Friday, November 30, 2018
Dec. 14-15, 2018 - Hotel Atton San Martín, Viña del Mar, Chile
We are pleased to announce the 11th TOI workshop
This international symposium is organized every year by the Markets, Organizations and Regulation Group (MORe) at the Complex Engineering Systems Institute in Chile. The meeting is oriented to Industrial Organization, Market Design, Organization Economics and related topics, gathering well renowned experts in such fields.
Wouter Dessein · Economics Division, Columbia Business School
Eli Ginzberg Andrés Elberg · Pontificia Universidad Católica de Chile
Marina Halac · Department of Economics, Yale University.
Joseph Harrington · The Wharton School, University of Pennsylvania
Gastón Illanes · Northwestern University Pedro Jara-Moroni · Universidad de Santiago de Chile
Carlos Noton · Universidad de Chile
Alessandro Pavan · Northwestern University Hugo Silva · Pontificia Universidad Católica de Chile
Frank Verboven · KU Leuven
Gabriel Weintraub · Graduate School of Stanford Business
IMPORTANT DATES & GENERAL INFORMATION Venue: Hotel Atton San Martín, Viña del Mar - Chile.
Workshop dates: December 14 - 15, 2018. Language: English. More information: [email protected] MORE INFO ORGANIZER: Complex Engineering Systems Institute (ISCI)
Haraguchi, Junichi; Hirose, Kosuke study Endogenous Timing in a Price-Setting Mixed Oligopoly.
ABSTRACT: We investigate the endogenous order of moves in a price-setting mixed oligopoly model, comprising two private firms and a public firm. We show that sequential moves emerge as the equilibrium in the observable delay game. Specifically, one of the private firms and the public firm set their prices in period 1, and the other private firm does so in period 2, in equilibrium, if their goods are not significantly differentiated. This is a clear contrast to a mixed duopoly where a simultaneous move game is a unique equilibrium. We also discuss a number of extensions and the robustness of our result.
Latest Competition Lore podcast episode: What’s in the water in Germany?, with Professor Rupprecht Podzun
The latest Competition Lore podcast episode: What’s in the water in Germany?, with Professor Rupprecht Podzun is now up. See https://competitionlore.com/podcasts/whats-in-the-water-in-germany/.
Welfare Effects of Switching Barriers Through Permanence Clauses: Evidence from the Mobiles Market in Colombia
Álvaro Riascos; Juan David Martín and Natalia Serna identify the Welfare Effects of Switching Barriers Through Permanence Clauses: Evidence from the Mobiles Market in Colombia.
ABSTRACT: During 2014, the Comisión de Regulación de Comunicaciones in Colombia enacted a Resolution by which permanence clauses or fixed-length terms in mobile telecommunications contracts were prohibited for network operators offering bundled mobile terminals and voice plans. Prohibition was enacted under the argument permanence clauses create switching costs, reduce competition, and generate information asymmetries. In this study we measure the impact of the Resolution on consumer, firm, and social welfare by estimating the structural demand for mobile terminals and conducting two counterfactual scenarios. We show switching costs by means of permanence clauses reduce consumer utility and increase the variance of the utility distribution. We also show the Colombian market for mobile terminals has been better off without permanence clauses, with both consumers and firms experiencing gains from the prohibition. However, variation in firm surplus is explained mostly by the variation in profits of incumbent network operators than by the variation in profits of firms selling terminals at cash price. Our study contributes to the literature of bundled sales and switching costs and is crucial from the perspective of regulation and industrial policy in the telecommunications sector.
Christian Beyer (Ostwestfalen-Lippe University of Applied Sciences); Elke Kottmann (Ostwestfalen-Lippe University of Applied Sciences); Korbinian von Blanckenburg (Ostwestfalen-Lippe University of Applied Sciences) discuss Trucks, Triangles and a Quiet Life: Welfare Implications of the European Trucks Cartel.
