Thursday, April 23, 2020

Advertising and Content Differentiation: Evidence from YouTube

By: Kerkhof, Anna
Abstract: Does advertising revenue increase or diminish content differentiation in media markets? This paper shows that an increase in the technically feasible number of ad breaks per video leads to an increase in content differentiation between several thousand YouTube channels. I exploit two institutional features of YouTube's monetization policy to identify the causal effect of advertising on the YouTubers' content choice. The analysis of around one million YouTube videos shows that advertising leads to a twenty percentage point reduction in the YouTubers' probability to duplicate popular content, i.e., content in high demand by the audience. I also provide evidence of the economic mechanism behind the result: popular content is covered by many competing YouTubers; hence, viewers who perceive advertising as a nuisance could easily switch to a competitor if a YouTuber increased her number of ad breaks per video. This is less likely, however, when the YouTuber differentiates her content from her competitors.
URL: http://d.repec.org/n?u=RePEc:zbw:vfsc19:204468&r=com

April 23, 2020 | Permalink | Comments (0)

Multiproduct Firms, Consumer Search, and Demand Heterogeneity

By: Yuta KITTAKA
Abstract: This study constructs a consumer search model in which some consumers search for multiple products, whereas others search for a single product. A price difference arises because of a difference in the price elasticity for each group. We show that a positive demand shock to one of the products decreases the price of another product, whereas it increases its own price, and a negative correlation between the demands for each product strengthens these tendencies. Both prices decrease, however, following a positive demand shock when the demands for each product are positively correlated. We also show that multiproduct firms set a relatively high price for a more demanded product, as such a product's price tends to be more elastic with respect to search costs. A price difference between products increases as the demand gap between products increases or as economies of scale in search increase.
URL: http://d.repec.org/n?u=RePEc:dpr:wpaper:1024r&r=com

April 23, 2020 | Permalink | Comments (0)

Wednesday, April 22, 2020

High-speed rail and air transport integration in hub-and-spoke networks. The role of airports

By: Alessandro Avenali (Department of Computer, Control and Management Engineering Antonio Ruberti (DIAG), University of Rome La Sapienza, Rome, Italy); Tiziana D'Alfonso (Department of Computer, Control and Management Engineering Antonio Ruberti (DIAG), University of Rome La Sapienza, Rome, Italy); Alberto Nastasi (Department of Computer, Control and Management Engineering Antonio Ruberti (DIAG), University of Rome La Sapienza, Rome, Italy); Pierfrancesco Reverberi (Department of Computer, Control and Management Engineering Antonio Ruberti (DIAG), University of Rome La Sapienza, Rome, Italy)
Abstract: Air transport and HSR are not simple competitors. Indeed, air and HSR services can be complements on long-haul routes served by connecting flights through a hub airport. This complementarity creates room for cooperation between airlines and HSR operators, particularly relating to international connecting passengers. Airport managers are also interested in such agreements since they affect, among others, air traffic volumes and the demand for slots on the part of the airlines. In this framework, we develop a theoretical model to study transport operators’ incentives to cooperate, and the strategic role of airports in facilitating or dampening airline-HSR cooperation via the airport per passenger fee. In our model, transport operators cooperate to offer a bundle of domestic HSR and international air services via a multimodal hub airport. We show that the scope for cooperation depends on two main factors, that is, the related sunk costs and mode substitution between air and HSR services.
URL: http://d.repec.org/n?u=RePEc:aeg:report:2019-09&r=com

April 22, 2020 | Permalink | Comments (0)

Market Power in Retail Gasoline Markets

By: Nguyen-Ones , Mai (Dept of Business and Management Science NHH); Steen, Frode (Dept. of Economics, Norwegian School of Economics and Business Administration)
Abstract: We estimate a structural model to uncover the degree of competition in retail gasoline markets using daily station-level data on quantity and price from the Swedish market. The structural model enables us to consider key features on both the demand and supply side that are important when evaluating retailers’ ability to obtain market power. Endowed with station-level information on service level, contractual form and number of nearby stations, we take into account the main drivers of differentiation in the local market. Our findings suggest that retailers in general exercise significant intermediate levels of market power. Further, local station characteristics significantly affect to which extent stations are able to extract market power. Results are robust to different estimation methods.
URL: http://d.repec.org/n?u=RePEc:hhs:nhheco:2019_021&r=com

April 22, 2020 | Permalink | Comments (0)

