Friday, May 31, 2019
| By: | David Spector (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Many collusive agreements involve the exchange of self-reported sales data between competitors, which use them to monitor compliance with a target market share allocation. Such communication may facilitate collusion even if it is unverifiable cheap talk and the underlying information becomes publicly available with a delay. The exchange of sales information may allow firms to implement incentive-compatible market share reallocation mechanisms after unexpected swings, limiting the recourse to price wars. Such communication may allow firms to earn profits that could not be earned in any collusive, symmetric pure-strategy equilibrium without communication. |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-01983037&r=com |
May 31, 2019 | Permalink | Comments (0)
| By: | Jens-Uwe Franck |
| Abstract: | The framework of EU law on cartel damages actions consists in part of rules established by the ECJ based on arts 101 and 102 TFEU in conjunction with the principle of effectiveness. These rules are an integral part of EU primary law. The notion of institutional balance, however, requires the Court to consider its own inherent limits on democratic legitimacy, accountability and expertise. In particular, the Court has to ensure that adequate scope remains for the EU legislature to exercise its legislative power pursuant to art.103 TFEU. It is argued that the ECJ has disregarded these restrictions and overstretched the principle of effectiveness––for instance, in its adjudication on liability for umbrella pricing and on access to leniency files, respectively. Consequently, the EU legislature must not consider itself bound by these standards. |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2018_037&r=com |
May 31, 2019 | Permalink | Comments (0)
| By: | Ben Mermelstein; Volker Nocke; Mark A. Satterthwaite; Michael D. Whinston |
| Abstract: | We study optimal merger policy in a dynamic model in which the presence of scale economies implies that firms can reduce costs through either internal investment in building capital or through mergers. The model, which we solve computationally, allows firms to invest or propose mergers according to the relative profitability of these strategies. An antitrust authority is able to block mergers at some cost. We examine the optimal policy for an antitrust authority who cannot commit to its future policy rule and approves or rejects mergers as they are proposed, considering both consumer value and aggregate value as its possible objectives. We find that the optimal policy can differ substantially from what would be best considering only welfare in the period the merger is proposed. In general, antitrust policy can greatly affect firms' optimal investment behavior, and firms' investment behavior can in turn greatly affect the antitrust authority's optimal policy. Moreover, externalities imposed by mergers on rivals can have significant effects on firms' investment incentives and thereby shape the optimal policy. |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2018_038&r=com |
May 31, 2019 | Permalink | Comments (0)
Thursday, May 30, 2019
| By: | Massimo Motta; Emanuele Tarantino |
| Abstract: | We study the effects of mergers when firms offer differentiated products and compete in prices and investments. Since it is in principle ambiguous, we use aggregative game theory to sign the net effect of the merger: We find that only if it entailed sufficient efficiency gains, could the merger raise total investments and consumer surplus. We also prove there exist classes of models for which the results obtained with cost-reducing investments are equivalent to those with quality-enhancing investments. Finally, we show that, from the consumer welfare point of view, a R&D cooperative agreement is superior to any consumer-welfare reducing merger. |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2018_056&r=com |
May 30, 2019 | Permalink | Comments (0)
| By: | Pierre Dubois; Helena Perrone |
| Abstract: | Traditional demand models assume that consumers are perfectly informed about product characteristics, including price. However, this assumption may be too strong. Unannounced sales are a common supermarket practice. As we show, retailers frequently change position in the price rankings, thus making it unlikely that consumers are aware of all deals o¤ered in each period. Further empirical evidence on consumer behavior is also consistent with a model with price information frictions. We develop such a model for horizontally di¤erentiated products and structurally estimate the search cost distribution. The results show that in equilibrium, consumers observe a very limited number of prices before making a purchase decision, which implies that imperfect information is indeed important and that local market power is potentially high. We also show that a full information demand model yields severely biased price elasticities. |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2018_047&r=com |
