Tuesday, January 22, 2013

Greek Lignite—Abuse of Dominant Position in the Context of Exclusive Rights Granted by Authorities

Posted by D. Daniel Sokol

 Cosmo Graham (Leicester) has written on Greek Lignite—Abuse of Dominant Position in the Context of Exclusive Rights Granted by Authorities. ABSTRACT: In Greek Lignite, the General Court has decided that inequality of opportunity, without more, does not constitute an abuse of dominant position in the context of Article 106(1) TFEU.

January 22, 2013 | Permalink | Comments (0) | TrackBack (0)

Monday, January 21, 2013

Obama discusses competition policy in his inagural address

Posted by D. Daniel Sokol

President Obama noted "Together, we discovered that a free market only thrives when there are rules to ensure competition and fair play."

January 21, 2013 | Permalink | Comments (0) | TrackBack (0)

THE TROUBLED PATH OF THE LOCK-IN MOVEMENT

Posted by D. Daniel Sokol

Stan J. Liebowitz (UT Dallas) and Stephen E. Margolis (NC State) discuss THE TROUBLED PATH OF THE LOCK-IN MOVEMENT.

ABSTRACT: Paul David (in his article “Clio and the Economics of QWERTY”), Brian Arthur (in his article “Competing Technologies, Increasing Returns, and Lock-In by Historical Events”), and others introduced a “new economics” of increasing returns, alleging problems of path dependence and lock-in. These conditions were claimed to constitute market failure and were soon featured in antitrust actions, most famously in Microsoft. We challenged the empirical support for these theories and their real-world applicability (in the articles “The Fable of the Keys” and “Network Externality: An Uncommon Tragedy”). Subsequently, David and others have responded, arguing that lock-in theories require no empirical support, market failures were never an important feature of their writings, and the empirical evidence that had been put forward was never meant to be taken literally. Nevertheless, David and others claim that their theories have policy significance. Indeed, lock-in claims continue to appear as a basis for antitrust action. We now respond to the responses of David and others, review new developments in this literature, and consider antitrust implications in light of the deficiencies in lock-in theories and related empirical work.

January 21, 2013 | Permalink | Comments (0) | TrackBack (0)

Fortune Telling: Australian Competition Law in 2013

Posted by D. Daniel Sokol

Julie Clarke (Deakin Univ. Law) undertakes Fortune Telling: Australian Competition Law in 2013.

ABSTRACT: "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Predicting the path of Australian competition law in 2013 may be more difficult still. It is an election year in Australia and, if history is any guide, this will generate some populist political promises, frequently at odds with sound competition policy. Political debate is likely to focus on the need, or otherwise, for a major review of Australia's competition laws and see philippics over who's policies are most likely to support small business, or curtail the market power allegedly enjoyed by big supermarkets, banks, and petrol companies.

January 21, 2013 | Permalink | Comments (0) | TrackBack (0)

Sequential vs Collusive Payoffs in Symmetric Duopoly Games

Posted by D. Daniel Sokol

Marco Marini (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza") and Giorgio Rodano (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza") explore Sequential vs Collusive Payoffs in Symmetric Duopoly Games.

ABSTRACT: In many strategic settings comparing the payoffs obtained by players under full cooperation to those obtainable at a sequential (Stackelberg) equilibrium can be crucial to determine the nal outcome of the game. This happens, for instance, in repeated games in which players can break cooperation by acting sequentially, as well as in merger games in which rms are allowed to sequence their actions. Despite the relevance of these and other applications, no fully-edged comparisons betwen collusive and sequential payo¤s have been performed so far. In this paper we show that even in symmetric duopoly games the ranking of cooperative and sequential payo¤s can be extremely variable, particularly when the consuete linear demand assumption is relaxed. Not surprisingly, the degree of strategic complementarity and substitutability of playersactions (and, hence, the slope of their best-replies) appears decisive to determine the rank! ing of collusive and sequential payoffs. Some applications to endogenous timing are discussed.

January 21, 2013 | Permalink | Comments (0) | TrackBack (0)

Partial collusion in an asymmetric duopoly

Posted by D. Daniel Sokol

Marc Escrihuela Villar (Universitat de les Illes Balears) describes Partial collusion in an asymmetric duopoly.

ABSTRACT: In this paper we investigate the connection between cost asymmetries and the sustainability of collusion within the context of a infinitely repeated Cournot duopoly. We assume that firms are able to coordinate on distinct output levels than the unrestricted joint profit maximization outcome. We show that, in our model, regardless of the degree of cost asymmetry, at least some collusion is always sustainable if firms are patient enough. We also endogenize the degree of collusion and show that it has an upper bound determined by the most inefficient firm.