Underpromise and overdeliver? – Online product reviews and firm pricing

By: Simon MartinSandro Shelegia
Abstract: This paper presents a quality signaling model with consumer reviews. Reviews refl ect true quality as well as consumers' expectations of quality, improving with the former and worsening with the latter. Expectation-based reviews give rise to a novel separating equilibrium with several interesting properties: (i) low quality types are deterred from charging high prices by disappointed consumers who may write bad reviews; (ii) high quality types are deterred from imitating low types and thus generating good reviews by low equilibrium prices set by the low types; (iii) prices charged by lowest quality types can be below marginal cost. The equilibrium price schedule is inversely related to the number of consumers who rely on product reviews. Hence higher reliance on reviews reduces prices. In contrast, more informative reviews may lead to lower as well as higher prices depending on how reviews are generated. These results extend to the duopoly model, where we show that prices are lower (higher) than under monopoly for prices above (below) marginal cost.
URL: http://d.repec.org/n?u=RePEc:upf:upfgen:1674&r=com

April 22, 2020 | Permalink | Comments (0)

Tuesday, April 21, 2020

Complementarities as an Antitrust Defense

Dennis Weisman Kansas State University - Department of Economics theorizes about Complementarities as an Antitrust Defense.

ABSTRACT: We employ a Cournot model with interdependent demands to explore the interaction between demand and cost complementarities in mitigating upward pricing pressure, post-merger. The analysis reveals that even substantial increases in the HHI post-merger need not raise competitive concerns when output is redistributed from single-market to multi-market providers. Furthermore, the numerical simulations indicate that there is a wide range of demand and cost complementarity parameters over which even monopolization of the market would not be expected to result in higher prices. These findings may constructively inform merger policy and provide useful context for application of the DOJ/FTC horizontal merger guidelines in an increasingly digitalized economy.

April 21, 2020 | Permalink | Comments (0)

Spring 2020, Volume 1, Number 1

See here.
 
Antitrust Chronicle – Remedies – April I, 2019

Remedies

Where there is a violation of the antitrust rules, there must be consequences. This can take the form of fines or damages for injured parties, but also structural or behavioral remedies designed to maintain or restore competitive conditions.

Antitrust remedies have become a hot topic in recent months. Prominent politicians around the world are calling for certain technology companies to be “broken up” for alleged antitrust infringements. In parallel, there have been significant policy shifts in the U.S. as regards the correct approach to remedies in merger enforcement.

April 21, 2020 | Permalink | Comments (0)

A Reform Too Few or a Reform Too Many: Judicial Review, Appeals or a Prosecutorial System under the UK Competition Act 1998?

Renato Nazzini, King's College London – The Dickson Poon School of Law asks A Reform Too Few or a Reform Too Many: Judicial Review, Appeals or a Prosecutorial System under the UK Competition Act 1998?

ABSTRACT: This article discusses the CMA’s proposals to lower the standard of review of certain antitrust decisions in the CAT from a merits appeal to judicial review principles or some other limited basis, while retaining the CAT’s ‘full jurisdiction’ over fines, and to amend the CAT’s rules of procedure to restrict the admissibility of new evidence on appeal and the use of oral testimony. The argument developed in this article is that such proposals are:

(a) in conflict with the constitutional principle of the rule of law;

(b) incompatible with the HRA98;

(c) a step back even from the often criticised standard of review applied by the Union Courts in respect of European Commission’s decisions;

(d) inappropriate as a matter of policy.

If the current regime needs improving to reduce the cost and length of the proceedings, then three options should be considered:

(a) moving from a merits appeal to a merits review (Option 1);

(b) strengthening the independence of the decision-making panel within the CMA (Option 2), while lowering the standard of review to judicial review principles;

(c) establishing a prosecutorial model (Option 3).

Option 3 is the most radical but should be given serious consideration as it is likely to be the best suited to achieving the policy objective of reducing the cost and length of competition proceedings while at the same time retaining rigorous scrutiny of the facts and economic evidence, which is key to ensuring not only the fairness, and therefore the legitimacy, of the system, but also its effectiveness.

April 21, 2020 | Permalink | Comments (0)

Independence of National Competition Authorities – Problem Solved by Directive 2019/1? Example of the Antimonopoly Office of the Slovak Republic

Maria T. Patakyova, Comenius University in Bratislava, Faculty of Law asks Independence of National Competition Authorities – Problem Solved by Directive 2019/1? Example of the Antimonopoly Office of the Slovak Republic.

ABSTRACT: This paper analyses independence of National Competition Authorities under legislation before Directive 2019/1 and after Directive 2019/1. The aim of the paper is to find out whether Directive 2019/1 addresses the problem of independence properly or not. In order to answer the question, it discusses what does it mean the term independence, especially in the view of scholars. Several aspects of independence are identified. Subsequently, this paper zooms in on what are current imperfections when it comes to independence of National Competition Authorities. The Anti-monopoly Office of the Slovak Republic is discussed in particular. The paper then finds out what are the requirements of Directive 2019/1 and whether these requirements address the imperfection identified above. The paper confirms that these imperfections are covered only partially.

