Saturday, November 30, 2013

A Look Back at the Attempts to Repeal Leegin

Leiv Blad & Maggie Sheer (Bingham McCutchen) provide A Look Back at the Attempts to Repeal Leegin.

ABSTRACT: In 2007, the United States Supreme Court jettisoned 96 years of precedent and held that minimum resale price maintenance ("RPM") agreements were not per se illegal under Section 1 of the Sherman Act, but rather should be subject to "rule of reason" review, a far more lenient process. The reaction to Leegin among many state legislators and attorneys general was swift and dramatic. They vowed to reverse the rule through legislation or to continue prosecuting RPM agreements remained as per se illegal under their existing state laws.

Now, nearly seven years later, has that outrage amounted to anything? Have the states successfully repealed Leegin or outlawed RPM agreements under their own laws? Only one state-Maryland-has enacted a repealer statute, but two others-California and Kansas-are successfully prosecuting RPM claims under a per se rule. That may not sound like much, but these developments have presented companies selling products nationwide with a difficult choice: adopt different distribution practices for the country's largest state or let that state drive their entire distribution strategy.

November 30, 2013 | Permalink | Comments (0) | TrackBack (0)

Friday, November 29, 2013

Competition Policy for Modern Banks

Lev Ratnovski (IMF) analyzes Competition Policy for Modern Banks.

ABSTRACT: Traditional bank competition policy seeks to balance efficiency with incentives to take risk. The main tools are rules guiding entry/exit and consolidation of banks. This paper seeks to refine this view in light of recent changes to financial services provision. Modern banking is largely market-based and contestable. Consequently, banks in advanced economies today have structurally low charter values and high incentives to take risk. In such an environment, traditional policies that seek to affect the degree of competition by focusing on market structure (i.e. concentration) may have limited effect. We argue that bank competition policy should be reoriented to deal with the too-big-to-fail (TBTF) problem. It should also focus on the permissible scope of activities rather than on market structure of banks. And following a crisis, competition policy should facilitate resolution by temporarily allowing higher concentration and government control of banks.

November 29, 2013 | Permalink | Comments (0) | TrackBack (0)

Vertical differentiation, schedule delay and entry deterrence: Low cost vs. full service airlines

Jorge Valido (Universidad de Las Palmas de Gran Canaria), M. Pilar Socorro (Universidad de Las Palmas de Gran Canaria) and Francesca Medda (FEDEA and IAE) explore Vertical differentiation, schedule delay and entry deterrence: Low cost vs. full service airlines.

ABSTRACT: We consider a market with a full-service (FS) carrier (the incumbent) and a low-cost (LC) carrier (the potential entrant). If the LC carrier enters the market, airlines compete in ticket prices and frequency with vertically differentiated products. The higher the frequency, the lower passenger’s generalized price. Thus, more frequency allows airlines to increase ticket prices without losing demand. In this context, we show that the incumbent may increase the frequency offered in order to deter the LC carrier entry. We show that if the airport capacity is low enough the LC carrier entry can be easily blocked or deterred. However, if the airport capacity is sufficiently high, the LC carrier entry must be accommodated.

November 29, 2013 | Permalink | Comments (0) | TrackBack (0)

Thursday, November 28, 2013

Dear Congress: Don't Take Away the FTC's Best Tool for Fighting Patent Trolls

Insurer Competition and Negotiated Hospital Prices

Kate Ho (Columbia) Robin S. Lee (NYU) analyze Insurer Competition and Negotiated Hospital Prices.

ABSTRACT: We examine the impact of increased health insurer competition on negotiated hospital prices. Insurer competition can lead to lower premiums and reduced industry surplus, thereby depressing hospital prices; however, hospitals may also leverage fiercer insurer competition when bargaining in order to negotiate higher prices. We rely on a theoretical bargaining model to derive a regression equation relating negotiated prices to the degree of insurer competition, and use the presence of Kaiser Permanente in a hospital's market as a measure of insurer competition. We estimate a model of consumer demand for hospitals and use it to derive many of the other independent variables specified in the regression equation. Leveraging a unique dataset on negotiated prices between hospitals and commercial insurers in California in 2004, we find that increased insurer competition reduces hospital prices on average, but has a positive and empirically meaningful effect on the prices of attractive and high utility generating hospitals. This heterogeneous effect across hospitals—which has not been emphasized in the recent literature on hospital-insurer bargaining—provides incentives for hospital investment and consolidation, and implies that hospital market power can lead to high input prices even in markets where many insurers are present.