May 30, 2019 | Permalink | Comments (0)
| By: | Markus Reisinger; Emanuele Tarantino |
| Abstract: | Patent pools are commonly used to license technologies to manufacturers. Whereas previous studies focused on manufacturers active in independent markets, we analyze pools licensing to competing manufacturers, allowing for multiple licensors and non-linear tariffs. We find that the impact of pools on welfare depends on the industry structure: Whereas they are procompetitive when no manufacturer is integrated with a licensor, the presence of vertically integrated manufacturers triggers a novel trade-off between horizontal and vertical price coordination. Specifically, pools are anticompetitive if the share of integrated firms is large, procompetitive otherwise. We then formulate information-free policies to screen anticompetitive pools. |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2018_057&r=com |
May 30, 2019 | Permalink | Comments (0)
Wednesday, May 29, 2019
| By: | Giovanni Cespa; Xavier Vives |
| Abstract: | We assess the consequences for market quality and welfare of different entry regimes and exchange pricing policies in a context of limited market participation. To this end we integrate a two-period market microstructure model with an exchange competition model with entry in which exchanges supply technological services, and have market power. We find that technological services can be strategic substitutes or complements in platform competition. Free entry of platforms delivers a superior outcome in terms of liquidity and (generally) welfare compared to the case of an unregulated monopoly. Controlling entry or, even better typically, platform fees may further increase welfare. The market may deliver excessive or insufficient entry. However, if the regulator is constrained to not making transfers to platforms then there is never insufficient entry. |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7432&r=com |
May 29, 2019 | Permalink | Comments (0)
| By: | Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa) |
| Abstract: | There is a growing body of evidence that interest rate spreads in Africa are higher for big banks compared to small banks. One concern is that big banks might be using their market power to charge higher lending rates as they become larger, more efficient, and unchallenged. In contrast, several studies found that when bank size increases beyond certain thresholds, diseconomies of scale are introduced that lead to inefficiency. In that case, we also would expect to see widened interest margins. This study examines the connection between bank size and efficiency to understand whether that relationship is influenced by exploitation of market power or economies of scale. Using a panel of 162 African banks for 2001–2011, we analyzed the empirical data using instrumental variables and fixed effects regressions, with overlapping and non-overlapping thresholds for bank size. We found two key results. First, bank size increases bank interest rate margins with an inverted U-shaped nexus. Second, market power and economies of scale do not increase or decrease the interest rate margins significantly. The main policy implication is that interest rate margins cannot be elucidated by either market power or economies of scale. Other implications are discussed. |
| Keywords: | Sub-Saharan Africa; banks; lending rates; efficiency; Quiet Life Hypothesis |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:18/056&r=com |
May 29, 2019 | Permalink | Comments (0)
| By: | G. Gulsun Akin (Bogazici University); Ahmet Faruk Aysan; Ezgi Özer; Levent Yildiran |
| Abstract: | Using a discrete choice random utility model and unique data from a nationwide consumer survey, we show that consumers view credit cards as highly differentiated products with both bank-level and card-level nonprice features. They select their credit cards by predominantly considering these nonprice features. Although they charge higher prices, the majority of consumers choose private banks as issuers due to their bank-level and card-level nonprice benefits. Consumers who prioritize prices tend to choose participation or public banks. Product differentiation and bundling seem to underlie banks’ market power in the Turkish credit card market. Large private banks and public banks reap the benefits of bundling more than the other banks. Of card-level nonprice features, installments, bonuses/rewards/miles, and the prestige of the card seem to be particularly effective in consumers’ decisions. We argue that this highly differentiated nature of credit cards can be an alternative explanation for the credit card pricing puzzles. |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1258&r=com |
May 29, 2019 | Permalink | Comments (0)
Anupriya Dhonchak (National Law Delhi) asks Who Does India’s Draft Enabling Framework for Regulatory Sandbox actually Enable?.
