Wednesday, May 22, 2013

Bohannan wins 2013 Mark T. Banner Award

Posted by D. Daniel Sokol

The 2013 Mark T. Banner Award of the ABA Section of Intellectual Property Law has been awarded to Christina Bohannan (Iowa Law). Christina writes on IP and competition, among other topics.

The Mark T. Banner Award is

conferred annually to an individual or group who has advanced the practice, profession and/or substance of intellectual property law through extraordinary contributions in areas such as teaching, scholarship, innovation, legislation, advocacy, bar or other association activities, or the judiciary.


Kudos to Christina - a first rate scholar.

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

Competition and Growth: Reinterpreting their Relationship

Posted by D. Daniel Sokol

Daria Onori (Aix-Marseille University) explores Competition and Growth: Reinterpreting their Relationship.

ABSTRACT: In this paper we modify a standard quality ladder model by assuming that R&D is driven by outsider firms and the winners of the race sell licenses over their patents, instead of entering directly the intermediate good sector. As a reward they get the aggregate profit of the industry. Moreover, in the intermediate good sector firms compete a la Cournot and it is assumed that there are spillovers represented by strategic complementarities on costs. We prove that there exists an interval of values of the spillover parameter such that the relationship between competition and growth is an inverted-U-shape.

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

Search Costs, Demand-Side Economies and the Incentives to Merge under Bertrand Competition

Posted by D. Daniel Sokol

Jose L. Moraga-Gonzalez and Vaiva Petrikaite analyze Search Costs, Demand-Side Economies and the Incentives to Merge under Bertrand Competition.

ABSTRACT: We study the incentives to merge in a Bertrand competition model where firms sell differentiated products and consumers search sequentially for satisfactory deals. In the pre-merger symmetric equilibrium, consumers visit firmsrandomly. However, after a merger, because insiders raise their prices more than the outsiders, consumers start searching for good deals at the non-merging stores, and only when they do not find a satisfactory product there they visit the merging firms. As search costs go up, consumer traffic from the non-merging firms to the merged ones decreases and eventually mergers become unprofitable. This new merger paradox can be overcome if the merged entity chooses to stock each of its stores with all the products of the constituent firms, which generates sizable search economies. We show that such demand-side economies can confer the merging firms a prominent position in the marketplace, in which case their price may even be lower than the price of the non-merging firms. In that situation, consumers start searching for a satisfactory good at the merged entity and the firms outside the merger lose out. When search economies are sufficiently large, a merger is beneficial for consumers too, and overall welfare increases.

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

Cartel stability and profits under different reactions to entry in markets with growing demand

Posted by D. Daniel Sokol

Joao Correia-da-Silva (CEF.UP e Faculdade de Economia do Porto), Joana Pinho (CEF.UP e Faculdade de Economia do Porto) and Helder Vasconcelos (ANACOM) discuss Cartel stability and profits under different reactions to entry in markets with growing demand.

ABSTRACT: We study sustainability of collusion with optimal penal codes, in markets where demand growth may trigger the entry of a new firm. In contrast with grim trigger strategies, optimal penal codes make collusion easier to sustain before entry than after. We compare different reactions of the incumbents to entry in terms of: sustainability of collusion, incumbent’s profits, entrant’s profits, consumer surplus and social welfare. Surprisingly, the incumbent firms may prefer competition to collusion.

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

Intellectual Property Rights in Competition Law: Compulsory License Issues in Developing Countries

Posted by D. Daniel Sokol

Marie D. Mesidor, National Institute of Industrial Property describes Intellectual Property Rights in Competition Law: Compulsory License Issues in Developing Countries.

ABSTRACT: The aim of this article is to contribute to the debate on the interplay between intellectual property (patents) and competition law. It examines compulsory licenses for patents under competition law. It looks at the principles and doctrines applied, particularly for public interest; relevant cases in the EU and US courts; as well as the situation in certain developing countries. This paper considers the cases in Brazil and, in particular, South Africa. It is argued herein that developing countries may benefit from US and EU experiences in patent-related competition law cases to the extent that they promote policies adapted to domestic needs. Finally, it explores application of the TRIPS Agreement Article 31(k) to facilitate access to medicines in developing countries and certain implementation questions that may arise.

