Monday, October 26, 2015
Lukas Ritzenhoff, Hengeler Mueller examines Indirect Effect: Fine Calculation, Territorial Jurisdiction, and Double Jeopardy.
ABSTRACT: Recently, there have been developments in the calculation of cartel fines by the Commission and the ECJ dealt with specific aspects of the Commission's fine calculation. This article summarises the latest developments and provides an analysis including the related issues of territorial jurisdiction and the risk of double jeopardy, which is particularly relevant as more and more jurisdictions are imposing fines on international cartels. The latest related developments in United States and Japan concerning the question what types of sales can be included in the calculation of fines are taken into account.
ABSTRACT: Luxury is a complex industrial activity whose products combine strong vertical differentiation and a meaning value for the consumer. Luxury offers experiences, the economy of which is based on signalling. This gives rise to intense intangible investment internalized by trademark law and vertical restraints in distribution. However, the extent of the added value and the power of externalities associated with communication generate many sources of free-riding. Using the tools of industrial economics, this article analyses how the digitization of information and transactions creates new forms of free-riding in relation to luxury brands. Identifying vertical disintegration as a major source of free-riding, it calls for improved internalization of the enforcement of trademark law by all players in the digital value chain.
This is a great program as I know firsthand from teaching in it in 2015. The students and instruction make this a spectacular program. For people based in Asia and Latin America in particular, this is the best program within a 12 hour flight.
Melbourne Law School, ranked in the top 10 law schools in the world, offers an extensive masters program in the complex and challenging field of competition and consumer law.
Copeland, Adam (Federal Reserve Bank of New York) and Garratt, Rod (Federal Reserve Bank of New York) explore Nonlinear pricing with competition: the market for settling payments.
ABSTRACT: The multiple payments settlement systems available in the United States differ on several dimensions. The Fedwire Funds Service, a utility that operates a U.S. large-value payments-settlement service, offers the fastest speed of settlement. Recognizing that payments differ in the urgency with which they need to be settled, Fedwire offers banks a decreasing block-price schedule. This approach allows Fedwire to price discriminate, charging high fees for urgent payments and low fees for less urgent ones. We analyze banks’ demand for Fedwire Funds given this nonlinear scheme, taking into account competing settlement systems. We show that how banks respond to Fedwire’s pricing depends crucially on the need to settle payments quickly. If the urgency for immediate settlement is great enough, banks will respond to marginal price; otherwise, they will respond to average price. We test whether banks respond to marginal or to average price. Our identification comes from exogenous variation in Fedwire’s pricing, which results in differential changes in marginal and average price for comparable banks. We find that banks respond to average price.
Florian LEON (CERDI, CNRS) asks What do we know about the role of bank competition in Africa?
ABSTRACT: This paper reviews the literature regarding the consequences of interbank competition. The literature has identified three reasons why competition in the financial sector is important: firstly, for efficient functioning of financial intermediaries and markets, secondly, for firms and households access to financial services and thirdly, for stability of the financial system. While special attention is dedicated to empirical papers focusing on African banking systems, this review also considers works on other developing and developed economies.
Friday, October 23, 2015
Wahyoe Soedarmono (Universitas Siswa Bangsa Internasional, Faculty of Business / Sampoerna School of Business) and A Tarazi (LAPE) study Competition, financial intermediation and riskiness of banks: Evidence from the Asia-Pacific region.
ABSTRACT: From a sample of commercial banks in the Asia-Pacific region over the 1994-2009 period, this study highlights that banks in less competitive markets exhibit lower loan growth and higher instability. Such instability is further followed by a decline in deposit growth, suggesting that Asian banks are also subject to indirect market discipline mechanisms through bank competition. This study therefore sheds light on the importance of enhancing bank competition to overcome bank risk and strengthen financial intermediation. Likewise, this study advocates the importance of strengthening market discipline to reduce bank riskiness regardless of the degree of competition in the banking industry.
Damien Sans (AMSE - Aix-Marseille School of Economics) ; Sonia Schwartz (CERDI ) ; and Hubert Stahn (AMSE) - provide thoughts On Abatement Services: Market Power and Efficient Environmental Regulation.
ABSTRACT: In this paper, we study an eco-industry providing an environmental service to a competitive polluting sector. We show that even if this eco-industry is highly concentrated, a standard environmental policy based on a Pigouvian tax or a pollution permit market reaches the first-best outcome, challenging the Tinbergen rule. To illustrate this point, we first consider an upstream monopoly selling eco-services to a representative polluting firm. We progressively extend our result to heterogeneous downstream polluters and heterogeneous upstream Cournot competitors. Finally, we underline some limits of this result. It does not hold under the assumption of abatement goods or downstream market power. In this last case, we obtain Barnett's result.
ABSTRACT: The extent to which firms face price-elastic demands for their products is important in the application of competition law and in judgments made as to whether they have significant market power. In the context of the airport industry, assessing price-elasticities is complicated by the fact that one major type of consumer of airport services, the air passenger, is not charged directly for use of terminals and airside infrastructure. Instead, the airport derives its revenues from charges to airlines and from the supply of non-aeronautical services. The charges to airlines then become one of many input costs that the airlines recoup from passenger fares, and this intermediation has significant implications for the demand analysis.
