein Wesseling, Benjamin van Rooij, Jeroen van de Ven, Kati Cseres and Jo Seldeslachts, will produce a full day program based on the response to this call. Local organizers are Martijn Han and Michael Frese.   More Information For more information, please visit the ACLE conference website: http://emergingagencies.acle.nl   Relevant information on the preliminary program, registration, fees and accommodation will be posted on this website as we progress towards the conference date.    Please accept our apologies for the inconvenience should you, despite our every effort to clean our database for doubles, receive this message more than once.

Internet Retailing and ‘Free Riding’: A Post-Leegin Antitrust Analysis

Posted by D. Daniel Sokol

Marina Lao (Seton Hall Law) has posted Internet Retailing and ‘Free Riding’: A Post-Leegin Antitrust Analysis.

ABSTRACT: This article is adapted for the Journal of Internet Law from a more in-depth article that the author has published: Resale Price Maintenance: The Internet Phenomenon and Free Rider Issues, 55 Antitrust Bulletin 473 (2010). It examines the characteristics of the Internet, online retailing, and the issues they raise pertaining to the free rider justification. It argues that, for most products, the abundance of information available online should diminish the need for in-store demonstrations or knowledgeable sales assistance and, thus, the frequency of free riding. Several recent marketing studies seem to confirm this analysis and to further suggest that free riding may be synergistic, not harmful, calling into question the usual free rider justification for resale price fixing agreements. Even if one rejects these insights and views free riding from a conventional perspective, RPM is not particularly effective in eliciting from online retailers the types of brick-and-mortar services upon which they are allegedly prone to free ride. In any event, there are other less anti-competitive means of achieving the objective of inducing dealer services. Given the many benefits of Internet retailing and the risk that prohibiting discounting would impede its growth, it is important not to allow the rule of reason to devolve into a de facto legality rule for RPM. This article concludes by suggesting a way forward that would avoid this result without running afoul of Leegin.

 

The Cartel Project: Report on a Survey of the Australian Public Regarding Anti-Cartel Law and Enforcement

Posted by D. Daniel Sokol

Caron Y. Beaton Wells, Melbourne Law School, Fiona Haines, University of Melbourne - Department of Criminology, Christine Parker, Melbourne Law School - University of Melbourne, and Chris Platania-Phung, University of Melbourne discuss The Cartel Project: Report on a Survey of the Australian Public Regarding Anti-Cartel Law and Enforcement.

ABSTRACT: This survey has been undertaken in connection with a research project (The Cartel Project) that investigates various aspects of the criminalisation of cartel conduct in Australia. In section 1 of the Report we set out the background to cartel criminalisation in Australia (section 1.1) and explain the aims and components of The Cartel Project (section 1.2). We also set out why we decided to undertake this survey as part of The Cartel Project and, in particular, why we regard empirical evidence of public opinion on cartel criminalisation as relevant from various perspectives (section 1.3). The scope of the survey, as determined by the questions we were seeking to answer, is explained (section 1.4), and finally there is a note on the purpose and scope of this report (section 1.5).

Competition Law and the Pharmaceutical Industry conference - 17 May 2011

Posted by D. Daniel Sokol

The conference will be held on 17 May 2011 from 10am to 6pm in the Mary Sunley Building, St Catherines College, Manor Road, Oxford. The Registration Fee includes all conference materials, refreshments and a buffet lunch.

The Oxford Centre for Competition Law and Policy will host a one day conference on Competition Law and the Pharmaceutical Industry on Tuesday, 17 May 2011.

The event is scheduled to start at 10h00 and will feature leading academics, practitioners and competition officials. Confirmed speakers include:

-Steven Anderman, University of Essex

-Ulf Bernitz, IECL, University of Oxford

-Michael Carrier – Rutgers University

-Elisabeth Eklund - Advokatfirman Delphi, Sweden

-Hugh M. Hollman - US FTC

-Helen Jenkins – OXERA

-Hans Henrik Lidgard, University of Lund

-Ian Karet - Linklaters

-Greg Perry - European Generic Medicines Association

-Julia Pike - Sandoz International GmbH

-Simon Priddis - Freshfields Bruckhaus Deringer

-Dominik Schnichels - EU Commission

-Steve Shadowen - Hangley Aronchick Segal & Pudlin

-Geoffrey Steadman – UK OFT

-Pat Treacy - Bristows

-Mark Williams – NERA

 

Places for this conference are limited and early registration is advisable. To register, please visit the conference registration and payment page. The registration fee of £35 includes the conference materials, refreshments and a buffet lunch. 

Vertical Integration with Complementary Inputs

Posted by D. Daniel Sokol

Markus Reisinger, University of Munich - Economics Department, CESifo (Center for Economic Studies and Ifo Institute for Economic Research) and Emanuele Tarantino, University of Bologna - Department of Economics, Tilburg Law and Economics Center (TILEC) address Vertical Integration with Complementary Inputs.

ABSTRACT: We analyze the profitability and welfare consequences of vertical integration when downstream firms deal with suppliers of complementary intermediate goods that exert market power. We show that the results in this setting are markedly different from those of the received literature that deals only with substitute intermediate goods. In particular, vertical integration is not necessarily profitable since the integrated firm faces the problem that the complementary input producer expropriates the higher profits earned by the integrated chain on the downstream market. Interestingly, this effect is particularly strong is the integrated firm is very efficient. We also show that if vertical integration is profitable, foreclosure of downstream rivals is no longer the optimal strategy of the integrated firm. Instead, the integrated firm may set prices even below marginal costs thereby rendering vertical integration pro-competitive, which has profound consequences on antitrust policy.

Monopolistic Competition and Product Diversity: Review and Extension

Posted by D. Daniel Sokol

Winston W. Chang, State University of New York - Department of Economics has posted Monopolistic Competition and Product Diversity: Review and Extension.

ABSTRACT: The modeling of monopolistic competition has contributed to rapid developments in numerous fields of economics, notably macroeconomics, international trade, industrial organization, economic growth and economic geography. This paper provides a brief survey and synthesis of the original monopolistic competition models and their subsequent developments, including the works of Spence (1976a, 1976b) and Dixit and Stiglitz (1977) that are based on the "love-of-variety" approach, the works of Lancaster (1966, 1979) that are based on the "love-of-characteristic" approach, and the large-group monopolistic competition models of Hart (1979, 1985a, 1985b), among others. This paper will also examine some of the special utility functions frequently used in the literature on models of monopolistic competition. Perhaps owing to the complexity of these models, the literature lacks a broad and systematic coverage of this essential subject. This paper aims to help fill the gap.