Thursday, June 25, 2015

CRESSE 2015 10th International Conference on Competition and Regulation Rethymnon, Greece 3-5 July 2015

The conference program for the annual amazing program is here.


Advances in the Analysis of Competition Policy and Regulation



(Toulouse School of Economics)



(Harvard University)


June 25, 2015 | Permalink | Comments (0)

Offshoring under Oligopoly

Mitsuru Igami (Yale University) examines Offshoring under Oligopoly.

ABSTRACT: This paper empirically investigates high-tech firms' decisions to relocate manufacturing plants to low-cost countries. Computers and electronics have undergone sector-wide offshoring and typically feature an oligopolistic market structure, in which firms' profits depend on their own and rivals' costs. To incorporate the endogenous evolution of offshoring incentives and market structure, I model and estimate a dynamic offshoring game with entry/exit, using unique data on hard disk drive (HDD) manufacturers. The results suggest that due to competitive pressure, the incentives to offshore increase as more rivals offshore. I then assess the welfare impacts of government interventions and find that (1) offshoring is pro-competitive, (2) discouraging offshoring would risk the survival of domestic firms, and (3) governments in Nash equilibrium would engage in either a subsidy race to drive out foreign firms, or free-riding on foreign firms' offshoring efforts, depending on policy objectives.

June 25, 2015 | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 24, 2015

Empire-building and Price Competition

Antoine Pietri (University Paris 1, CES), Tarik Tazdait (CNRS, EHESS, CIRED), and Mehrdad Vahabi (University Paris 8, CES) discuss Empire-building and Price Competition.

 This paper examines the relevance of price competition in the protection market in order to explain the different modes of empire-building. Our approach unravels the economic rationale of merchant empires which is not explicable with existing theoretical frameworks systematically eluding price competition. Our main contribution is to introduce a distinction between two different types of rent, namely an ‘absolute’ and a ‘differential’ one. Absolute protection rent (AR) corresponds to rents extracted by sellers of protection (empires) using threats and coercion. In contrast, differential protection rent (DR) stands for economic advantages conferred on subjects of an empire. The choice of the territorial expansion rule (AR-maximizing or DR-maximizing) depends on the nature of the protection market which is influenced by the assets structure detaining by the buyers of protection. In this paper, we build a general framework consistent with historical ! evidence in which coercive rivalry appears to be one case of empire-building among others (including price competition).

June 24, 2015 | Permalink | Comments (0) | TrackBack (0)

Oligopolistic vs. monopolistic competition: do intersectoral effects matter?

d’ASPREMONT, Claude (CORE, Universite Catholique de Louvain); DOS SANTOS FERRERIA, Rodolphe (BETA, Universite de Strasbourg, France, and FCEE, Universidade Cataolica Portuguesa) ask Oligopolistic vs. monopolistic competition: do intersectoral effects matter?

ABSTRACT: Recent extensions of the standard Dixit-Stiglitz (1977) model, that go beyond the CES sub-utility assumption, while maintaining monopolistic competition, have mainly emphasized the role of iintrasectoral substitutability. We argue that introducing oligopolistic competition can be an alternative extension, still tractable, allowing to restore the role of intersectoral substitutability and reinforcing the general equilibrium dimension of the model. For this purpose, we use the concept of oligopolistic equilibrium and derive a comprehensive formula to characterize the set of potential equilibria with varying competitive toughness. For two particular competitive regimes, price competition and quantity competition, we show how, with strategic interactions, procompetitive or anti-competitive effects now depend on the elasticity of intersectoral substitution as compared to the elasticity of intrasectoral substitution.

June 24, 2015 | Permalink | Comments (0) | TrackBack (0)

Lunchtime Lecture by Maureen K. Ohlhausen at the Centre of European Law, The Dickson Poon School of Law, King's College London

CEL Lunchtime Lecture by Maureen K. Ohlhausen

Antitrust and Data Privacy

Centre of European Law, The Dickson Poon School of Law, King's College London

Friday, 26 June 2015 from 12:30 to 13:30 (BST)
London, United Kingdom

Free event

Register here

June 24, 2015 | Permalink | Comments (0)

Toward a theory of monopolistic competition

PARENTI, Mathieu (Universite catholique de Louvain, CORE, Belgium; NRU-Higher School of Economics, Russia) ; USHCHEV, Philip (NRU-Higher School of Economics, Russia) ; THISSE, Jacques-François (Universite catholique de Louvain, CORE, Belgium; NRU-Higher School of Economics, Russia; CEPR) move thinking Toward a theory of monopolistic competition.