November 28, 2013 | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 27, 2013

Social awareness and duopoly competition

BELHADJ nada (ISG, University of Tunis), Jean J. GABSZEWICZ (Universite catholique de Louvain) and Ornella TAROLA (DISSE, University of Rome “La Sapienza”) address Social awareness and duopoly competition.

ABSTRACT: Human actions are often guided both by individual rationality and by social norms. In this paper we explore how duopoly market competition values the variants of a product, when these variants embody at different levels the requirements derived from some social norm. In a model where preferences of consumers depend partially on the levels of compliance of the variants with the social norm, we characterize the equilibrium path along which firms choose sequentially their level of compliance and their price.

November 27, 2013 | Permalink | Comments (0) | TrackBack (0)

The equivalence of bundling and advance sales

Alexei Alexandrov (Consumer Financial Protection Bureau) and Ozlem Bedre-Defolie (ESMT) discuss The equivalence of bundling and advance sales.

ABSTRACT: We show that a monopolist's problem of optimal advance selling strategy can be mathematically transformed into a problem of optimal bundling strategy if four conditions hold: i. consumers and the firm agree on the probability of the states occurring, ii. the firm pre-commits to the spot prices to be charged in the advance selling stage, iii. consumers are risk-neutral, and iv. consumers and the firm do not have time preferences or when they do have time preferences, they discount future at the same rate. The result allows both researchers and practitioners to apply the insights from the well-developed vast literature on bundling to advance selling problems. In particular, we show that advance selling is more profitable than spot selling when consumer valuations across the states are independent or negatively dependent or positively dependent up to a point. We furthermore illustrate the effect of advance selling on the sp! ot prices and consumer welfare: When the firm offers advance selling discounts, sets higher spot prices, so consumers who do not buy in advance are worse off due to the firm offering advance selling discounts. We extend our analysis to the cases of more than two states and competition only in one of the states. We also show how advance selling can be used as an entry deterrence strategy. 

November 27, 2013 | Permalink | Comments (0) | TrackBack (0)

Substitution and Complementarity between Fixed-Line and Mobile Access

Lukasz Grzybowski, Telecom ParisTech and Frank Verboven, KU Leuven - Faculty of Business and Economics (FBE) explore Substitution and Complementarity between Fixed-Line and Mobile Access.

ABSTRACT: We use rich survey data on 133,825 households from 27 EU countries during 2005-2011 to analyze substitution between fixed-line and mobile telecommunications services. We estimate a discrete choice model where households may choose between having mobile or fixed-line voice access only, or using both technologies at the same time. We obtain the following main findings. First, fixed-line and mobile connections are on average perceived as substitutes. But there is substantial heterogeneity across households and EU regions, with stronger substitution in Central and Eastern European countries. Second, there is strong complementarity between fixed-line and mobile connections that are offered by the fixed-line incumbent operator. This gives the incumbent a possibility to leverage its position in the fixed-line market into the mobile market. Third, fixed broadband technologies such as DSL and cable generate strong complementarities between fixed and mobile access, while mobile broadband strengthens substitution (at a smaller scale). The emergence of fixed broadband has thus been an important additional source through which incumbents leverage their strong position in the fixed-line network.

November 27, 2013 | Permalink | Comments (0) | TrackBack (0)

Price Discrimination in a Two-Sided Market: Theory and Evidence from the Newspaper Industry

Charles Angelucci, Harvard University - Department of Economics, Julia Cage, Harvard University and Romain De Nijs, Paris School of Economics (PSE) analyze Price Discrimination in a Two-Sided Market: Theory and Evidence from the Newspaper Industry.