Thursday, October 22, 2015
ABSTRACT: This paper investigates empirically the advertising competition in the French free TV broadcasting industry in a two-sided framework. We specify a structural model of oligopoly competition of free TVs, and identify the shape and magnitude of the feedback loop between the TV viewers and the advertisers using French market data from March 2008 to December 2013. We contribute to the literature by implementing a simple procedure to test the conduct of TV channels, and identify that the nature of competition is of Cournot type on the French TV advertising market. In line with a decision of French anti-trust authority in 2010 which authorized the acquisition of two free broadcasting TV channels by a big media group under behavioral remedies, a series of competitive analysis has been conducted: We find firstly that the surplus of TV viewers keep raising after the decision of acquisition, suggesting that the implemented policy has been efficient in protecting the ! consumer surplus; Then, we find, by counterfactual simulation, that the merger of advertising agencies would not affect importantly the equilibrium outcomes in this industry, due to the strong network externalities between the TV viewers and the advertisers.
Adrien Nguyen Huu (IMPA) examines Investment under uncertainty, competition and regulation.
ABSTRACT: We investigate a randomization procedure undertaken in real option games which can serve as a basic model of regulation in a duopoly model of preemptive investment. We recall the rigorous framework of [M. Grasselli, V. Leclere and M. Ludkovsky, Priority Option: the value of being a leader, International Journal of Theoretical and Applied Finance, 16, 2013], and extend it to a random regulator. This model generalizes and unifies the different competitive frameworks proposed in the literature, and creates a new one similar to a Stackelberg leadership. We fully characterize strategic interactions in the several situations following from the parametrization of the regulator. Finally, we study the effect of the coordination game and uncertainty of outcome when agents are risk-averse, providing new intuitions for the standard case.
Burton Ong (NUS) explores Competition Law and Policy in Singapore.
ABSTRACT: This paper provides a bird’s eye view of developments in field of competition law and policy in Singapore over the past 10 years, highlighting the progress made in the areas of enforcement, regulatory policy and advocacy.
Prater, Marvin ; Sparger, Adam ; O'Neil, Daniel Jr. analyze Railroad Concentration, Market Shares, and Rates.
ABSTRACT: Since the passage of the Staggers Act in 1980, many railroads have merged. The market share of Class I railroads has increased since then, while the number of Class I railroads has fallen to only seven. Through railroad mergers, rail-to-rail competition has been reduced, railroad market power has increased, and rail costs have fallen by over half in real terms. Over much of this period, most of these reduced costs were passed on to shippers as savings through lower rates. Since 2004, however, average rail rates per ton-mile for all commodities have climbed 36 percent, negating some of the savings over the period. Although some of these real rail rate increases have contributed to record rail profitability and capital investment, most of the rate increases are the result of increased railroad costs; real rail costs, adjusted for productivity, increased 29 percent during the same period. Although deregulation of railroads in 1980 produced more than 550 regi! onal and local railroads throughout America, the 7 Class I railroads originated well over half the grain and oilseed shipments in 2011.
Wednesday, October 21, 2015
George Mason Law Review 18th Annual Antitrust Symposium Issue Perspectives on Global Competition Law
Volume 22:5 Symposium Issue
Featuring Articles from The 18th Annual Antitrust Symposium
Perspectives on Global Competition Law
- Terry Calvani, Jaffer Abbasi, David Blonder, Aimee Imundo, Keynote Panel Discussion
- Damien Geradin, Collective Redress for Antitrust Damages in the European Union: Is this a Reality Now?
- Yong Huang, Elizabeth Xiao-Ru Wang, & Roger Xin Zhang, Essential Facilities Doctrine and Its Application in Intellectual Property Space Under China’s Anti-Monopoly Law
- John “Jay” Jurata & Inessa Mirkin Owens, Guarding Against Protectionism: The Need to Limit Extraterritorial Application of Antitrust Laws to Foreign Intellectual Property Rights
- William E. Kovacic, The United States and Its Future Influence on Global Competition Policy
- Derek W. Moore & Joshua D. Wright, Conditional Discounts and the Law of Exclusive Dealing
- D. Daniel Sokol, Tensions Between Antitrust and Industrial Policy
- Randolph W. Tritell, Meeting the Challenges of the Evolving International Antitrust Landscape
Mark Armstrong, Oxford has written on Nonlinear Pricing.
ABSTRACT: I survey the use of nonlinear pricing as a method of price discrimination, both with monopoly and oligopoly supply. Topics covered include an analysis of when it is profitable to offer quantity discounts and bundle discounts, connections between second- and third-degree price discrimination, the use of market demand functions to calculate nonlinear tariffs, the impact of consumers with bounded rationality, bundling arrangements between separate sellers, and the choice of prices for upgrades and add-on products.