ABSTRACT: We propose a general model of monopolistic competition, which encompasses existing models while being flexible enough to take into account new demand and competition features. The basic tool we use to study the market outcome is the elasticity of substitution at a symmetric consumption pattern, which depends on both the per capita consumption and the total mass of varieties. We impose intuitive conditions on this function to guarantee the existence and uniqueness of a free-entry equilibrium. Comparative statics with respect to population size, GDP per capita and productivity shock are characterized through necessary and sufficient conditions. Finally, we show how our approach can be generalized to the case of a multisector economy and extended to cope with heterogeneous firms and consumers.

June 24, 2015 | Permalink | Comments (0) | TrackBack (0)

Thinking globally about recovery actions in international cartel cases

Francis O. Scarpulla, The Scarpulla Law Firm and Qianwei Fu, Zelle Hofmann Voelbel & Mason LLP. are Thinking globally about recovery actions in international cartel cases.

ABSTRACT: This article examines the legal and practical challenges that corporate claimants face in pursuing damages actions against international price-fixing cartels. It discusses the complex jurisdiction, choice-of-law, and related procedural issues central to corporate claimants’ litigation strategy in maximizing global recovery, with a focus on the relevant legal frameworks in the USA and Europe. The article also identifies trends in settlement and arbitration as potential alternatives to litigating damages claims in multiple national courts. The objective of this article is to provide productive inputs for corporate claimants to conduct a fair assessment of cross-jurisdictional claims in linked global cartel cases. In practice, corporate claimants should carefully weigh their recovery options with these complex issues in mind.  

June 24, 2015 | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 23, 2015

Kimble and Revisiting Bad Antitrust Doctrine

The Supreme Court decision in Kimble v Marvel came out yesterday. The Court suggested that in antitrust cases, stare decisis has limits in antitrust and that we should see a change in doctrine as we have a better understanding of economics to guide us for better case law.  What are those areas most in need (based on how bad the underlying "good" case law is) of reform? I provide my top three terrible decisions previously endorsed by the Supreme Court:

1. criminal application of Robinson Patman

2. merger efficiencies are unlawful

3. tying is per se illegal

I open it up to readers to add their thoughts on bad antitrust doctrines and decisions. Please note that unless you use your real name, I am not posting your comment (this means you Dan Crane - aka, the "Wolverine Avenger").

June 23, 2015 | Permalink | Comments (2)

Should Reverse Payment Patent Settlements Be Prohibited Per Se?

Jorge Padilla, Compass Lexecon and Valerie Meunier, Compass Lexecon ask Should Reverse Payment Patent Settlements Be Prohibited Per Se?

ABSTRACT:  Using the same competition test and counterfactual that has been used in the economic literature that is often cited to justify intervention against virtually all reverse payment patent settlements (RPPSs), we conclude that (1) RPPSs can benefit consumers and, therefore, it is wrong to presume that RPPSs are necessarily anticompetitive; (2) it is also incorrect to presume that RPPSs are by their very nature injurious to competition; (3) such a presumption is unjustified even for those involving reverse payments in excess of the originator’s expected litigation costs; (4) there is therefore no justification for treating RPPSs as per se illegal; (5) a case-by-case assessment of the effects on competition and consumer welfare of an RPPS that uses the expected date of entry as the standard of comparison in the counterfactual world, would necessarily require informed judgments as to (at a minimum) the strength of the patent at issue and the likelihood of patent infringement; (6) as a result, assessing RPPSs on a case by case basis using the expected date of entry standard for comparison is bound to lead to errors and reduce consumer welfare and, hence, cannot constitute an appropriate legal standard; and (7) RPPSs, even those involving reverse payments greater than the originator’s litigation costs, should be assessed under a rebuttable presumption of legality rule — i.e. they should be presumed legal unless there is direct evidence of a conspiracy to delay entry.

June 23, 2015 | Permalink | Comments (0) | TrackBack (0)

Horizontal Merger of Big Firms with Product Choice in the Presence of Small Firms

Lijun Pan, Nagoya University discusses Horizontal Merger of Big Firms with Product Choice in the Presence of Small Firms.