ABSTRACT: We investigate theoretically and empirically the determinants of second-degree price discrimination in two-sided markets. We build a model in which a newspaper must attract both readers and advertisers. Readers are uncertain as to their future benefit from reading, and heterogeneous in their taste for reading. Advertisers are heterogeneous in their outside option, taste for subscribers, and taste for occasional buyers. To estimate empirically the effect of the advertisers' side of the industry on price discrimination on the readers' side, we use a “quasi-natural experiment". We exploit the introduction of advertisement on French Television in 1968, which we treat as a negative shock on advertisement revenues of daily national newspapers (treated group), but not on daily local newspapers (control group). We build a new dataset on French local newspapers between 1960 and 1974 and perform a Differences-in-Differences analysis. We find robust evidence of increased price discrimination as a result of a drop in advertisement revenues.

November 27, 2013 | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 26, 2013




ANTITRUST SECTION Law Student fellowship


The New York Bar Foundation is pleased to announce the 2014 Antitrust Section Law Student Fellowship,which has been established by the Foundation through gifts from the Antitrust Section of the New York State Bar Association.  The Fellowship will be awarded to one or two current first or second year law students to work on antitrust and related matters in the public sector in the State of New York during the Summer of 2014.

Fellowship Program Goals


Provide law students an opportunity to experience antitrust practice during the summer after their first year of law school and to increase the representation of lawyers from a diverse range of backgrounds in the practice of antitrust law in New York.  The ultimate goal of the Fellowship is to forge relationships among antitrust practitioners throughout the State of New York and foster greater diversity in the antitrust bar.  Through the Fellowship, students will be provided a meaningful and appropriately supervised work experience in the New York Office of New York Attorney General, Antitrust Bureau;theFederal Trade Commission, Northeast Region; ortheDepartment of Justice Antitrust Division, New York Field Office.


The Fellowship

  1. The Fellowship, valued at $6,000, will be awarded to one (1) or two (2) students to spend the summer of 2014 (10 weeks) working on antitrust matters in the New York Office of New York Attorney General, Antitrust Bureau;Federal Trade Commission, Northeast Region; orDepartment of Justice Antitrust Division, New York Field Office.
  2. Each Fellow will be a guest member of the NYSBA Antitrust Section for two years starting with the award of the Fellowship.
  3. Each Fellow will be invited to attend Executive Committee meetings of the NYSBA Antitrust Section during the Summer and Fall of 2014.
  4. Fellowship recipient(s) will be announced no later than FRIDAY, February 14, 2014.



The Fellowship is open to all first-year (1L) and second-year (2L) students (as of the Fall 2014 semester) who are capable of fulfilling the requested work hours and responsibilities and meet the criteria under the heading “Judging” below.

Fellowship Length

The Fellowship will take place during the summer of 2014 for a period of 10 weeks, approximately from June 2 to August 8, 2014. The expected work requirement per week generally will be 35 to 40 hours.

Location of Fellowship

The 2014 Fellowship will take place in the New York Office of New York Attorney General, Antitrust Bureau;Federal Trade Commission, Northeast Region; orDepartment of Justice Antitrust Division, New York Field Office.  Fellowship finalists will be interviewed in New York City.

Payment of Fellowship

Each Fellow will receive $3,000 at the start of the Fellowship with the remaining $3,000 paid to each Fellow at the end of the Fellowship (no federal or state income taxes will be withheld and a 1099 will be issued to the student by January 31, 2014).

Housing and Other Expenses

Housing, transportation and all other expenses to participate in the Fellowship will be provided by the students.

Fellowship Application Requirements

     Each applicant must submit the following:

  1. A completed application (application form below)
  2. Cover letter of interest
  3. Unofficial undergraduate school transcript
  4. Resume
  5. Two letters of recommendation
  6. One writing sample on any topic related to the law.  The writing sample must be at least five pages but shall not exceed 10 typed pages double-spaced.



All hard copy materials must be submitted by mail with a postmark on or before, MONDAY, December 16, 2013.



A Fellowship Committee will undertake a careful review of all applications for the Fellowship, and will consider the criteria below in evaluating each candidate.   No single criterion or combination of criteria will be dispositive. 