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

Tuesday, May 21, 2013

Buyer Power in Conglomerate Acquisitions

Posted by D. Daniel Sokol

Daniel Greene, Georgia State University - Department of Finance, Omesh Kini, Georgia State University and Jaideep Shenoy, Tulane University - Department of Finance discuss Buyer Power in Conglomerate Acquisitions.

ABSTRACT: There is a burgeoning literature in financial economics that finds evidence consistent with buyer power in horizontal acquisitions. The possibility that conglomerate acquisitions can also result in increased buyer power has, however, received no attention in academic circles or from regulators. The bidder and target firms in a conglomerate acquisition can source their inputs from common supplier industries and, therefore, the combination can result in a larger entity with increased bargaining power vis-à-vis these supplier industries. We construct a proxy for the increase in buyer power achieved by merging firms in conglomerate acquisitions using the benchmark input-output tables for the U.S. economy. We find that an increase in buyer power is significantly positively related to the combined wealth effect of the merging firms and significantly negatively related to the wealth effect of supplier firms around conglomerate acquisition announcements. We document a significant decrease in output prices for supplier industries that are most likely to be affected by the increased buyer power of the merging firms. Finally, consistent with lower input prices in deals in which there is a larger increase in buyer power, we find that the post-acquisition decrease in cogs-to-sales is higher for merging firms with greater increase in buyer power. Overall, our battery of tests provides consistent evidence in support of the buyer power hypothesis in the context of conglomerate acquisitions.

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

When the State Harms Competition ― The Role for Competition Law

Posted by D. Daniel Sokol

Eleanor M. Fox, New York University School of Law and Deborah Healey, University of New South Wales (UNSW) - Faculty of Law offer an interesting new work When the State Harms Competition ― The Role for Competition Law.

ABSTRACT: This article is about the reach of antitrust laws to proscribe or override anticompetitive acts and measures of the states. While it was once the case that antitrust (or competition) laws were reserved for private restraints, a more modern view of the state and the market recognizes the integral relationship between them. The authors surveyed 32 jurisdictions and found that antitrust/competition laws of a number of jurisdictions condemned certain state acts and measures. This article describes and summarizes the research and combines the research findings with conceptual analysis to recommend relevant rules and principles that might be adopted as recommended principles and included in a model modern competition law.

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

7th International IMEDIPA Conference on Competition Law and Policy

Posted by D. Daniel Sokol

7th International IMEDIPA Conference on Competition Law and Policy Friday, June 7, 2013 at 9:00 AM - Saturday, June 8, 2013 at 5:15 PM (EEST) Athens, Greece


invites you to its 7th International Conference on Competition Law and Policy

(Athens, 2013)

Conference Programme


Day 1: Friday, June 7th, 2013


8:30 Registration 

9:00– 9:45 Introduction

Dimitrios Kyritsakis (Chairman, Hellenic Competition Commission)

Harry Kyriazis (Executive vice-chairman, SEV [Hellenic Federation of Enterprises])

Ioannis Lianos (IMEDIPA, UCL, ENA)


9:45 – 11:30 Session 1 Recent Developments in Competition Law/Restructuring, Competition Law and the State I

Chair: Dimitris Tzouganatos (University of Athens)


Paris Anestis (Hogan Lovells, Brussels)

Christos Genakos (University of Economics and Business)

Ioannis Kokkoris (IMEDIPA, University of Reading)

Assimakis Komninos (White & Case, Brussels, IMEDIPA, UCL)

Constantinos Lambadarios (Lambadarios Law Firm, Athens)

Xenofon Paparrigopoulos (Potamitis Vekris, Athens)


11:30 – 12:00 Break


12:00 – 13:45 Session 2 Recent developments in Competition Law/Restructuring, Competition Law and the State

Chair: Ian Forrester (White and Case, Brussels)


Konstantinos Adamantopoulos (Holman Fenwick Willan, Brussels)

Emmanuel Dryllerakis (Dryllerakis & Associates, Athens)

Gönenç Gükaynak (ELİG, Istanbul)