ABSTRACT: We extend Shimomura and Thisse (2012) to investigate how the bilateral merger between big firms with the choice on product range affects the competitive fringe and social welfare. The comparison of the marginal cost synergy to fixed cost determines whether the merged big firm (insider) withdraws a brand or maintains two brands. In addition, the insider's different product choices generate opposing impacts on the competitive fringe and social welfare.



June 23, 2015 | Permalink | Comments (0) | TrackBack (0)

Ex-Ante and Ex-Post Control of Buyer Power

Stefan Thomas, Eberhard-Karls-University - Faculty of Law examines Ex-Ante and Ex-Post Control of Buyer Power.

ABSTRACT: This paper considers the effects of buyer power under the antitrust laws. It focuses on EU antitrust law, namely Article 102 TFEU and the EU Merger Control Regulation, while taking into account the stance of US antitrust law. Recent investigations of several European antitrust authorities in the grocery sector have expressed concerns that concentration on the demand side can result in market foreclosure or anticompetitive exploitation of market participants. Also, in the US there is an ongoing debate about the anticompetitive and procompetitive effects of buyer power, which is inter alia reflected in the landmark decision of the US Supreme Court in Weyerhaeuser and in the merger control policies of the DOJ and the FTC. Against this background, the present paper starts with the definition of buyer power. It underscores the necessity to distinguish between single price monopsony on the one hand and individual bargaining power on the other hand, since the economic effects of these two types of buyer power deviate significantly. In subsequent steps, the paper analyses different theories of harm that can be raised with respect to buyer power. It discusses the effects of buyer power on allocative efficiency, dynamic efficiency as well as consumer welfare and draws conclusions from that for the enforcement of the antitrust laws.

June 23, 2015 | Permalink | Comments (0) | TrackBack (0)

Tick Size Constraints, High-Frequency Trading, and Liquidity

Yong Chao, University of Louisville - College of Business - Department of Economics, Chen Yao, University of Warwick, and Mao Ye, University of Illinois at Urbana-Champaign discuss Tick Size Constraints, High-Frequency Trading, and Liquidity.

ABSTRACT: U.S. exchange operators compete for order flow by setting “make” fees for limit orders and “take” fees for market orders. When traders can quote continuous prices, fee breakdown is neutral and exchanges compete on the total fee. The one-cent minimum tick size constraints prevent perfect neutralization and create a role for exchanges to differentiate otherwise-identical trading platforms through their fee breakdowns. This product differentiation creates an incentive for an operator to establish multiple platforms for second-degree price discrimination, and leads to mixed-strategy equilibria with positive profits for competing operators. Fees can improve social welfare in the presence of tick-size constraints.

June 23, 2015 | Permalink | Comments (0) | TrackBack (0)

Monday, June 22, 2015

Competition Law and Economic Regulation - Making and Managing Markets

Niamh Dunne, Kings College has written on Competition Law and Economic Regulation Making and Managing Markets.

BOOK ABSTRACT: Niamh Dunne undertakes a systematic exploration of the relationship between competition law and economic regulation as legal mechanisms of market control. Beginning from a theoretical assessment of these legal instruments as discrete mechanisms, the author goes on to address numerous facets of the substantive interrelationship between competition law and economic regulation. She considers, amongst other aspects, the concept of regulatory competition law; deregulation, liberalisation and 'regulation for competition'; the concurrent application of competition law in regulated markets; and relevant institutional aspects including market study procedures, the distribution of enforcement powers between competition agencies and sector regulators, and certain legal powers that demonstrate a 'hybridised' quality lying between competition law and economic regulation. Throughout her assessment, Dunne identifies and explores recurrent considerations that inform and shape the optimal relationship between these legal mechanisms within any jurisdiction.

June 22, 2015 | Permalink | Comments (0) | TrackBack (0)

Frenemies in Platform Markets: The Case of Apple's iPad vs. Amazon's Kindle

Ron Adner, Dartmouth College - Strategy & Management Area, Jianqing Chen, University of Texas at Dallas - Jindal School of Management and Feng Zhu, Harvard University - Harvard Business School discuss Frenemies in Platform Markets: The Case of Apple's iPad vs. Amazon's Kindle.