May 29, 2019 | Permalink | Comments (0)
| By: | Dominik Gutt (Paderborn University); Philipp Herrmann (Consultant); Mohammad S. Rahman (Purdue University) |
| Abstract: | In this paper, we analyze how changes in local market structure affect the properties of a market’s mean rating distribution. To this end, we combine demographic, socioeconomic, and Yelp restaurant review data for 372 isolated markets in the United States. Our empirical estimates demonstrate that an increase in overall competition – measured as total number of businesses in a market – leads to a broader range and to a decrease in the average of a market’s mean rating distribution. The implication is that a larger market has proportionately more lower rated restaurants, whereas higher rated restaurants have relatively fewer comparable substitutes and face less competition in such a market. These effects are particularly pronounced when the analysis is limited to specific cuisine types where vertical differentiation is more natural or when we control for city-specific unobserved heterogeneity. Our findings highlight that practitioners and scholars using online mean ratings of businesses from disparate markets should account for the local market structure to judiciously analyze the relative market power of a business. |
| Keywords: | Local Market Competition, Online Ratings, Online Offline Interplay, Geographic |
| URL: | http://d.repec.org/n?u=RePEc:pdn:dispap:41&r=com |
May 29, 2019 | Permalink | Comments (0)
Tuesday, May 28, 2019
| By: | Takaomi Notsu (Graduate School of Economics, Kyoto University) |
| Abstract: | In this paper, we study full collusion (total payoff maximization) in the repeated Bertrand duopoly with capacity constraints. Instead of a standard rationing rule, Efficient rule (E rule), we introduce a sales maximization rationing rule. Under this rule, when the demand of a firm with a lower price exceeds its capacity, the consumers who are willing to buy at that price are rationed to that firm according to their unwillingness to buy. Then, we investigate whether the full collusion can be sustained or not by an equilibrium under our rule. We have four main results. First, we find that unless each firm's capacity is too large, an asymmetric price pair maximizes one shot total payoffs and the maximum total payoff is strictly greater than the one under E rule. Second, we explicitly find a minimum discount factor under which the full collusion can be sustained along a simple path such that the firms alternate two asymmetric price pairs. Third, we find that there exists a range of capacity constraints within which the minimum discount factors above which the full collusion can be sustained are lower under our rule than under E rule. This implies that the payoff of the full collusion, which is greater than under E rule, can be sustained within a wider range of discount factors rather than under E rule. Fourth and finally, we show that there exists the interior optimal capacity which maximizes the total payoffs of the full collusion, and the total payoff is strictly greater than the profit of a monopolist with aggregate capacities. This implies that sufficiently patient rms intend to reduce their capacities to just the optimal level when they have extra capacities, and that each middle-size firm prefers to be independent, instead of being horizontally integrated. |
| URL: | http://d.repec.org/n?u=RePEc:kyo:wpaper:990&r=com |
May 28, 2019 | Permalink | Comments (0)
| By: | Basaure, Arturo; Vesselkov, Alexandr |
| Abstract: | Platforms that are understood as a place or system coordinating the interaction of different stakeholders (e.g., service consumers and providers) may enable widespread adoption of IoT services and applications. However, the lack of interoperability between platforms may inhibit the diffusion of IoT services by preventing reaching a critical mass and reducing competition as it makes consumer switching and service provider multihoming prohibitively expensive. Moreover, network effects inherent in multisided platforms may lead to a monopoly power in IoT market. This paper analyzes the effect of consumer switching costs and provider multihoming on market structure and competition by means of agent-based modelling. Simulation results suggest that service provider multihoming plays a key role in increasing market competition when switching costs decrease due to, for example, consumer data portability. |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itsb18:190352&r=com |
May 28, 2019 | Permalink | Comments (0)
Concurrences Review, will hold the 10th edition of its annual conference “New Frontiers of Antitrust" on Friday 14 June, from 8:30am to 7:00pm, at the Ministry of French Ministry for the Economy and Finance, 139 rue de Bercy, Paris.
This edition marks the 10 year anniversary of this leading antitrust event.
https://new-frontiers-of-antitrust-2019.eventbrite.fr
Speakers include:
- Virginie Beaumeunier, Director-General, DGCCRF
- Sir Christopher Bellamy QC, Chairman of the Global Competition Practice, Linklaters
- Paul Csiszar, Director - Basic industries, Manufacturing and Agriculture, DG COMP
- Christian D'Cunha, Head of Private Office, EDPS
- Isabelle de Silva, President, Autorité de la concurrence
- Simon Evenett, Professor of International Trade and Economic Development, University of St. Gallen
- Daniel Fasquelle, MP for Pas-de-Calais & Vice President of the Economic Affairs Committee, French National Parliament - Professor, University of Boulogne-sur-Mer
- Laurence Idot, Professor, University Paris II Panthéon-Assas
- Frédéric Jenny, Chairman, OECD Competition Committee - Professor of Economics, ESSEC, Paris
- Thomas Kramler, Head of Unit, DG COMP
- Cecilio Madero, Deputy Director-General, DG COMP
- Richard Panquiault, Director-General, ILEC
- Nicolas Petit, Professor, University of Liège
- Alvaro Ramos, Senior Director - Head of Global Antitrust, Qualcomm
- Arno Rasek, Chief Economist, Bundeskartellamt
- Sébastien Soriano, President, ARCEP
- Wouter Wils, Hearing Officer, European Commission - Visiting Professor, King's College London
The conference will focus on 5 topics:
- Which competition and industrial policies for Europe?
- Beyond ALSTOM-SIEMENS: Is there a need to revise competition law goals?
- Competition authorities: Which judicial review?
- Restrictive trade practices in the food and retail sector: Is the end near, truly?