Vassilis Karagiannis (KLC Law Firm, Athens)

Lefkothea Nteka (Hellenic Competition Commission)


13:45 – 15:00 Lunch


15:00 – 16:30 Session 3 Recent developments in Competition Law

Chair: Giorgos Triantafillakis (Democritus University of Thrace)


Anastasios Antoniou (Anastasios Antoniou LLC, Nicosia)

Stamatis Drakakakis (Koutalidis Law Firm, Athens)

Anastasia Dritsa (KGDI Law Firm, Athens)

Victoria Mertikopoulou (Hellenic Competition Commission)


16:30 – 17:00 Break


17:00 – 18:45 Session 4 Roundtable of Competition and Regulatory Authorities

Chair: Ioannis Lianos (IMEDIPA, UCL)


Alla Budman (Israel Antitrust Authority)

Alexey Ivanov (Skolkovo Foundation, Moscow)

Dimitris Loukas (Hellenic Competition Commission)

Sheldon Mills (UK Office of Fair Trading)

Valentin Mircea (Romanian Competition Council)

Evren Sesli (Turkish Competition Authority)

Howard Shelanski (US Federal Trade Commission)


Day 2: Saturday, June 8th, 2013


10:00 – 11:30 Session 5 Procedural aspects of competition law enforcement (human rights, rights of defense, due process)

Chair: Assimakis Komninos (White & Case, Brussels, IMEDIPA, UCL)


Michal Gal (University of Haifa Law School)

Judge Douglas Ginsburg (US DC Circuit Court of Appeals; NYU Law School)

Denis Waelbroeck (Ashurst, Brussels)

Mihalis Vilaras (former Judge, General Court of the EU) TBC


11:30 – 12:00 Break


12:00 – 13:15 Session 6 Anticompetitive foreclosure (antitrust, merger control, electricity regulation)

Chair: Ioannis Kokkoris (IMEDIPA, University of Reading)


Muzaffer Eroglu (Kocaeli University Faculty of Law, Istanbul)

Kyriakos Fountoukakos (Herbert Smith)

Sheldon Mills (UK Office of Fair Trading)

Valentin Mircea (Romanian Competition Council)

Samil Pismaf (Turkish Competition Authority)

Howard Shelanski (US Federal Trade Commission)


13:15 -14:00 Lunch


14:00 – 15:30 Session 7 Damages, Remedies, Private Law Consequences for anticompetitive practices and corporate compliance

Chair: Ioannis Lianos (IMEDIPA, UCL, ENA)


Daniele Calisti (European Commission, DG COMP)

Kerem Cem Sanlı (İstanbul Bilgi University Faculty of Law)

Herbert Hovenkamp (University of Iowa Law School)

Spyros Mello (Coca Cola Hellenic)

Gregory Pelecanos (Ballas, Pelecanos & Associates LPC, Athens)

Fevzi Toksoy (Actecon Consultancy, İstanbul)


15:30 - 16:00 Break


16:00 – 17.15 Session 8 Evidence matters in competition law: between law and economics

Chair: Howard Shelanski (US Federal Trade Commission)


Ioannis Lianos (IMEDIPA, UCL, ENA)

Nicolas Petit (University of Liege)

Cleomenis Yannikas (Dryllerakis & Associates)


17:15 Conclusions and end of the Conference


With the exception of panel 3 all other panels are in English. No translation is provided.

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

'Neutral' Search as a Basis for Antitrust Action?

Posted by D. Daniel Sokol

Marina Lao (Seton Hall) asks 'Neutral' Search as a Basis for Antitrust Action?

ABSTRACT: The Federal Trade Commission recently voted unanimously to close its antitrust investigation into Google’s search practices after concluding that the firm’s practice of favoring its own content in its search results did not violate U.S. antitrust laws. The agency determined that, although the practice (often called “search bias”) may have an incidental negative impact on some competitors, it was a product improvement that likely benefited consumers. Additionally, it concluded that Google did not selectively change its search algorithm to exclude competition, and any disadvantage to competing websites was the collateral result of changes that likely improved the quality of Google searches.