ABSTRACT: We study the compatibility decisions of two competing platforms that generate profits through both hardware sales and royalties from content sales. We consider a game-theoretic model in which the platform hardware may offer different standalone utilities to users who have different preferences over the two platforms. We find that incentives to establish one-way compatibility — the platform with smaller standalone value allows users of the competing platform to access its content — can arise from the difference in their profit foci. As the difference in the standalone utilities increases, royalties from content sales become less important to the platform with greater standalone value but becomes more important for the other platform. Compatibility increases asymmetry between the platforms’ profit foci and, when the difference in the standalone utilities is sufficiently large, yields greater profits for both platforms. We further show that social welfare is greater under one-way compatibility than under incompatibility, and there exist no incentives for either platform to establish one-way compatibility the other way round. We investigate as well how factors such as different platform production costs, exclusive content, and endogenized royalty rates affect compatibility incentives.

June 22, 2015 | Permalink | Comments (0) | TrackBack (0)

Does Patent Licensing Mean Innovation?

Robin Feldman, University of California Hastings College of the Law and Mark A. Lemley, Stanford Law School ask Does Patent Licensing Mean Innovation?

ABSTRACT: A commonly offered justification for patent trolls or non-practicing entities (NPEs) is that they serve as a middleman facilitating innovation, bringing new technology from inventors to those who can implement it. We survey those involved in patent licensing to see how often patent licenses actually led to innovation or technology transfer. We find that very few patent licenses from assertion actually lead to new innovation; most are simply about paying for the freedom to keep doing what the licensee was already doing. Surprisingly, this is true not only of NPE licenses but even of licenses from product-producing companies and universities. Our results cast significant doubt on one common justification for patent rights.

June 22, 2015 | Permalink | Comments (0) | TrackBack (0)

Herbert Smith Freehills Competition Law Moot 2015 - ranking and results

Kings College Dickson Poon of Law, the premier competition law program in Europe (and by the number of academics on the faculty - the world) hosted the Herbert Smith Freehills Competition Law Moot 2015.  The results are in and congrats to the following students and schools:


Individual Oralists-Results

Best Oralist: Lisa Tan.

Runner ups: Jeremiah Lau, Michael Craig, Vesna Tezak, Benjamin Wong.




Overall Team Rankings

1. The University of Hong Kong

2. King’s College London

3. National University of Singapore

4. University of Amsterdam

5. University of Leeds

6. University of Leicester


7. Utrecht University

8. University of Nottingham

9. University of Wroclaw

10. Maastricht University

11. University of East Anglia

12. Helsinki University


June 22, 2015 | Permalink | Comments (1)

Consumer Welfare in EU Competition Law: What is It (Not) About?

Victoria Daskalova, TILEC; Tilburg Law School asks Consumer Welfare in EU Competition Law: What is It (Not) About?

ABSTRACT: More than a decade after the proclamation of consumer welfare as a goal of EU competition law, a fundamental question remains unanswered: namely, what is the content of the EU consumer welfare standard? What types of benefits and harms count respectively as welfare and as harm? Whose harm and whose benefit is included in the definition? Few answers have been available to these crucial, from a legal perspective, questions.

The goal of this article is to explore the meaning of consumer welfare in terms of these questions. In particular, considering the assumption that the notion of consumer welfare in EU competition law is borrowed from economics, the article will attempt to verify to what extent consumer welfare coincides with the notion of consumer surplus in economics. The focus is therefore on 1) whether consumer can be taken to mean the final consumer or the intermediary purchaser and 2) whether the notion of harm refers primarily to price effects. Part I of the paper focuses on the definition of consumer welfare in antitrust law and in economics. Part II considers the definitions of consumer welfare in the Commission’s soft law and argues that a finding of an end user surplus cannot be supported. Part III turns to the jurisprudence of the European Courts and argues that support for end-user surplus cannot be found in the Court’s case law. The paper concludes that although we do not find support for an end-user surplus standard in the Court’s jurisprudence, the change in language in the 2012 Post Danmark ruling leaves us wondering as to whether and in what direction the Court’s approach might change.