Hovhannisyan, Vardges; Bozic, Marin examine the EFFECTS OF RETAIL CONCENTRATION ON RETAIL PRICE: THE US DAIRY MARKET.
ABSTRACT: This study provides an empirical investigation of the relationship between grocery retail concentration and retail dairy prices in the US. We perform the analysis based on a unique dataset on store-level retail prices provided by the Information Resources Inc. Further, we consider alternative measures of retail concentration including revenue and store selling space-based Herfindahl Hirschman Index, which we compute using a Nielsen TDLinx dataset on store characteristics. Results from a reduced-from empirical framework estimated via panel data techniques indicate that grocery retail concentration affects dairy retail prices favorably. This central result is robust to the way that retail concentration is measured and is consistent with the empirical evidence from both the US and oversees.
Lopez, Rigoberto A. ; Zheng, Hualu ; Azzam, Azzeddine address Oligopoly Power in the Food Industries Revisited: A Stochastic Frontier Approach.
ABSTRACT: Since the late 1980s, the analysis of market power in the food industries has shifted from analyzing market concentration (structure) towards empirically measuring how far a market diverges from perfect competition (conduct). The New Empirical Industrial Organization (NEIO; usually offspring of the work of Appelbaum, 1982, or Bresnahan, 1982) has dominated the food economics literature on market power in the past 25 years (see Kaiser and Suzuki, 2006, for a summary of NEIO applications to food industries) and continues to do so (Cakir and Balagtas, 2012; Hovhannisyan and Gould, 2012; Cleary and Lopez, 2014). NEIO studies, in general, find a significant degree of oligopoly power in the food industries (Bhuyan and Lopez, 1997; Lopez, Azzam and Liron, 2002; Sheldon and Sperling, 2003). This study estimates mark-ups and oligopoly power for U.S. food industries using a stochastic frontier (SF; Kumbhakar, Baardsen and Lien, 2012; Baraigi and Azzam, 2014) approa! ch, where mark-ups are treated as systematic deviations from a marginal cost pricing frontier. We apply the analysis to 36 U.S. food industries using NBER-CES Manufacturing Industry Database (2014), which covers a span of 31 years from 1979 to 2009. Empirical results show that all the food industries in the sample exercise at least some degree of oligopoly power, but most in a moderate manner. The estimated mean Lerner index is approximately 0.06, generally much lower than obtained using the conventional NEIO approaches. The SF model used provides a novel and promising framework to test and measure the degree of market power in agricultural and food markets.
Substitution between Online and Offline Advertising: Evidence from the Carbonated Soft Drink Industry
He, Xi ; Lopez, Rigoberto A. ; Liu, Yizao suggest Substitution between Online and Offline Advertising: Evidence from the Carbonated Soft Drink Industry.
ABSTRACT: As in previous studies on traditional media, previous work has assumed that online and offline advertising are substitutes. However, empirical evidence for this premise is lacking. This paper investigates the substitution between online advertising and offline advertising as well as the impact of the introduction of new media technology on the cost of advertising. Using a rich dataset of monthly observations for 52 carbonated soft drink brands between 2005 and 2011, we estimate a translog cost function that considers the mix of on/off line advertising and online advertising adoption at the brand level. As in previous work, we find that TV and print media are close substitutes. Surprisingly, however, we find that online advertising is a complement to rather than a substitute for both TV and print media advertising. This might be explained by online advertising’s targeting younger market segments and acting as a reinforcement of TV and print media advertising exposure. Further results show that the adoption of online advertising has lowered the cost of advertising for achieving a sales target but that its role as a complement rather than a substitute is weakening.
Tuesday, October 20, 2015
Tim Buthe and Stephen Morgan, discuss Antitrust Enforcement and Foreign Competition: Special Interest Theory Reconsidered.
ABSTRACT: What role is there for the enforcement of ostensibly pro-market laws and regulations when international economic integration extends the boundaries of the market far beyond the borders of any particular jurisdiction? Specifically, do governments reduce, intensify, or in other ways materially change the enforcement of their antitrust laws after they open their markets to foreign competition?
Roberto Cellini (Department of Economics, University of Catania) ; Luigi Siciliani (yDepartment of Economics and Related Studies, University of York) ; Odd Rune Straume offer A dynamic model of quality competition with endogenous prices.
ABSTRACT: We develop a dynamic model of price and quality competition in order to analyse the effects of competition intensity on quality provision and to which extent an unregulated market is able to provide a socially optimal quality level. Using a differential-game approach with price and quality competition on a Hotelling line, we compare the benchmark open-loop solution against the feedback closed-loop solution, which implies strategic dynamic interaction over time. We find that steady-state quality in the closed-loop solution is (i) increasing in the degree of competition between firms, (ii) lower than in the open-loop solution, and (iii) lower than the socially optimal level. In contrast, steady-state quality in the open-loop solution is at the socially optimal level and independent of competition intensity. Thus, our analysis identifies dynamic strategic interactions between competing firms as an independent source of inefficiency in quality provision.