ABSTRACT: We present a pragmatic approach to calculating the total economic loss induced by a cartel, focusing on the European trucks cartel (1997-2011). Overall, we estimate a net welfare loss of approximately €0.7 bn. and an overcharge below 1% (€1.8 bn.). The cartel overcharge is surprisingly low. We explain this by (1) the existence of a reference market with an already elevated price level and (2) by other industry-specific factors that encourage cartel arrangements. In the case of the trucks cartel, the companies involved have apparently preferred the Hicksian "quiet life" of the monopolist to a further maximization of profits.
Thursday, November 29, 2018
Jan Krämer and Martin Peitz offer A Fresh Look at Zero-Rating.
ABSTRACT: We provide an economic assessment of zero-rating offers in the context of mobile internet access services and draw six lessons: (1) Zero-rating can have several different characteristics that crucially affect their economic and welfare assessment. Thus, regulatory interventions must be based on a careful case-by-case analysis. (2) In the context of zero-rating offers, it is often crucial to evaluate the extent to which users are able to activate and deactivate a (throttled) zero-rated tariff option. If activation/deactivation is easy and instantaneous, a sound economic theory of harm for consumers will in many cases be hard to establish. (3) Similarly, if access to zero-rated partner programs is non-discriminatory and entails low barriers to entry, a sound theory of harm for content providers will usually not be given. (4) Zero-rating can be beneficial for consumers and (legal) content providers alike by contributing to a reduction of illegal content. Combined with throttling it can mitigate congestion problems. However, by requiring all content belonging to the same content category to be treated equally with respect to throttling, independent of whether a content provider opted for zero-rating or not, the existing regulation creates a negative externality on those content providers that do not wish to be zero-rated for some reason. (5) Particular attention should be paid to the impact of throttled zero-rating tariffs on the competition between mobile network operators (MNOs) and MVNOs. The latter may not be able to compete on equal footing with MNOs, because they benefit less from the traffic management aspects of zero-rating. (6) Competition among (infrastructure-based) ISPs provides a safeguard against severe rent extraction and, thus, an abuse of throttling and zero-rating as an exploitative device. Therefore, regulators should carefully account for the competitive environment and the existing tariff portfolio and options before deciding to intervene. Competition policy, rather than ex-ante regulation, may be more suitable for this task.
Sourav Bhattacharya; Pavel Chakraborty; Chirantan Chatterjee quantify Intellectual Property Regimes and Firm Structure.
Abstract: We use The Patents (Amendment) Act, 2002 in India as a quasi-natural experiment to identify the causal effect of higher incentives for innovation on firm organizational features. We find that stronger intellectual property (IP) protection has a sharper impact on technologically advanced firms, i.e., firms that were a-priori above the industry median in terms of technology adoption. While there is an overall increase in managers' share of compensation, this increase is about 1.6-1.7% more for high-tech firms. This difference can be attributed to a larger increase in performance pay for high-tech firms. The reform also leads to a significant increase in number of managerial layers and number of divisions for high-tech firms relative to low-tech firms, but only the latter effect is correlated with the differential change in managerial compensation. Broadly, we demonstrate that stronger IP protection leads to an increase in both within-firm and between-firm wage inequality, with more robust evidence for between-firm inequality.
Marco Tolotti (Dept. of Management, Università Ca' Foscari Venice) and Jorge Yepez (Dept. of Economics, Università Ca' Foscari Venice) theorize about Hotelling-Bertrand duopoly competition under firm-specific network effects.
Abstract: When dealing with consumer choices, social pressure plays a crucial role; also in the context of market competition, the impact of network/social effects has been largely recognized. However, the effects of firm-specifc social recognition on market equilibria has never been addressed so far. In this paper, we consider a duopoly where competing firms are differentiated solely by the level of social (or network) externality they induce on consumers' perceived utility. We fully characterize the subgame perfect Nash equilibria in locations, prices and market shares. Under a scenario of weak social externality, the firms opt for maximal differentiation and the one with the highest social recognition has a relative advantage in terms of profits. Surprisingly, this outcome is not persistent; excessive social recognition may lead to adverse coordination of consumers: the strongest firm can eventually be thrown out of the market with positive probability. This scenario is related to a Pareto inefficient trap of no differentiation.