  1. Content and quality of application materials.
  2. Demonstrated interest in antitrust and/or consumer protection.
  3. New York permanent residence or demonstrated intent to reside and practice law in New York following graduation from law school.
  4. Diverse background (e.g., Asian/Pacific Islander, Black/African American, Latino/a, LGBT, Native American/Alaska Native, Physically Disabled.)
  5. Work experience.
  6. Academic record.
  7. Leadership experience.
  8. Extracurricular activities and community service.
  9. Quality of written expression.
  10. Maturity, integrity and professionalism.
  11. Any other relevant factors.

Download 2014 Antitrust Section Law Student Fellowship (2)




All materials must be submitted by mail with a postmark on or before FRIDAY, December 16, 2013.

Mail to:




ALBANY, NY 12207

[email protected]

November 26, 2013 | Permalink | Comments (0) | TrackBack (0)

Developing a Framework for Arbitrating Standards-Essential Patent (SEP) Disputes

Jorge L. Contreras, American University - Washington College of Law and David L. Newman, Arnstein & Lehr, LLP discuss Developing a Framework for Arbitrating Standards-Essential Patent (SEP) Disputes.

ABSTRACT: A growing chorus of voices is calling for the use of arbitration to resolve disputes concerning standards-essential patents (SEPs). Those advocating the arbitration of SEP-related disputes include academic commentators, government officials and members of the professional bar. Most cite the potential savings of cost and time that arbitration could achieve over the multi-year, resource-intensive lawsuits that currently characterize these disputes. But despite these ringing endorsements, there is surprisingly little guidance available for parties, standards-development organizations (SDOs), and tribunals that wish to implement effective arbitration procedures for these complex disputes.

In this article, we lay the groundwork for the development of such procedures and identify several key areas in which further study and deliberation will be required. We pay particular attention to fundamental questions such as whether SEP arbitration should be mandated by SDOs, which issues should be arbitrated, whether arbitral decisions should be confidential, and what form arbitration proceedings should take. While, at this early stage, we do not purport to answer these difficult questions in a definitive manner, we offer a framework for further discussion that we hope will be useful for policy makers, industry participants and commentators considering these important issues.

November 26, 2013 | Permalink | Comments (0) | TrackBack (0)

Dynamic Network Competition

Hanna Halaburda, Bank of Canada, Bruno Jullien, University of Toulouse 1 and Yaron Yehezkel, Tel Aviv University - Eitan Berglas School of Economics explain Dynamic Network Competition.

ABSTRACT: This paper considers a dynamic platform competition in a market with network externalities. We ask two research questions. The first one asks how the beliefs advantage carries over in time, and whether a low-quality platform can maintain its focal position along time. We show that for very high and very low discount factors it is possible for the low-quality platform to maintain its focal position indefinitely. But for the intermediate discount factor the higher quality platform wins and keeps the market. The second question asks what drives changes in the market leadership along time (observed in many markets, like smartphones and video-game consoles), and how such changes can be supported as a dynamic equilibrium outcome. We offer two explanations. The first explanation relies on intrinsic equilibrium uncertainty. The second explanation relies on the adoption of technology. One could expect such change in the market leader to be a sign of intense competition between platforms. However, we find that changes in leadership indicate softer price competition.

November 26, 2013 | Permalink | Comments (0) | TrackBack (0)

Tacit Coordination in Games with Third-Party Externalities

James R. Bland, Purdue University - Department of Economics and Nikos Nikiforakis, University of Melbourne - Department of Economics describe Tacit Coordination in Games with Third-Party Externalities.

ABSTRACT: When agents face coordination problems their choices often impose externalities on third parties. We investigate whether such externalities can affect equilibrium selection in a series of one-shot coordination games varying the size and the sign of the externality. We find that third-party externalities have a limited effect on decisions. A large majority of participants in the experiment are willing to take an action that increases their income slightly, even if doing so causes substantial inequalities and reductions in overall efficiency. Individuals revealed to be other-regarding in a non-strategic allocation task often behave as-if selfish when trying to coordinate.

November 26, 2013 | Permalink | Comments (0) | TrackBack (0)

Antitrust Enforcement and Regulation. Different Standards but Incentive Coherent?

Alberto Heimler (National School of Administration Italty) asks Antitrust Enforcement and Regulation. Different Standards but Incentive Coherent?

