Monday, November 30, 2015

King's College London Herbert Smith Freehills Competition Law Moot 2016

Herbert Smith Freehills Competition Law Moot 2016


The Dickson Poon School of Law, King’s College London is very proud to offer students from across the world the opportunity to participate in the Herbert Smith Freehills Competition Law Moot. The competition is generously sponsored by Herbert Smith Freehills, one of the world’s leading law firms.

In 2016, we will invite 12 teams to compete in a moot competition in the home of The Dickson Poon School of Law, Somerset House East Wing, London. The competition will provide an excellent opportunity for students to practise and improve advocacy skills in front of a judging panel, drawn from international competition law specialists.  


Scholarship for student members from a University in a Medium or Low HDI Country (based on the UNDP Human Development Index).

King's is delighted to offer one scholarship of £2000 to pay towards the costs of participating in the oral round for student members of a team from a University in a Medium or Low HDI Country. This scholarship will be awarded to the the student members of the team with the highest score in the written round and which qualifies to participate in the oral round.

November 30, 2015 | Permalink | Comments (0)

Merger Policy in a Quantitative Model of International Trade

Breinlich, Holger ; Nocke, Volker and Schulz, Nicolas theorize about Merger Policy in a Quantitative Model of International Trade.

ABSTRACT: In a two-country international trade model with oligopolistic competition, we studythe conditions on market structure and trade costs under which a merger policy designed to benefit domestic consumers is too tough or too lenient from the viewpoint of the foreign country. Calibrating the model to match industry-level data in the U.S. and Canada, we show that at present levels of trade costs merger policy is too tough in the vast majority of sectors. We also quantify the resulting externalities and study the impact of different regimes of coordinating merger policies at varying levels of trade costs.

November 30, 2015 | Permalink | Comments (0)

Measuring Market Power and the Efficiency of Alberta’s Restructured Electricity Market: An Energy-Only Market Design

Brown, David P. (University of Alberta, Department of Economics) and Olmstead, Derek (Alberta Market Surveillance Administrator) are Measuring Market Power and the Efficiency of Alberta’s Restructured Electricity Market: An Energy-Only Market Design.

ABSTRACT: We measure the degree of market power execution and inefficiencies in Alberta’s restructured electricity market. Using hourly wholesale market data from 2008 to 2014, we find that firms exercise substantial market power in the highest demand hours with limited excess production capacity. The degree of market power execution in all other hours is low. Market inefficiencies are larger in the high demand hours and elevate production costs by 14% - 19% above the competitive benchmark. This reflects 2.35% of the average market price across all hours. A recent regulatory policy clarifies that certain types of unilateral market power execution is permitted in Alberta. We find evidence that suggests that strategic behavior changed after this announcement. Market power execution increased. We illustrate that the observed earnings are often sufficient to promote investment in natural gas based technologies. However, the rents from market power execution can exceed the estimated capacity costs for certain generation technologies. We demonstrate that the energy market profits in the presence of no market power execution are generally insufficient to promote investment in new generation capacity. This stresses the importance of considering both short-run and long-run performance measures.

November 30, 2015 | Permalink | Comments (0)

Network Centrality and Market Prices: An Empirical Note

Matthias Firgo (Austrian Institute of Economic Research (WIFO)) ; Dieter Pennerstorfer (Department of Economics, Vienna University of Economics and Business; Austrian Institute of Economic Research (WIFO)) ; Christoph R. Weiss (Department of Economics, Vienna University of Economics and Business) offer Network Centrality and Market Prices: An Empirical Note.

ABSTRACT: We empirically investigate the importance of centrality (holding a central position in a spatial network) for strategic interaction in pricing for the Austrian retail gasoline market. Results from spatial autoregressive models suggest that the gasoline station located most closely to the market center - defined as the 1-median location - exerts the strongest effect on pricing decisions of other stations. We conclude that centrality influences firms' pricing behavior and further find that the importance of centrality increases with market size.

November 30, 2015 | Permalink | Comments (0)

Identification in Differentiated Products Markets

Steven T. Berry (Cowles Foundation, Yale University) and Philip A. Haile (Cowles Foundation, Yale University) describe Identification in Differentiated Products Markets.