January 21, 2013 | Permalink | Comments (0) | TrackBack (0)

Dynamic Price Competition with Capacity Constraints and a Strategic Buyer

Posted by D. Daniel Sokol

James J. Anton (Duke), Gary Biglaiser (UNC Chapel Hill), and Nikolaos Vettas (Athens University of Economics and Business) model Dynamic Price Competition with Capacity Constraints and a Strategic Buyer.

ABSTRACT: We analyze a simple dynamic durable good oligopoly model where sellers are capacity constrained. Two incumbent sellers and potential entrants choose their capacities at the start of the game. We solve for equilibrium capacity choices and the (necessarily mixed) pricing strategies. In equilibrium, the buyer splits the order with positive probability to preserve competition; thus it is possible that a high and low price seller both have sales. Sellers command a rent above the value of unmet demand by the other seller. A buyer would bene…t from either a commitment not to buy in the future or by hiring an agent with instructions to buy always from the lowest priced seller.

January 21, 2013 | Permalink | Comments (0) | TrackBack (0)

Sunday, January 20, 2013

2013: The Wind of Change?

Posted by D. Daniel Sokol

Ruchit Patel (Cleary Gottlieb) asks 2013: The Wind of Change?

ABSTRACT: The wind of change is blowing through this continent. Whether we like it or not ..."

2013 has the potential to be a year of significant change for European antitrust law. Aside from anticipated policy developments in the areas of State Aid, Merger Control, Collective Redress, and Free Trade, it seems likely that a number of important cases, currently under investigation by the European Commission, may progress or be decided in 2013. This article seeks to summarize and anticipate certain (but by no means all) of the most important likely developments in 2013.

January 20, 2013 | Permalink | Comments (0) | TrackBack (0)

Saturday, January 19, 2013

2013 Antitrust Developments: United States

Posted by D. Daniel Sokol

Aidan Synnott & William Michael (Paul, Weiss) discuss 2013 Antitrust Developments: United States.

ABSTRACT: United States antitrust law has seen a number of significant developments in recent years—from American Needle to shifts in regulatory priorities—and 2013 promises to continue that trend. We cannot know exactly how U.S. antitrust law will or will not change in the coming year, but we can highlight some key events and cases to watch. The goal of this article is thus not to predict changes in antitrust law. Instead, we aim to identify critical questions that are on the horizon.

In the first section of this article, we identify some of the pending cases that have the greatest potential to change antitrust law in 2013. In the second, we discuss possible changes in regulatory enforcement.

January 19, 2013 | Permalink | Comments (0) | TrackBack (0)

Friday, January 18, 2013

Who's afraid of big bad banks? Bank competition, SME, and industry growth

Posted by D. Daniel Sokol

Robert Inklaar (U Groningen), Michael Koetter (Frankfurth School of Finance and Management), and Felix Noth (Goethe University) ask Who's afraid of big bad banks? Bank competition, SME, and industry growth.

ABSTRACT: We test how bank market power influences technical change and resource allocation of informationally opaque firms. We use a dataset with approximately 700,000 firm-year observations of German small and medium-sized enterprises (SME) to identify the effect of bank market power using the dependence on external finance per industry and the regional demarcation of the German banking market. Market power generally spurs aggregate SME growth. Banks need to realize sufficient margins to generate useful private information. Bank market power spurs both technical change and reallocation of resources, but it reduces SME growth in industries that depend heavily on external finance.

January 18, 2013 | Permalink | Comments (0) | TrackBack (0)

Economies of Scale and Merger Efficiencies: Empirical Evidence from the Chilean Pension Funds Market

Posted by D. Daniel Sokol

Claudio A Agostini (Escuela de Gobierno, Universidad Adolfo Ibanez) provides a discussion of Economies of Scale and Merger Efficiencies: Empirical Evidence from the Chilean Pension Funds Market.

ABSTRACT: The financial services industry has been experiencing a strong concentration process all over the world during the last decade (Cetorelli, et. al, 2007; De Nicolo, et. al, 2003; Gelos and Roldos, 2004; Rhoades, 1996). As usual, one of the main concerns associated to the concentration of the industry is related to the possibility of exercising market power. As a result, antitrust authorities in several countries have required an in depth analysis of the efficiencies of each merger when concentration indexes are above the minimum thresholds required by mergers guidelines. The main goal of this paper is to evaluate the welfare implications of the merger of two medium Pension Fund Managers (AFP) in Chile that was approved in 2007 by the Antitrust Tribunal (Tribunal de Defensa de la Libre Competencia). To this end, we estimate the size of scale economies in this industry, we present a simple theoretical model of the competition in the industry and, based on this model, we simulate the merger.