Sander Heinsalu identifies Competitive pricing despite search costs if lower price signals quality.
Abstract: I show that firms price almost competitively and consumers can infer product quality from prices in markets where firms differ in quality and production cost, and learning prices is costly. Bankruptcy risk or regulation links higher quality to lower cost. If high-quality firms have lower cost, then they can signal quality by cutting prices. Then the low-quality firms must cut prices to retain customers. This price-cutting race to the bottom ends in a separating equilibrium in which the low-quality firms charge their competitive price and the high-quality firms charge slightly less.
Wednesday, November 28, 2018
Price strategies of independent and branded dealers in retail gas market. The case of a contract reform in Spain
Pilar Cuadrado (Banco de España); Aitor Lacuesta (Banco de España); María de los Llanos Matea (Banco de España); F. Javier Palencia-González (UNED) analyze Price strategies of independent and branded dealers in retail gas market. The case of a contract reform in Spain.
ABSTRACT: This paper analyses how the contract structure between gas stations and the wholesale operator affects price strategies. Using daily data on prices of different gas stations the paper finds that independent dealers charge lower margins than other dealers with different contracts. One potential hypothesis is that this is the case because independent stations react more to the number of competitors. We use the introduction of a discretional regional excise duty (IVMDH) on gas stations to check the reaction of markups to changes in marginal costs of the actual number of competitors. Results are consistent with the idea that regardless the type of contract all dealers react notably to the increases in relative marginal costs by decreasing average markups. We use those results to interpret the inexistent reduction in markups that followed a change in the Spanish regulation that took place in 2013 fostering competition in the retail sector. One potential interpretation is that the big increase in independent stations following the reform was not considered an increase in actual competition for most of the incumbent stations.
Francesca Di Iorio (Department of Epolitical Sciences, University of Naples Federico II); Maria Letizia Giorgetti (Department of Economics, Management and Quantitative Methods, University of Milano) measure The impact of submarket concentration in the US pharmaceutical industry in 1987-1998.
ABSTRACT: Global market concentration is the result of the interplay of different sub-markets. According to this view, empirical analysis on the role of concentration as an incentive or as a barrier to entry must be conducted on a sub-market level, where the sub-markets are identified as specific technological trajectories. In this paper we investigate the role of 3-digit submarket concentration in the US pharmaceutical sector in 1987-1998. We take into account several sources of potential entry deterrence including the relative company size to the largest incumbent firm and the number of competing products in each submarket. The estimates of a panel logit model show that a concentrated industry at submarket level seems to act like a barrier to entry. The relative company size is not significant while the number of competing products is significantly positive.
Taming the "Fourth Power": Competition law and policy in the era of digital platforms and intermediaries
Piuli Roy Chowdhury (Indira Gandhi Institute of Development Research; Institute of Economic Growth) offers A New model of mergers and innovation.
ABSTRACT: This paper reexamines the impact of merger on innovation. Unlike as in Federico et al (2017), it considers the scenario where merged firms combine their research labs. It shows that, in equilibrium, each firm chooses a higher R&D effort after the merger, while industry effort may rise or fall due to the merger. Furthermore, it shows that given a sufficient condition, profits of the merged firm falls and consumer surplus rises in the post merger scenario. These results are in sharp contrast to the findings of Federico et al (2017).
Jay Modrall, Norton Rose explores Big Data and Merger Control in the EU.
ABSTRACT: EU antitrust authorities have taken a leading role in exploring antitrust concerns around ‘big data.’ The UK CMA announced the formation of a new technology team to keep pace with the use of algorithms, artificial intelligence and big data in 2017, and the French and German authorities published a joint study on big data and antitrust in 2016. Compared to these national authorities, the European Commission has kept a relatively low profile, although Commissioner Vestager has commented on big data and algorithm issues in several speeches.
Tuesday, November 27, 2018
Gregory J. Werden, U.S. Department of Justice - Antitrust Division addresses Back to School: What the Chicago School and New Brandeis School Get Right.