By declining to bring a case after determining that Google did not manipulate its search algorithms and search results pages to target particular competitors or to thwart competition, the FTC seemed to have implicitly rejected the notion that Google has a duty to adopt search “neutrality,” as some have advocated. Search neutrality is generally understood to mean that a search engine should not prefer its own content in search results unless its own content is “objectively” superior to competing content based on the use of a “neutral” search algorithm.

I suggest, in this essay, that the FTC’s decision was correct. It is difficult to build an antitrust case (against any major search engine) around the notion of search neutrality for several reasons: first, search is inherently subjective and it is unclear what would constitute a “neutral” standard or algorithm, and who would or should have the right to make that judgment; second, there appears to be no identifiable antitrust theory of liability that would require neutral search, and the paper analyzes the essential facilities doctrine to explain why it is a poor fit; and third, any remedy imposing some form of neutral search is likely to be more harmful to consumers than the incidental exclusionary effects that the remedy is supposed to correct.

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

Competition Law Issues in the Human Resources Field

Posted by D. Daniel Sokol

Gonenc Gurkaynak (ELIG), Ayse Guner and Ceren Ozkanl discuss Competition Law Issues in the Human Resources Field.

ABSTRACT: Competitor agreement not to solicit or hire each other's employees as well as agreements among competitors to poach a rival entity's key employees could be deemed as a violation of competition law principles (and in some jurisdictions, public policy doctrines). European and US jurisprudence shows that an agreement or merely the exchange of information concerning human resources data, such as wage/salary, among competitors could run afoul of competition law rules. As an area of competition law, these more settled forms of anticompetitive risk-bearing practices deserve meticulous and sustained attention from practitioners in the field.

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

Monday, May 20, 2013

The Incentives for Vertical Mergers and Vertical Integration

Posted by D. Daniel Sokol

Laurent Fresard, University of Maryland - Robert H. Smith School of Business, Gerard Hoberg, University of Maryland - Department of Finance and Gordon M. Phillips, University of Southern California describe The Incentives for Vertical Mergers and Vertical Integration.

ABSTRACT: We examine the incentives for firms to vertically integrate through vertical mergers and production. We develop a new firm-specific measure of vertical integration using 10-K text to identify the extent a firm's products span vertically related product markets. We find that firms in high R&D industries are less likely to vertically integrate or engage in vertical mergers, and are more likely to initiate customer or supplier relationships outside of the firm. These findings are consistent with firms with unrealized innovation avoiding integration to maintain ex ante incentives to make relationship specific investments and maintain residual rights of control as in Grossman and Hart (1986). In contrast, firms in high patenting industries with stable product markets are more likely to vertically integrate consistent with control rights being obtained by firms to facilitate commercialization of already realized innovation.

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

Does industry concentration matter for pollution haven effects?

Posted by D. Daniel Sokol

Svetlana Batrakova (LSE) asks Does industry concentration matter for pollution haven effects?

ABSTRACT: This paper focuses on the role of firm’s market power and industry concentration in a still debated issue of pollution haven effects or carbon ’leakage’ represented as increased trade flows in the most polluting sectors from the developing world spurred by regulations in developed countries. A firm in a relatively competitive industry with less market power has no option to transfer costs of environmental regulations to consumers and may be more likely to resort to ’importing pollution’ from places with lax environmental standards that insure cheaper inputs as a result of such regulations at home. This paper finds that a degree of industry’s concentration has an effect on firms’ margins of products that were affected by the EU ETS policy in 2005 and that are imported from the developing world. Firms in from the developing world post 2005 more than firms in a less competitive setting.

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

Hemphill and Wu Respond to Blog Symposium

Posted by Scott Hemphill and Tim Wu

We thank the commenters for their thoughtful and generous reactions.

In a nutshell, parallel exclusion is conduct by multiple firms that blocks or slows the entry of would-be competitors. Parallel exclusion can be far more harmful than parallel pricing, yet receives much less attention. In our article, we identify the mechanisms and effects of parallel exclusion; assess its surprising resistance to internal collapse, as compared to ordinary cartels; and offer interpretations of existing antitrust doctrine that would address its anticompetitive forms.