January 18, 2013 | Permalink | Comments (0) | TrackBack (0)

Lateral Move: Amelia Fletcher from OFT to University of East Anglia

Posted by D. Daniel Sokol

Amelia Fletcher, Cheif Economist at the OFT will join the University of East Anglia Centre for Competition Policy. See the press release here. This is a great move for UEA's Centre for Competition Policy. I think that without a doubt in terms of the size of the academic team in both competition economics and law, UEA has the deepest bench for competition of any UK university.

January 18, 2013 | Permalink | Comments (0) | TrackBack (0)

U.S. Antitrust Enforcement in 2013: Where Are We Going, and Why?

Posted by D. Daniel Sokol

Kent Bernard (Fordham Law) asks U.S. Antitrust Enforcement in 2013: Where Are We Going, and Why?

ABSTRACT: U.S. antitrust law is like a huge cargo ship in at least two respects: It takes time to change direction, and you don't want to be in its way when it does. When we lift our eyes from the day-to-day cases and developments, certain trends come into sharper focus. Bigness is suspect again, but in some new and different ways than it was in the past.

January 18, 2013 | Permalink | Comments (0) | TrackBack (0)

Taking Antitrust to Patent School: The Instance of Pay-for-Delay Settlements

Posted by D. Daniel Sokol

Rudy Peritz (NYLS) is Taking Antitrust to Patent School: The Instance of Pay-for-Delay Settlements.

ABSTRACT: The essay develops a new approach for antitrust analysis of pay-for-delay settlements in pharmaceutical patent infringement cases, an approach that shows them to be presumptively prohibited agreements in restraint of competition. The issue is timely in light of the Watson v FTC case now pending before the Supreme Court; the decision below is one in a line of antitrust cases concluding that the settlement agreements are legal per se so long as their pay-for-delay provisions fall “within the scope of the patent.” The essay explains why proper antitrust analysis calls for separate attention to the scope of the injunction remedy and then shows how antitrust approval of pay-for-delay provisions entails satisfaction of the Supreme Court’s traditional test for the injunction remedy in patent infringement cases set out in the landmark eBay decision. Along the way, the essay briefly describes how the economics of patent law, rightly understood, supports the eBay test’s application in the antitrust analysis of cases like Watson.

January 18, 2013 | Permalink | Comments (0) | TrackBack (0)

Competition, Gatekeeping, and Health Care Access

Posted by D. Daniel Sokol

Godager, Geir (Department of Health Management and Health Economics) Iversen, Tor (Department of Health Management and Health Economics) and Albert Ma, Ching-to (Department of Economics, Boston University and University of Oslo)b explore Competition, Gatekeeping, and Health Care Access.

ABSTRACT: We study the impact of competition on primary care physicians’specialty referrals. Our data come from a Norwegian survey in 2008-9 and Statistics Norway. From the data we construct three measures of competition the number of open primary physician practices with and without population adjustment, and the Herfindahl-Hirschman Index. We build a theoretical model, and derive two opposing effects of competition on gatekeeping physicians’ specialty referrals. The empirical results suggest that competition has negligible or small positive effects on referrals. Our results do not support the policy claim that increasing the number of primary care physicians reduces secondary care.

January 18, 2013 | Permalink | Comments (0) | TrackBack (0)

Thursday, January 17, 2013

Performance of the life insurance industry under pressure: efficiency, competition and consolidation

Posted by D. Daniel Sokol

Jacob Bikker, De Nederlandsche Bank; University of Utrecht - Utrecht University School of Economics discusses Performance of the life insurance industry under pressure: efficiency, competition and consolidation.

ABSTRACT: A well-performing life insurance industry benefits consumers, producers and insurance firm stockholders alike. Unfavourable market conditions stress the need for life insurers to perform well in order to remain solvent. Using a unique supervisory data set, this paper investigates competition and efficiency in the Dutch life insurance market by estimating unused scale economies and measuring efficiency-market share dynamics during 1995-2010. Large unused scale economies exist for small and medium-sized life insurers, indicating that further consolidation would reduce costs. Over time average scale economies decrease but substantial differences between small and large insurers remain. A direct measure of competition confirms that competitive pressures are at a lower level than in other markets. We do not observe any impact of increased competition from banks, the so-called investment policy crisis or the credit crisis, apart from lower returns in 2008. Investigation of product submarkets reveals that competition is higher on the collective policy market, while the opposite is true for the unit-linked market, where the role of intermediary agents is largest.