ABSTRACT: Empirical models of demand for -- and, often, supply of -- differentiated products are widely used in practice, typically employing parametric functional forms and distributions of consumer heterogeneity. We review some recent work studying identification in a broad class of such models. This work shows that parametric functional forms and distributional assumptions are not essential for identification. Rather, identification relies primarily on the standard requirement that instruments be available for the endogenous variables -- here, typically, prices and quantities. We discuss the kinds of instruments needed for identification and how the reliance on instruments can be reduced by nonparametric functional form restrictions or better data. We also discuss results on discrimination between alternative models of oligopoly competition.

November 30, 2015 | Permalink | Comments (0)

Sunday, November 29, 2015

Non Tenure Track Lecturer Position in Sports Law at the University of Florida (Department of Sports Management)

The ad for the position is here.  The University of Florida Department of Sports Management is looking for a non-tenure track hire position at the Lecturer level in Sports Law.  Given the important intersection of antitrust with sports law, I assume someone might be looking to move to a lovely college town to teach bright undergraduate and graduate students in sports law full time.  Please note that the application deadline is later this week.  

November 29, 2015 | Permalink | Comments (0)

Friday, November 27, 2015

Information and Market Power

Dirk Bergemann (Cowles Foundation, Yale University); Tibor Heumann (Dept. of Economics, Yale University); and Stephen Morris (Dept. of Economics, Princeton University) analyze Information and Market Power.

ABSTRACT: We analyze demand function competition with a finite number of agents and private information. We show that the nature of the private information determines the market power of the agents and thus price and volume of equilibrium trade. We establish our results by providing a characterization of the set of all joint distributions over demands and payoff states that can arise in equilibrium under any information structure. In demand function competition, the agents condition their demand on the endogenous information contained in the price. We compare the set of feasible outcomes under demand function to the feasible outcomes under Cournot competition. We find that the first and second moments of the equilibrium distribution respond very differently to the private information of the agents under these two market structures. The first moment of the equilibrium demand, the average demand, is more sensitive to the nature of the private information in demand function competition, reflecting the strategic impact of private information. By contrast, the second moments are less sensitive to the private information, reflecting the common conditioning on the price among the agents.

November 27, 2015 | Permalink | Comments (0)

Price and non-price competition in oligopoly: An analysis of relative payoff maximizers

Hamed M. Moghadam offers Price and non-price competition in oligopoly: An analysis of relative payoff maximizers.

ABSTRACT: Do firms under relative payoffs maximizing (RPM) behavior always choose a strategy profile that results in tougher competition compared to firms under absolute payoffs maximizing (APM) behavior? In this paper we will address this issue through a simple model of symmetric oligopoly where firms select a two dimensional strategy set of price and a non-price variable known as quality simultaneously. In conclusion, our results show that equilibrium solutions of RPM and APM are distinct. We further characterize the comparison between these two equilibrium concepts. In particular, RPM does not always lead to stricter competition compared to the Nash equilbrium (APM). In fact, the comparison between two equilibrium concepts is influenced by the parameters of demand curve and cost function. The conditions, derived in this paper, determine under which circumstances RPM induces more competition or less competition w.r.t the price or non-price dimension.

November 27, 2015 | Permalink | Comments (0)

Nonlinear Pricing

Mark Armstrong, Oxford, examines 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.

November 27, 2015 | Permalink | Comments (0)

Thursday, November 26, 2015

Patent Pools and Related Technology Sharing

Erik N. Hovenkamp, Northwestern University, Department of Economics and Herbert J. Hovenkamp, University of Iowa - College of Law discuss Patent Pools and Related Technology Sharing.

ABSTRACT: A patent "pool" is an arrangement under which patent holders in a common technology commit their patents to a single holder, who then licenses them out to the original patentees and perhaps also to outsiders. The payoffs include both revenue earned as a licensor, and technology acquired by pool members as licensees. Public effects can also be significant. For example, technology sharing of complementary patents can improve product quality and variety. In some information technology markets pools can prevent patents from becoming a costly obstacle to innovation by clearing channels of technology transfer. By contrast, a pool's aggregate output reduction or price fixing in a product market can produce cartel profits.