The commenters, a set of first-rate lawyers and economists, offer a variety of extensions, clarifications, and challenges to our legal and economic analysis. In this post, we offer reactions to a few of their reactions.

Doctrine of parallel exclusion

Professors Baker and Waller address the legal doctrine that might be used in a parallel exclusion case. Three points bear special emphasis.

Baker says what’s needed is a test case—a “Prince Charming” in Baker’s Cinderella metaphor—to give a full vetting to the parallel exclusion approach. The point is well taken. A major problem is that potentially important parallel exclusion cases never get past the initial stage of antitrust scrutiny, probably based on a fear of wasting limited resources on unproven theories. It’s a reasonable concern:  many federal judges seem resistant to any but the most established theories of antitrust (like price-fixing), so why, if you are an enforcer, put precious lawyers to work on such a case?

Harm should be the guiding star for enforcers in this area. In fact, parallel exclusion cases do get brought when the harm is clear and the conduct outlandish, and also when agreement, though of minor or no importance to the underlying economics, is easy to establish. Unfortunately, we suspect other potential cases are ignored, but we hope our article convinces enforcers to look for the harm that parallel exclusion can cause.

Next, Baker worries that the Supreme Court’s decision in Brooke Group might stand in the way of recognizing parallel exclusion as a viable theory. In that case, the Court considered parallel predation conducted by oligopolists. The Court expressed skepticism about oligopoly predation, in part because it thought that the losses and gains would be difficult to allocate. The “anticompetitive minuet,” the Court wrote, would be “difficult to compose and perform.”

On the other hand, the Court has already recognized parallel exclusion where it takes the form of multiple vertical exclusive agreements. Standard Stations established the principle that multiple exclusive contracts can be added up in evaluating their collective effect. The case has been criticized by commentators, but not on this ground, and the Court has not backed away from this analysis. Moreover, as we emphasize in the article, often the coordination is in fact easy to compose and perform, and in such settings this dicta from Brooke Group has little force.

Finally, we’d like to echo one point emphasized by Waller in his kind and generous review. It is very common for the media, courts, and antitrust lawyers to point to industry-wide practice as proof that particular conduct cannot be harmful. But that’s exactly the wrong way to look at things: an industry-wide practice might be procompetitive, or might instead be the anticompetitive conduct of a constructive monopoly. In discussing the FTC’s Google investigation, observers too often said the fact that Bing did what Google was doing meant the practice couldn’t be anticompetitive, which is just illogical. In a recent UK example, Office of Fair Trading issued a statement of objections alleging that (owned by Priceline) and Expedia had both entered agreements with InterContinental Hotels, which had the effect of preventing online travel agents from competing by offering discounts. Here, too, the widespread nature of the practice is hardly a defense.

Economics of parallel exclusion

We see an important research opportunity for economists to model, in a rigorous way, the conditions under which inefficient parallel exclusion can be expected to arise. Professors Wickelgren, Baker, and Bar-Isaac suggest helpful next steps along this path. Wickelgren identifies coordination among the excluders, in determining which excluder will work with which buyer, as one element of a rigorous model. This concern is more important for exclusion accomplished through buyer contracts, less so for other exclusionary mechanisms. Wickelgren also notes a further modeling element, compared to off-the-shelf models of exclusion by a single dominant firm: profit erosion through competition among the excluders.

Baker identifies a third issue that is ripe for formal modeling, namely the relative stability of parallel exclusion compared to parallel price elevation. Finally, Bar-Isaac notes the value of further theoretical work to specify the structure of upstream and downstream market segments and the relationship between buyers and sellers. As Bar-Isaac emphasizes, upstream exclusion and downstream exclusion can be complementary, as firms in each segment act one another’s behalf. All of these suggestions are helpful in expanding on the single-firm exclusionary models that have predominated in the economics literature.


Hurwitz takes a critical stance, concluding that our analysis is neither new nor correct. The stance is surprising, because he agrees with much of what we say. He accepts that “oligopolistic exclusionary conduct surely can be just as problematic as monopolistic exclusionary conduct….” He agrees that “it is problematic if antitrust doctrine systematically and unjustifiably disadvantages one type of claim over the other.” And he is “sympathetic” to our advocacy of what he calls “joint monopoly claims,” to be addressed as monopolization under section 2, to handle interdependent action by excluders that would not be readily captured as an agreement subject to section 1. (The details of his proposed test are different from ours.)