January 17, 2013 | Permalink | Comments (0) | TrackBack (0)

Hotelling Models with Price-Sensitive Demand and Asymmetric Transport Costs: An Application to Public Transport Scheduling

Posted by D. Daniel Sokol

Adriaan Hendrik van der Weijde (VU University Amsterdam), Erik T. Verhoef (VU University Amsterdam) and Vincent A. C. van den Berg (VU University Amsterdam) discuss Hotelling Models with Price-Sensitive Demand and Asymmetric Transport Costs: An Application to Public Transport Scheduling.

ABSTRACT: We formulate a horizontal differentiation model with price-sensitive demand and asymmetric transport costs, in the context of transport scheduling. Two competitors choose fares and departure times in a fixed time interval. Consumers are distributed uniformly along the interval; their location indicates their desired departure time. In a standard Hotelling model, locations are chosen before prices. In our context, the opposite order is also conceivable, but we show that it does not result in a Nash equilibrium; the same is true for a game in both variables are chosen simultaneously. We also discuss Stackelberg game structures and second-best regulation. We conclude that the addition of price-sensitive demand results in equilibria in the traditional Hotelling model with price setting; there, services are scheduled closer together than optimal. We also show that it is possible to include asymmetric schedule delay functions. Our results show that departure times can be strategic instruments. Optimal regulatory strategies depend on the value of schedule delay, and on whether the regulator can commit.

January 17, 2013 | Permalink | Comments (0) | TrackBack (0)

Competitiveness and Stability of Collusive Behavior

Posted by D. Daniel Sokol

Toshihiro Matsumura, University of Tokyo - Institute of Social Science and Noriaki Matsushima, Osaka University - Institute of Social and Economic Research analyze Competitiveness and Stability of Collusive Behavior.

ABSTRACT: We investigate the relationship between the degree of competition and the stability of collusive behaviour, by introducing the element of relative performance in the objective functions of the firms. We show that an increase in the degree of competition destabilizes the collusion. This relation differs starkly in the standard symmetric Cournot and Bertrand duopoly models, with the former being more unstable than the latter.

January 17, 2013 | Permalink | Comments (0) | TrackBack (0)

"Competition Laws in Transitional Economies: A Plain-Language Approach?" on Jan 22nd - Registration is Now Open

Posted by D. Daniel Sokol

"Competition Laws in Transitional Economies: A Plain-Language Approach?" on Jan 22nd - Registration is Now Open

Competition Laws in Transitional Economies:  A Plain-Language Approach?
Begins: Jan 22, 2013  12:00 PM  
Ends:
Jan 22, 2013  01:30 PM

(All times are local per meeting location)
Co-Sponsored by the American Bar Association Section of Antitrust Law, International Committee

Please Note:

  • This is a non-CLE program
  • The timing for this program is listed in US Eastern Time

 

Over 100 emerging and transitional economies have adopted antitrust or competition laws. But have these laws been successful?  Has the international community developed adequate models for writing effective laws and provided sufficient assistance to new competition agencies?  Our panel of experts will explore ideas for approaches to the challenges of structuring and implementing competition laws, drawing on their own experiences in working with governments and competition agencies in transitional economies.

Speakers:

  • Eduardo Perez Motta, Chairman of the Mexican Federal Competition Commission, Chair of the International Competition Network
  • Eleanor Fox, NYU Law School
  • Timothy Hughes, FTC International Division
  • Michael Nicholson, Mission Economist, USAID; former FTC economist

 

Moderator:

  • Kenneth Davidson, American Antitrust Institute,  Former Consultant to Ministry of Commerce, Kingdom of Cambodia

January 17, 2013 | Permalink | Comments (0) | TrackBack (0)

DOES HEALTH INFORMATION TECHNOLOGY REDUCE COSTS?

Posted by D. Daniel Sokol

David Dranove (Northwestern), Christopher Forman (Georgia Tech), Avi Goldfarb (Toronto), and Shane Greenstein (Northwestern) ask DOES HEALTH INFORMATION TECHNOLOGY REDUCE COSTS?

ABSTRACT: We examine the relationship between the adoption of EMR and hospital operating costs. We first identify a puzzle that has been seen in prior studies: Adoption of EMR is associated with a slight cost increase. We draw on the literature on IT and productivity to demonstrate that the average effect masks important differences across time, locations, and hospitals. We find: (1) EMR adoption is initially associated with higher costs; (2) At hospitals with access to complementary inputs, EMR adoption leads to a cost decrease after three years; (3) Hospitals in unfavorable conditions experience increased costs even after six years.

January 17, 2013 | Permalink | Comments (0) | TrackBack (0)