ABSTRACT: The New Brandeis School renews debate on two fundamental antitrust policy questions: 1) what source of wisdom or set of values should inform antitrust rules; and 2) what criterion should govern antitrust case adjudication. In our view, the Chicago School’s answer to the first question was right; economics, rather than populist politics, should guide the formulation of antitrust rules. On the second question, we agree with the New Brandeis School that US antitrust is too focused on bottom-line indicators of market performance; the result has been to make antitrust both more complex and less effective in protecting competition.
Tim Wu, Columbia asks After Consumer Welfare, Now What? The ‘Protection of Competition’ Standard in Practice.
ABSTRACT: The consumer welfare standard in antitrust has been heavily criticized. But would, in fact, abandoning the “consumer welfare” standard make the antitrust law too unworkable and indeterminate?
I argue that there is such a thing as a post-consumer welfare antitrust that is practicable and arguably as predictable as the consumer welfare standard. In practice, the consumer welfare standard has not set a high bar. The leading alternative standard, the “protection of competition” is at least as predictable, and arguably more determinate than the exceeding abstract abstract consumer welfare test, while being much truer the legislative intent underlying the antitrust laws. More concretely, we should return to asking, in most antitrust cases, the following question: Given a suspect conduct (or merger): Is this merely part of the competitive process, or is it meant to “suppress or even destroy competition?” This standard actually already forms a part of antitrust doctrine. What changes is eliminating “consumer welfare” as a final or necessary consideration in every case.
GCR is delighted to host the inaugural GCR Live Pharmaceuticals event on Thursday, 28 February 2019
White & Case, Washington, DC
J. Mark Gidley chairs the White & Case global Antitrust/Competition Practice, which is the only such practice to have been named Competition Group of the Year for the past six years by Law360. His practice focuses on mergers and acquisitions, cartel cases, class actions, and pharmaceutical antitrust cases, with an emphasis on trying antitrust cases.
NERA Economic Consulting, New York
Featured as one of Global Competition Review's "Women in Antitrust," Dr. Christine Meyer is considered one of the foremost testifying economists in the areas of complex commercial litigation involving intellectual property, antitrust claims, and commercial damages. In the area of intellectual property, Dr. Meyer has analyzed damages and provided expert testimony concerning issues arising from patent, trademark, and copyright infringement, the misappropriation of trade secrets, and breaches of contract. She has considerable expertise in analyzing lost profits, reasonable royalties, price erosion, commercial success, and irreparable harm.
8.45: Welcome coffee and registration
9.15: Chairs’ opening remarks
J. Mark Gidley, White & Case, Washington DC
Christine Siegwarth Meyer, NERA Economic Consulting, New York
9.30: Keynote address
10.15: Pricing cases: what do they mean for the future of pharma?
The scrutiny of pricing in the pharmaceuticals sector has, if anything, become fiercer in 2018. How has this enforcement by the agencies and court decisions from private litigation affected the industry and its business practices?
Questions the panel are expected to discuss include:
- What is the effect of industry consolidation on drug pricing?
- How are the agencies evaluating the effect of mergers on short-term and longer-term pricing?
- How has alleged collusion in the generic drugs market affected pricing, and how will those cases affect future enforcement?
- How effective are “pay-for-delay” settlements in today’s industry?
11.30: Coffee break
12.00: Innovation: a double-edged sword?
Innovation is commonly accepted as beneficial for consumers and the market, but pharmaceutical companies have also been accused of using innovation and patents as an anti-competitive sword against potential competitors. How can companies understand what is ‘good’ and ‘bad’ innovation?
Questions the panel are expected to discuss include:
- Is the pharmaceutical industry in need of more regulation - or less?
- Is product hopping to extend patent life a clever tactic, or deleterious for the market?
- How are method of use patents seen by authorities and courts?
- What has been and will be the impact of alleged sham patent litigation?
- How should innovation be considered in merger review in the pharma sector?