So where is the disagreement, exactly? Hurwitz argues that parallel exclusion might not be so harmful, and even if it is sometimes harmful, existing doctrine can handle any harm that arises. How does he know? Because there are cases that use existing doctrine to deal with parallel exclusion problems. The problem inherent in this proof should be immediately apparent.

How much harm is actually caused by parallel exclusion? No one knows. Given that fact, we certainly cannot know whether current doctrine is sufficient merely by looking at cases that use it. Stated otherwise, relying on successful uses of section 1 to combat anticompetitive exclusion tells us nothing about whether those cases are the tip of the iceberg, so to speak, or, as Hurwitz seems to assume, the whole iceberg.

At a deeper level, our main interest is trying to understanding when and how parallel exclusion is harmful; how doctrine ought deal with anticompetitive parallel exclusion is a secondary concern. Cases such as Visa and Allied Tube, among many others discussed in our article, show the potential harms of parallel exclusion. While apparently accepting that Visa and Allied Tube featured anticompetitive schemes, and that antitrust intervention was appropriate in both, Hurwitz draws the conclusion from these examples that “the case for parallel exclusion is quite weak.” By this, he means that antitrust doctrine successfully reached these cases, without any need for our analysis. But that misses the point, because we don’t think it’s the end of the world if (say) a public enforcer uses a section 1 agreement “hook” to reach parallel exclusion cases. It’s a little like prosecuting Al Capone for tax evasion, but at least the government recognizes the harm.

Another point that Hurwitz challenges is our assertion that anticompetitive exclusionary conduct is detrimental to innovation. He says we are discounting Schumpeter, and points out that organizations like “Bell Labs, Apple, [and] Google” have been very innovative. But this confuses large organizations with exclusionary behavior. We are not arguing that large organizations cannot be innovative. Rather, we’re claiming that self-entrenching behavior has bad effects on innovation, not the mere fact of size. Exclusionary conduct may lead to size, but it isn’t necessary to it, nor clearly necessary to large-firm innovation of the kind that Schumpeter and others have celebrated.

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

Determinants of Broadband Access: Is Platform Competition always the Key Variable to Success?

Posted by D. Daniel Sokol

Xavier Fageda (Faculty of Economics, University of Barcelona), Rafael Rubio (Faculty of Economics, University of Barcelona) and Montserrat Termes (Faculty of Economics, University of Barcelona) ask Determinants of Broadband Access: Is Platform Competition always the Key Variable to Success?

ABSTRACT: Previous studies have identified the rivalry among technological platforms as one of the main driving forces of broadband services penetration. This paper draws on data from the Spanish market between 2005 and 2011 to estimate the main determinants of broadband prices. Controlling for broadband tariffs features and network variables, we examine the impact of the different modes of competition on prices. We find that inter-platform competition has no significant effects over prices, while intra-platform competition is a key driver of the prices charged in the broadband market. Our analysis suggests that the impact of different types of competition on prices is critically affected by the levels of development of the broadband market achieved by the considered country.

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

Dynamic Effect of Low-Cost Entry on the Conduct Parameter: An Early-Stage Analysis of Southwest Airlines and America West Airlines

Posted by D. Daniel Sokol

Hideki Murakami (Graduate School of Business Administration, Kobe University) examines Dynamic Effect of Low-Cost Entry on the Conduct Parameter: An Early-Stage Analysis of Southwest Airlines and America West Airlines.

ABSTRACT: The purpose of this research is to investigate the dynamic changes in the competition between air carriers by applying a revised conduct parameter method. We examined the cases of Southwest Airlines and America West Airlines due to the availability of data. Our interest is in what fashion a low-cost carrier (LCC) entered the market, how the rival reacted, and whether the fashions of competition between two types of air carrier remained stable as time passed. Our empirical results obtained by econometric methods using 894 sample observations show that the fashions of competition fell between Cournot competition and gP=MC (price equals marginal cost)h competition, and sometimes the fashions were stable and sometimes not. Beyond four or five years after new entry by an LCC, these two fashions of competition reached a state of equilibrium. An implication for industrial policy is that an LCCfs entry improves consumer surplus ! but it seems not to maximize social welfare.