A traditional justification for patent pools is that they facilitate improved products by uniting complements Sharing of complementary patents means that licensees can then employ all the patents in their product, rather than creating silos in which each manufacturer incorporates only its own patented features. Pools created for this purpose can reduce problems of royalty stacking and holdup, as well as problems involving blocking patents. A more robust explanation for pooling in many markets comes out of the economics of transaction costs, which emphasizes the role of limited information and the costs of obtaining it, as well as uncertainty in bargaining and sharing. Pooling is an efficient solution to problems of technology development and transfer when determining patents' validity or identifying their boundaries is costly. In this sense, patent pools function much as traditional common pool resources.

An individual patent’s boundaries distinguish its protected technological embodiments from noninfringing technology. But when multiple patents are aggregated what really matters are the outer boundaries that separate the portfolio as a whole from outside patents or the public domain. So long as the relevant rights are somewhere in the portfolio, the parties do not need to delineate the boundaries of individual patents in order to strike a deal. While most patent pools are socially beneficial, certain practices or structures can pose competitive problems. The biggest antitrust risk from pooling is collusion, and its threat depends on two things. First is the market structure and the power of the pool within its market. Second is the nature of pricing and exclusivity arrangements within the pool. Pool "exclusivity" can take several forms. First, it can refer to the contract that each licensor has with the pool, asking whether that licensor is free to license to others outside of the pool. Second it can refer to the pool’s willingness as licensee to accept an offered technology from an outsider for inclusion in the pool. Third it can refer to the pool's willingness as licensor to license to outsider manufacturers. Fourth, it can refer to field-of-use or other restrictions given to licensees from the pool.

A large but inconclusive literature considers the relationship between pooling and innovation. Conclusions are sensitive to assumptions about patent strength and quality, about the relationship among the patents in a pool and the strength of alternatives outside the pool, about the impact on innovation of insiders vs. outsiders to the pool, and finally, about the strategic responses of participants. Most of the literature concludes that most pools increase innovation rates. A pool should increase the demand for innovation of complements to the pool. First of all, access to the existing technology by pool members should be guaranteed and cheaper. To the extent the pool reduces licensing costs and eliminates royalty stacking the cost of further improvements should decline. When innovation is cumulative the development of new technology may require the licensing of existing technology with multiple patent holders. Pooling can reduce these costs and thus facilitate cumulative innovation.

November 26, 2015 | Permalink | Comments (0)

Dynamic Downstream Collusion with Secret Vertical Contracts

David Gilo, Tel Aviv University - Buchmann Faculty of Law and Yaron Yehezkel, Faculty of Management, Tel-Aviv University think about Dynamic Downstream Collusion with Secret Vertical Contracts.

ABSTRACT: We consider dynamic, infinitely repeated downstream price competition. In every period, a retailer cannot observe the contract that the competing retailer offers to a joint supplier. We find that even though contracts are secret, they enable retailers to collude. The more the retailers and the supplier care about future profits, retailers obtain a higher share of the monopoly profits. We also find that implementing collusion requires retailers to commit to deal exclusively with the joint supplier and to charge slotting allowances. Hence, slotting allowances can eliminate competition even when contracts are unobservable to competing retailers.

November 26, 2015 | Permalink | Comments (0)

Disruptive Innovation and Competition Policy Enforcement

Alexandre De Streel, University of Namur and Pierre Larouche, Tilburg Law and Economics Center (TILEC); College of Europe - Bruges; Tilburg University - Tilburg Law School; Center on Regulation in Europe (CERRE) analyze Disruptive Innovation and Competition Policy Enforcement.

ABSTRACT: Disruptive innovation, according to business literature, occurs when an innovative product is brought to a market, such as meets the basic requirements of the lower-end of an established value network and also offers added value outside of that value network. That product wins over consumers and progressively takes over the established market, displacing the existing value network in so doing. By now, disruptive innovation is a frequent entry strategy, and it is usually beneficial for welfare. Despite an ever growing literature on innovation and competition policy, the latter is not well placed to deal with disruptive innovation. Methodologically, disruptive innovation can hardly be captured with the tools of market definition and market power analysis, which do not account for the competition for the definition of the relevant market that is characteristic of disruptive innovation. In addition, competition authorities experience difficulties in acting quickly enough to deal effectively with attempt to prevent disruptive innovation. However, incumbent firms on the established market can hinder disruptive innovation. The theory of harm is that an incumbent firm with market power seeks to prevent a potential disruptor from another market from executing its strategy, using either (i) anti-competitive practices designed to prevent the creation of an overlap between its innovative product and the established market or (ii) an acquisition with a view to mothball the disruptor and its invention. Against the former, competition authorities should seek to keep markets open and act quickly to prevent practices such as defensive leveraging (as in the Microsoft Explorer case) or the use of IP protection to lock away features of the value network. Against the latter, additional merger thresholds (based on a discrepancy between transaction value and turnover) and an expanded concept of the maverick firm could be effective.