ABSTRACT: Governments play a significant role in determining how markets function and use a variety of policies for this purpose, including economic regulation, trade policy and antitrust. Some of these policies (i.e. trade policy and antitrust) in principle promote competition directly, but sometimes are too intrusive, while others pursue other general interest objectives and in so doing restrict competition, sometimes beyond what is strictly necessary. While in the last few decades antitrust scholars and practitioners have thoroughly emphasized the role of incentives in achieving optimal economic outcomes, even though actual antitrust enforcement has not always been coherent in this respect, such an understanding does not play a similar role in other policy domains. This paper, by discussing selective, but relevant examples, shows how economic regulation, trade policy, intellectual property and antitrust laws have been applied in recent years without considering the compatibility with proper incentive schemes. Some policy changes and legislation reforms are discussed and suggested.

November 26, 2013 | Permalink | Comments (0) | TrackBack (0)

Monday, November 25, 2013

Dynamic Countervailing Power Under Public and Private Monitoring

V. Bhaskar, University College London explores Dynamic Countervailing Power Under Public and Private Monitoring.

ABSTRACT: We examine buyer strategic power in the model of dynamic Bertrand-Edgeworth competition. Two sellers with a limited inventory sell to a single buyer, who has a consumption opportunity in each period. The market power of the sellers is offset by the strategic power of the buyer. By not consuming in any period, the buyer can destroy a unit of demand, thereby intensifying future price competition. If transactions are publicly observed, we find that that a strategic buyer can do significantly better than non-strategic buyers; strategic power may also give rise to inefficiencies. However, if an agent only perfectly observes those transactions in which he is directly involved, and imperfectly observes other transactions, the strategic power of the buyer is reduced, and in some cases, may be completely eliminated. This highlights the sharp discontinuity between the equilibrium outcomes between perfect and imperfect monitoring.

November 25, 2013 | Permalink | Comments (0) | TrackBack (0)

The Impact of the European Union Current Crisis on Law, Policy and Society

Anca Daniela Chirita, Durham University offers her thoughts on The Impact of the European Union Current Crisis on Law, Policy and Society.

ABSTRACT: The purpose and methodology of this article is as follows: first, to understand the general nature of the current crisis (banking, financial, debt, currency, constitutional, political) from a socio-legal, economic, ideological and political perspective; then, to analyse the complexity of the multiple causes which have led to the current crisis in particular areas of law (financial, banking, securities, contract, competition and corporate law) in which it has manifested itself and the sectors of the economy it has affected; and, finally, to criticise law in action and the management of the crisis through political decision-making (state intrusiveness), that is, the various responses and reactions to the crisis and the effectiveness of the measures implemented by policy-makers and enforcers, and, inter alia, to question the constitutional legitimacy of the TBTF (Too-Big-to-Fail) theory as a predominant doctrine and criterion of state intervention in the economy.

A multi-layered level of economic, social, and political governance is envisaged through insights from microeconomics, by looking at how economic agents have affected individuals such as consumers; from macroeconomics, by looking at how state intervention in the economy has impacted upon taxpayers and the human and social costs of the crisis; and from political economy by looking through the lenses of ideology and policy and reflecting on the role of neoliberalism today. To conclude, the heavy reliance on the TBTF doctrine became a European ‘Too Big to Crash’ test which signals past memories and fears of an eventual repeat of the 1929 Wall Street crash, which to date has been avoided by all possible methods of political intervention. Unfortunately, competition law could be seen as the scapegoat of this unprecedented restructuring of the banking and financial markets through competition policy’s illegitimate and undeserved but generous state aid to benefit mostly inefficient and unscrupulous financial game players. This last recognition leads us to question the adequate measures of profit-seeking capitalism.

November 25, 2013 | Permalink | Comments (0) | TrackBack (0)

Merger Policy at the Margin: Western Refining's Acquisition of Giant Industries

Nicholas Kreisle , FTC analyzes Merger Policy at the Margin: Western Refining's Acquisition of Giant Industries.