13.15: Chairs’ closing remarks
J. Mark Gidley, White & Case, Washington DC
Christine Siegwarth Meyer, NERA Economic Consulting, New York
13.30: Close of conference
FRAND-Encumbered Patents, Injunctions and Level Discrimination: What Next in the Interface between IP Rights and Competition Law?
Renato Nazzini, King's College London – The Dickson Poon School of Law examines FRAND-Encumbered Patents, Injunctions and Level Discrimination: What Next in the Interface between IP Rights and Competition Law?
ABSTRACT: Standards are of fundamental importance in our economy and competition law has an important role to play in ensuring that standard setting procedures are not distorted so as to result in negative effects on technological progress and social welfare. The Court of Justice in Huawei ruled on the circumstances in which the seeking of an injunction or a product recall by the holder of a standard essential patent (‘SEP’) may be an abuse of dominance under Article 102 TFEU. However, Huawei left many questions unanswered. One of them is whether the practice known as level discrimination is compatible with EU competition law. Level discrimination occurs when the holder of a SEP, having made a FRAND commitment, decides to license only undertakings at a given level of the supply chain, typically, the end-product manufacturers, rather than the component manufacturers. The economic and policy arguments for and against level discrimination are finely balanced and it may not be obvious whether this practice is likely to cause competitive harm if the SEP holder does not enforce the SEP against the component manufacturers who operate without a licence. However, as a matter of law, it appears that a refusal to license component manufacturers has the potential to exclude them from the market and, if the SEP holder made a FRAND commitment, such a refusal to licence may well be abusive, at least when the SEP holder is a vertically integrated undertaking. For non-practising entities, a first-principle analysis appears to point to the same conclusion. Both in the case of practising and non-practising entities, the abuse would be exclusionary. Somewhat paradoxically, the prohibition of abusive discrimination under Article 102(c) has no role to play in the competition law assessment of level discrimination.
Daniel Gross, Harvard Business School identifies Creativity Under Fire: The Effects of Competition on Creative Production.
ABSTRACT: Though fundamental to innovation and essential to many industries and occupations, individual creativity has received limited attention as an economic behavior and has historically proven difficult to study. This paper studies the incentive effects of competition on individuals' creative production. Using a sample of commercial logo design competitions, and a novel, content-based measure of originality, I find that intensifying competition induces agents to produce original, untested ideas over tweaking their earlier work, but heavy competition drives them to stop investing altogether. The results yield lessons for the management of creative workers and for the implementation of competitive procurement mechanisms for innovation.
Monday, November 26, 2018
Competition Law Enforcement at a Crossroads:
Disruption and Change
With the anticipated appointment of a permanent Commissioner expected in late 2018 or early 2019, the public and private enforcement of Canada’s competition laws are at turning point. The Bureau has signalled its intention to step up its enforcement activities in the digital economy, setting up a potential friction with other regulators in Canada and abroad. The Bureau has also challenged drip pricing and ordinary selling price practices across a range of industries, and is litigating its first abuse case in a number of years. The Bureau is also road testing its revamped immunity and leniency programs, and the Tribunal is implementing new fast track procedures to expedite competition enforcement in merger and other cases. And while the Bureau’s enforcement activities are heading in new directions, the private class actions bar is continuing to push the boundaries of the scope of private enforcement of the Act.
Please join us in Toronto on Tuesday, May 7, 2019, where leading experts from Canada and abroad will explore the latest in antitrust trends and discuss their implications, and to hear the new Commissioner’s latest enforcement priorities.
On-line registration is now open. Simply click on the REGISTER NOW button located on the right-hand side of your screen. If you do not wish to proceed with on-line registration you can print, complete and send (by fax or mail) thePDF Registration Form.
$475 + taxes
Young Lawyers (less than 5 years)
$340 + taxes
$265 + taxes
$575 + taxes
There will be a 20% administrative charge for any cancellation received in writing prior to April 7, 2019. No refund will be given after April 7, 2019. There will be no refunds for "no-show" registrants.
Toronto Board of Trade
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