November 26, 2015 | Permalink | Comments (0)

Collective Redress in EU: Can Pitfalls of US Class Actions Be Avoided? At What Cost?

Katarina Zajc, University of Ljubljana - Faculty of Law and Jaka Cepec, University of Ljubljana - Faculty of Economics ask Collective Redress in EU: Can Pitfalls of US Class Actions Be Avoided? At What Cost?

ABSTRACT: The article discusses the introduction of collective redress in the EU, with special emphasis on the comparison to the US class action suits in the field of competition law. After briefly overviewing EU’s approach to implementing collective redressing and a description of the history and nature of the class action suits, the article stresses the agency costs that arise in class action suits as the main inefficiency of class action suits and discusses ways to decrease the agency costs in class actions. It concludes with the overview of Slovenian legislation pertaining to the collective redress and the recommendations for the EU’s implementation of the collective redress.

November 26, 2015 | Permalink | Comments (0)

Wednesday, November 25, 2015

A Model of Patent Trolls

Jay Pil Choi, Michigan State University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute) and Heiko A. Gerlach, University of Queensland - School of Economics theorize A Model of Patent Trolls.

ABSTRACT: This paper develops a model of patent trolls to understand various litigation strategies employed by nonpracticing entities (NPE). We show that when a NPE faces multiple potential infringers who use related technologies, it can gain a credible threat to litigate even when it has no such credibility vis-à-vis any single potential infringer in isolation. This is due to an information externality generated by an early litigation outcome for subsequent litigation. Successful litigation creates an option value against future potential infringers through Bayesian updating. This renders a credible litigation threat against the initial defendant and allows the NPE to extract more rents. We discuss policy implications including the adoption of the British system of “loser-pays” fee shifting and the use of injunctive relief.

November 25, 2015 | Permalink | Comments (0)

Antitrust and the Approach to Innovations

Magdalena Laskowska, Universite Paris II - Pantheon-Assas ponders Antitrust and the Approach to Innovations.

ABSTRACT: My paper points to the fact that the generation of innovations is very weakly financially supported all over the world, and even if innovations occur, the appropriate regulation lacks. In particular, the innovation doctrine in case of the control of concentrations in the European Union does not exist, and, in general, there are no research scholarships in antitrust aimed at promoting the adequate regulation of innovation – both in the United States and the European Union.

November 25, 2015 | Permalink | Comments (0)

Anticompetitive Patent Injunctions

Erik N. Hovenkamp, Northwestern University, Department of Economics and Thomas F. Cotter, University of Minnesota Law School offer thoughts on Anticompetitive Patent Injunctions.

ABSTRACT: The current approach for determining when courts should award injunctions in patent disputes involves a myopic focus on the hardships an injunction might impose on the litigants and the public. This article demonstrates, however, that courts sometimes could rely instead on a consideration far more relevant to the patent system's goal of promoting innovation: the extent to which the right to exclude was actually a necessary quid pro quo for the plaintiff's decision to bring its products to market. We illustrate the value of this approach with a critique of a recent Federal Circuit decision, Trebro Mfg. Inc. v. FireFly Equipment, LLC, which held that injunctive relief may be appropriate when a defendant infringes a patent that the plaintiff-competitor does not practice, and against which it lacked any legal protection when it entered the relevant downstream market. These circumstances — which are increasingly common in industries with rich markets for secondhand patents, result in the formation of what we refer to as a “diagonally integrated” nonpracticing entity (NPE) — a producer who owns a patent it does not practice, and who competes with downstream rivals who use (or would like to use) the patented technology. We develop a simple model showing that if such a firm acquired the unpracticed patent after entering the relevant product market, an injunction poses a threat to competition and consumer welfare that is not offset by any plausible benefit to innovation. Further, diagonally integrated NPEs have a perverse incentive to exclude or substantially limit all use of the patented technology, making them more likely to seek excessive licensing fees and aggressively seek injunctive relief than are conventional, “unintegrated” NPEs. This effort to foreclose all use of a technology is novel in the patent literature, but the spirit of this tactic is well known in antitrust: a dominant firm acquires patents that it has no intent to use simply in order to deny the technology to rivals, thus perpetuating its dominant position. The model’s implications also extend to a range of topics at the core of contemporary patent policy debates, including patent privateering, FRAND-encumbered patents, and preemptive patenting. It also suggests that in considering appropriate remedies the court should weigh competition concerns more seriously, particularly when there is little or no tradeoff with innovation concerns.