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

Saturday, May 18, 2013

ABA Antitrust in the Americas II

Posted by D. Daniel Sokol


ABA Antitrust in the Americas II


June 06 - 07, 2013


  • Renaissance Sao Paulo Hotel
  • Alameda Santos 2233
  • Sao Paulo, DF 01419-002
  • Brazil
Primary Sponsors

Co-sponsored by IBRAC

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

Friday, May 17, 2013

Bargaining power and local heroes

Posted by D. Daniel Sokol

Ulrich Heimeshoff and Gordon J. Klein (both Heinrich-Heine-Universitat Dusseldorf) have a new paper on Bargaining power and local heroes.

ABSTRACT: Bargaining Power of retailers is an important aspect of discourse in many industrialized countries, including Germany, Portugal, the UK, and the USA. In Germany the Federal Cartel Office argues that strong bargaining power of retailers presents danger for workable competition in the market. Furthermore, significant bargaining power on the retailer side is often assumed a priori without further investigation. Based on a treatment effect study using difference-in-differences techniques we show, that even small suppliers can have superior bargaining power against retailers depending on their shares on local markets. We do not argue that retailers have no bargaining power at all, but we want to show, that the division of bargaining power between the two sides of the markets varies from product to product and is also a dynamic phenomenon which changes over time. As a result, the a priori assumption of bargaining power of reta! ilers can be very misleading.

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

Price competition and reputation in credence goods markets: Experimental evidence

Posted by D. Daniel Sokol

Wanda Mimra (ETH Zurich, Switzerland), Alexander Rasch (Universitat zu Koln) and Christian Waibel (ETH Zurich, Switzerland) discuss Price competition and reputation in credence goods markets: Experimental evidence.

ABSTRACT: In credence goods markets, experts have better information about the appropriate quality of treatment than their customers. As experts provide both diagnosis and treatment, this leaves scope for fraud. We experimentally investigate how intensity of price competition and the level of customer information about past expert behavior influence an expert’s incentive to defraud his customers when the expert can build up reputation. We show that the level of fraud is significantly higher under price competition than when prices are fixed. The price decline under competitive prices superimposes quality competition. More customer information does not necessarily decrease the level of fraud.

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

Regulating a multiproduct and multitype monopolist

Posted by D. Daniel Sokol

Dezso Szalay (University of Bonn) is Regulating a multiproduct and multitype monopolist.

ABSTRACT: I study the optimal regulation of a firm producing two goods. The firm has private information about its cost of producing either of the goods. I explore the ways in which the optimal allocation differs from its one dimensional counterpart. With binding constraints in both dimensions, the allocation involves distortions for the most efficient producers and features overproduction for some less efficient types.

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

Thursday, May 16, 2013

In Defense of Trusts: R&D Cooperation in Global Perspective

Posted by D. Daniel Sokol

Jeroen Hinloopen (University of Amsterdam), Grega Smrkolj (University of Amsterdam), and Florian Wagener (University of Amsterdam) arguer In Defense of Trusts: R&D Cooperation in Global Perspective.

ABSTRACT: We examine the trade-off between the benefits of allowing firms to cooperate in R&D and the corresponding increased potential for product market collusion. For that we utilize a dynamic model of R&D whereby we consider all possible initial marginal cost levels (technologies), including those that exceed the choke price. This global analysis yields four possibilities: initial marginal costs are above the choke price and this technology is, or is not, developed further, and initial marginal costs are below the choke price and the technology is, or is not, (eventually) taken off the market. We show that an extension of the cooperative agreement towards collusion in the product market is not necessarily welfare reducing: if firms collude, they (i) develop further a wider range of initial technologies, (ii) invest more in R&D such that process innovations are pursued more quickly, and (iii) abandon the technology for a smaller set of initial marginal costs. We also discuss the implications of our analysis for antitrust policy.

May 16, 2013 | Permalink | Comments (0) | TrackBack (0)