June 22, 2015 | Permalink | Comments (0) | TrackBack (0)

Sunday, June 21, 2015

Happy Father's Day

We spent father's day in Clearwater, Florida, at the Clearwater Marine Aquarium, home of dolphins Winter and Hope from the movies Dolphin Tale and Dolphin Tale 2.  Hannah and the girls had lots of fun although it was quite hot.  It was a rewarding father's day for me because the girls were happy.

Today we also skyped with my father in the morning and called him and my mother when we got home (because they worry - and if your parents' still don't ask you to call them, you are missing out).  I love my father José Sokol very much.  He is kind, caring and very loving.  He worked hard all of his life to provide for us and instilled in us the importance of education, hard work and and giving back to the community - my mom did too but more on that for Mother's Day.  Both of my parents are my role models.  Hannah and I both hope to be as good to our girls as my parents are to me and my brother.  I should add that Hannah speaks more to my parents per day than I do.

For the first time (as a father's day present - he has always wanted to watch me), my father will hear me present at an antitrust conference. For those in DC and who plan to attend the World Bank conference Promoting Effective Competition Policies for Shared Prosperity and Inclusive Growth on Tuesday, you can meet him.

June 21, 2015 | Permalink | Comments (0)

Saturday, June 20, 2015

CPI Antitrust Chronicle Spring 2015, Volume 6 Number 1 Issue: Teaching Antitrust Effectively

Teaching Antitrust Effectively

  1. Spencer Weber Waller, Jun 12, 2015

    Teaching Merger Law Through In-Class Simulations

    I am convinced that there are effective ways to introduce more simulations, role playing, active learning, and a greater air of reality to teaching antitrust law. Spencer Weber Waller (Loyola University Chicago School of Law)

  2. Steven Cernak, Jun 12, 2015

    Antitrust Courses Can Teach Valuable Practical Skills—If Taught Well

    Beyond necessary legal skills, many of my students can use an antitrust course to learn needed lessons about how the economy and businesses function. Steven J. Cernak (Schiff Hardin LLP)

  3. Andrew Gavil, Jun 12, 2015

    Then and Now: Teaching Antitrust for a New Generation of Law and Lawyers

    But the challenge for teaching antitrust is not just the volume of newer cases, but also their analytical content and the evolving role of the antitrust lawyer. Andrew I. Gavil (Howard University School of Law)

  4. Max Huffman, Jun 12, 2015

    Teaching Antitrust Online

    My single most successful innovation in recruiting students and teaching antitrust has been to move one class, and particular lessons from another, out of the classroom and online. Max Huffman (Indiana University Robert H. McKinney School of Law)

  5. Philip Marsden, Jun 12, 2015

    Teaching Antitrust in Bruges

    It is better that the students realize early on how fact-specific antitrust law is, how important (and even determinative) economic analysis is, and how underneath the case law are small “p”—political or philosophical—approaches to the respective roles of markets and government intervention. Philip Marsden (College of Europe, Bruges & U.K. CMA)

  6. Paul Nihoul, Jun 12, 2015

    Antitrust Educators Should Teach Cultural Differences in the Global Economy

    Should students be aware of subtle cultural distinctions, if the purpose is to teach them how to exercise their legal profession and, ultimately, as some would reckon, make money? My answer is that cultural differences matter to legal education—they matter a lot. Paul Nihoul (Université Catholique de Louvain, Belgium)

June 20, 2015 | Permalink | Comments (0)

Friday, June 19, 2015

Non-Competitive Potential in the Iranian Electricity Market

Ali Nazemi (University of Economic Sciences) and Anahita Farsaee (University of Economic Sciences) describe Non-Competitive Potential in the Iranian Electricity Market.

ABSTRACT:  The electricity markets worldwide have distinctive particularities due to some political and historical reasons. However, principal guidelines of market design remain very similar. The Iranian electricity market has been inaugurated as a pay-as-bid market in 2004. Although the Iranian electricity market has had positive consequences, the economic discussion about proper market design and architecture is in its infancy. The main goal of this paper is analyzing market power and efficiency in the Iranian electricity market.Generally, in spite of the fact that Iranian electricity market is not a high concentrated market, it has potential for non-competitive results. Analyzing results and other facts of the market shows that the most important reason for this is the urgent shortage of supply threshold in this market, rather than the extent of concentration in the industry.

June 19, 2015 | Permalink | Comments (0) | TrackBack (0)