ABSTRACT: In May 2007 the Federal Trade Commission failed to win a preliminary injunction in U.S. District Court that would have blocked the merger of two refiners that served Albuquerque, NM and surrounding areas. This study compares estimates of the post-merger price effect to the price effects predicted by economic experts on both sides of the case. I find little scope to interpret the evidence as consistent with an anticompetitive post-merger price effect. I also highlight difficulties involved in econometrically identifying small effects even with an abundance of pricing data.

November 25, 2013 | Permalink | Comments (0) | TrackBack (0)

Thanksgivukkah Music Videos

The last time that Thanksgiving and Channukah coincided was 1888.  With this new mega holiday approaching, we had the Sokol girls this morning choose their favorite music videos for the combination holiday of Maccabees and Pilgrims.


The Thanksgivukkah Medley (Simple Gifts and Hava Narima)


Thanksgivukkah Pie


The Ballad of Thanksgivukkah  


Thanksgivukkah - " Scream and shout "


The girls liked Thanksgivukkah Pie the most.  However, they did note that the Maccabeats have a new Channukah song that they wanted me to plug.  They love the Maccabeats.


 The girls also wondered why Adam Levine does not have a Thanksgivingkkah song (or we the parents wonder how Adam Sandler passed this holiday up).  We had a chat this week with the girls about Adam Levine. We mentioned that while his parents are very happy that their son was named People's Sexiest Man, they are probably very upset that he has those tattoos across his arms.  Nice Jewish boys don't cover their arms in tattoos.


November 25, 2013 | Permalink | Comments (0) | TrackBack (0)

The Protected Profits Benchmark: Responses to Comments

Steve Salop (Georgetown) has written The Protected Profits Benchmark: Responses to Comments.

ABSTRACT: In my earlier article, I proposed the "Protected Profits Benchmark" (PPB) price standard for determining whether or not a vertically integrated monopolist is engaged in a refusal to deal or price squeeze in violation of Section 2 of the Sherman Act. The PPB would be used where market benchmarks do not exist or do not apply. Violating the PPB price involves profit-sacrifice, which suggests anticompetitive animus. When products are homogeneous, a wholesale price that violates this price standard would exclude an equally efficient entrant. As a result, there will be less competition in the downstream (output) market in which the entrant is trying to compete. This article responds to several Comments. While the Commentors all agree that refusals to deal and price squeezes can be determined by the use of some price benchmark, contrary to the Court’s suggestion in Trinko and linkLine, the Commentors have raised a number of issues. These include whether the PPB is the proper standard, whether it is administrable, and whether it should be adjusted for particular fact situations. The Response article explains either how the Commentors’ concerns can be incorporated into the standard or why they should not be incorporated.

November 25, 2013 | Permalink | Comments (0) | TrackBack (0)

Sunday, November 24, 2013

Resale Price Maintenance—The Blurred Lines

Christian Riis-Madsen & Ozlem Fidanboylu (O'Melveny & Myers) describe Resale Price Maintenance—The Blurred Lines.

ABSTRACT: The 2007 U.S. Supreme Court decision in Leegin set in motion a landslide by overturning a 96-year old precedent. After identifying that the probability of anticompetitive resale price maintenance was too low to justify a per se prohibition, the Court now advocated a rule of reason approach to RPM cases. Despite the following protracted debate regarding the interface between economic theory and legal rules, the landscape for RPM remains blurred across jurisdictions. RPM, often referred to as vertical price-fixing, occurs when suppliers fix the (minimum) price at which distributors can resell its products. While the U.S. federal analysis took a dramatic U-turn to review RPM under the rule of reason, the European approach remains largely unchanged. RPM is classified as a restriction of competition by object that will be presumed to breach Article 101(1) of the Treaty on the Functioning of the European Union and, consequently, presumed not to contain the sufficient efficiency requirements of Article 101(3).

This harsh stance does not fully embrace an economics-based approach as it fails to truly recognize that market power is a prerequisite for consumer harm to occur. Consequently, the European Commission's hostile approach causes the risk of over-enforcement through "type 1" errors where pro-competitive restraints are prohibited. This creates the risk that undertakings will not engage in pro-competitive RPM and will, instead, implement other vertical restraints that have a lower likelihood of providing welfare benefits to consumers.

November 24, 2013 | Permalink | Comments (0) | TrackBack (0)