November 25, 2015 | Permalink | Comments (0)


Alberto Heimler (Italian School of Government) gave a very thoughtful speech on COMPETITION POLICY, INNOVATION AND ECONOMIC GROWTH at Indian International Centre on 16 November 2015 sponsored by Delegation of European Union to India under the project ‘Capacity Building Initiative in the Competition Area under Trade Development Program in India.

November 25, 2015 | Permalink | Comments (0)

Ken Elzinga - Antitrust Thanksgiving Hero

The holiday season brings out the best in many people.  Ken Elzinga of the University of Virginia was profiled for opening up his home to his students for Thanksgiving.  From the article:

Hundreds of students have come through his home to feast over the years from far and near. The couple never had children so hosting Thanksgiving expands Elzinga’s family.

"They're my students and for that day they're my kids,” said Elzinga

Ken is one of the most kind and thoughtful people I know.  

November 25, 2015 | Permalink | Comments (1)

A Broader Look at Patent Royalties and Antitrust

Erik N. Hovenkamp, Northwestern University, Department of Economics offers A Broader Look at Patent Royalties and Antitrust.

ABSTRACT: It is well known in antitrust economics that competitors can rely on patent licensing with high royalties as a surrogate for price fixing. This paper addresses a number of alternative situations in which patent royalty agreements may raise antitrust concerns, even if the royalty rate is ostensibly reasonable (implying the agreement is not transparently anticompetitive). For example, a royalty charged to a competitor creates an "alignment effect" by giving the licensor a stake in its rival's success. This is the same problem that arises when a firm buys stock in a competitor (a potential antitrust violation). By aligning the firms' interests, this blunts competition and benefits both parties independently of the underlying exchange. Thus, for example, if a firm charges a rival $5 per unit for an invention that lowers production costs by the same $5, then even the rival-licensee strictly benefits, because its net costs are unchanged, but now the market is less competitive. More generally, the alignment effect may lead welfare to decline overall even if the royalty rate is strictly lower than the licensing value (e.g. $4), just as a merger may reduce welfare even if it produces some cost efficiencies.

Additionally, offsetting (i.e. reciprocal) license payments between competitors often warrant scrutiny even if each royalty appears individually reasonable. Even under cross-licensing, offsetting payments are never necessary for the parties to reach a mutually-beneficial agreement, which is generally the relevant antitrust question. Instead, the practical effect of offsetting royalties is to replicate a collusive agreement to restrain consumer pass-through, ensuring the firms retain more of the licensing surplus. The results shed new light on the competitive impact of patent pools, which typically create widespread royalty offset and alignment between competing members, even if patents are complementary.

November 25, 2015 | Permalink | Comments (0)

Tuesday, November 24, 2015

Adolescence and the Path to Maturity in Global Retail

Bart J. Bronnenberg (Tilburg) and Paul B. Ellickson (University of Rochester) explain Adolescence and the Path to Maturity in Global Retail.

ABSTRACT: Distributing goods from producers to consumers constitutes a large fraction of overall economic activity. Using the United Nations National Accounts database, the distributive trades—retailing, wholesaling, and transportation—account for a constant 20–21 percent of global GDP going back at least as far as 1970, amounting to 1.3 times the GDP share of manufacturing in 2013. The share does not vary much across continents. The size of the distributive trades alone suggests that productivity growth in retailing could have a substantial impact on consumer welfare.

November 24, 2015 | Permalink | Comments (0)