- Business & Personal data: Should access be shared? Should collection be confined?
You can find the detailed program on the dedicated website:
https://new-frontiers-of-antitrust-2019.eventbrite.fr
May 28, 2019 | Permalink | Comments (0)
The submission deadline for the Twelfth Annual Federal Trade Commission Microeconomics Conference is quickly approaching. The FTC Microeconomics Conference will bring together scholars working in areas related to the FTC’s antitrust, consumer protection, and public policy missions on November 14-15, 2019, in Washington, D.C. The Scientific Committee for the conference consists of Panle Jia Barwick (Cornell University), Mark Schankerman (London School of Economics), and Joel Sobel (University of California, San Diego). Submit your paper to [email protected] by June 21, 2019. Visit www.ftc.gov/microeconomics to see the Call for Papers and additional conference details.
May 28, 2019 | Permalink | Comments (0)
| By: | Iwan Bos; Marco Marini |
| Abstract: | This note considers cartel stability when the cartelized products are vertically differentiated. If market shares are maintained at pre-collusive levels, then the firm with the lowest competitive price-cost margin has the strongest incentive to deviate from the collusive agreement. The lowest-quality supplier has the tightest incentive constraint when the difference in unit production costs is sufficiently small. |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1812.10293&r=com |
May 28, 2019 | Permalink | Comments (0)
ABA Section of Antitrust Law International Committee presents a
Fireside Chat with Michael Grenfell of the CMA, 11AM EDT June 05, 2019
The CMA has suggested a number of changes to the UK's competition law regime. This program provides a fireside chat with Michael Grenfell, Executive Director, Enforcement, of the CMA. Dr. Grenfell will discuss the proposed changes in an informal setting, followed by Q&A from those on the call.
Moderator:
Daniel Sokol, University of Florida
Speaker:
Michael Grenfell, CMA
Explore Section benefits or call 1-800-285-2221 to join. To learn more visit: https://www.americanbar.org/groups/antitrust_law/
May 28, 2019 | Permalink | Comments (0)
See here for details.
KK315, 3/F, K.K. Leung Building,
The University of Hong Kong
CPD points have been applied for this event with The Law Society of Hong Kong
| June 20, 2019 (Thursday) - Practitioners’ Conference KK315, 3/F, K.K. Leung Building, The University of Hong Kong |
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| June 21, 2019 (Friday) - Academic Conference KK315, 3/F, K.K. Leung Building, The University of Hong Kong |
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May 28, 2019 | Permalink | Comments (0)
| By: | Guillaume Cheikbossian (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Philippe Mahenc (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier) |
| Abstract: | We study the ability of several identical firms to collude in the presence of a more efficient firm, which does not take part in their collusive agreement. The cartel firms adopt stick-and-carrot strategies, while the efficient firm plays its one-period best-response function, regardless of the history of play. We characterize the most collusive symmetric punishment, which maximizes the scope for collusion. We then find that either a lower cost disadvantage or a smaller cartel size facilitates collusion. Finally, we compare our results with those obtained in the standard setup where all firms participate in the collusive agreement. |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01950057&r=com |
May 28, 2019 | Permalink | Comments (0)
Monday, May 27, 2019
| By: | Daniel Levy (Department of Economics, Bar-Ilan University, Israel; Department of Economics, Emory University, USA; Rimini Centre for Economic Analysis); Avichai Snir (Department of Banking & Finance, Netanya Academic College, Israel); Alex Gotler (Department of Education and Psychology, Open University, Israel); Haipeng (Allan) Chen (Gatton College of Business and Economics, University of Kentucky, USA) |
| Abstract: | We document an asymmetry in the rigidity of 9-ending prices relative to non-9-ending prices. Consumers have difficulty noticing higher prices if they are 9-ending, or noticing price-increases if the new prices are 9-ending, because 9-endings are used as a signal for low prices. Price setters respond strategically to the consumer-heuristic by setting 9-ending prices more often after price-increases than after price-decreases. 9-ending prices, therefore, remain 9-ending more often after price-increases than after price-decreases, leading to asymmetric rigidity: 9-ending prices are more rigid upward than downward. These findings hold for both transaction-prices and regular-prices, and for both inflation and no-inflation periods. |
| Keywords: | Asymmetric Price Adjustment, Sticky/Rigid Prices, 9-Ending Prices, Psychological Prices, Price Points, Regular/Sale Prices |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:19-02&r=com |
May 27, 2019 | Permalink | Comments (0)