April 21, 2020 | Permalink | Comments (0)

Daily Newspapers and Antitrust: As Relevant and Crucial to Our Democracy as Ever

Thomas Jeffrey Horton, University of South Dakota, School of Law describes Daily Newspapers and Antitrust: As Relevant and Crucial to Our Democracy as Ever.

ABSTRACT: Daily newspapers today are under siege. The future viability of traditional daily newspapers is being questions due to the rise of Internet information sources, as well as the current political attacks on the press. This article argues that those predicting "doom and gloom" for the daily newspaper industry are short-sighted, given the continued popularity of high-quality investigative journalism and ever-present need for accountability reporting in our democracy. With many readers consuming daily newspapers' content through their innovative online platforms, the competition of the Internet had increased the quality of newspaper journalism, after a period of declining quality due to aggressive consolidation in the print industry. Discussing the 1970 Newspaper Preservation Act ("NPA"), which was supposed to protect editorial diversity by allowing horizontal economic consolidations, the author observes that it actually led to lower quality journalism and less competitive newspapers. The author argues that the NPA should be repealed, and aggressive competition encouraged between newspapers at both the local and national geographic levels through the rigorous enforcement of the antitrust laws. Newspapers should continue to be analyzed as a distinct product market by antitrust enforcers, and further horizontal mergers and consolidation discouraged, and, if necessary, rejected.

April 21, 2020 | Permalink | Comments (0)

Monday, April 20, 2020

AN EMPIRICAL ANALYSIS OF MERGERS: EFFICIENCY GAINS AND IMPACT ON CONSUMER PRICES

Céline Bonnet and Jan Philip Schain offer AN EMPIRICAL ANALYSIS OF MERGERS: EFFICIENCY GAINS AND IMPACT ON CONSUMER PRICES.

ABSTRACT: In this article, we extend the literature on merger simulation models by incorporating its potential synergy gains into structural econometric analysis. We present an integrated approach. We estimate a structural demand and supply model dealing with two-part tariff contracts between manufacturers and retailers as in Bonnet and Dubois (2010). This model allows us to recover the marginal cost of each differentiated product. Then we estimate potential efficiency gains using the data envelopment analysis approach of Bogetoft and Wang (2005), and some assumptions about exogenous cost shifters. In the last step, we simulate the new price equilibrium post-merger by taking into account synergy gains, and derive price and welfare effects. We use a home scan data set of dairy dessert purchases in France, and show that synergy gains could offset the upward pressure on prices post. Moreover, in this market, the increase in industry profit due to the merger is more driven by its induced synergy gains than by the market power increase.

April 20, 2020 | Permalink | Comments (0)

Asymmetric Stakes in Antitrust Litigation

Erik Hovenkamp, University of Southern California School of Law and Steven C. Salop, Georgetown University Law Center identify Asymmetric Stakes in Antitrust Litigation.

ABSTRACT: Private antitrust litigation often involves a dominant firm being accused of exclusionary conduct by a smaller rival or entrant. Importantly, the firms in such cases generally have asymmetric stakes: the defendant typically has a much larger financial interest on the line. We explore the broad policy implications of this fact using a novel model of litigation with endogenous effort. Asymmetric stakes lead dominant defendants to invest systematically more resources into litigation, causing the plaintiff's success probability to fall below the efficient level--a distortion that carries over to ex ante settlements. We explain that enhanced damages may reduce the problem, but cannot eliminate it. We also show that, in most areas of private law, asymmetric stakes do not distort litigation outcomes in this way; the distortion arises in antitrust only because it proscribes certain ex post settlements, and this constraint influences incentives at the litigation stage. Finally, we consider how courts could correct the distortion created by asymmetric stakes by altering plaintiffs' evidentiary burden.

April 20, 2020 | Permalink | Comments (0)

Due Process in Antitrust Enforcement Through the Lens of Comparative

Christopher S. Yoo, University of Pennsylvania Law School; University of Pennsylvania - Annenberg School for Communication; University of Pennsylvania - School of Engineering and Applied Science, Thomas Fetzer, University of Mannheim, Shan Jiang, University of International Business and Economics (UIBE) School of Law, and Yong Huang, University of International Business and Economics (UIBE) discuss Due Process in Antitrust Enforcement Through the Lens of Comparative.

ABSTRACT: Due process in antitrust enforcement has significant implications for better professional and accurate enforcement decisions. Not only can due process spur economic growth, raise government credibility, and limit the abuse of powers according to law, it also promotes competitive reforms in monopolized sectors and curbs corruption. Jurisdictions learn from the best practices in the investigation process, decisionmaking process, and the announcement and judicial review of antitrust enforcement decisions. By comparing the enforcement policies of China, the European Union, and the United States, this article calls for better disclosure of evidence, participation of legal counsel, and protection of the procedural and substantive rights of the respondent in the investigation process. In conducting evidence review and arriving at punitive decisions, the enforcement agency should establish a separation between investigatory and adjudicatory functions. Finally, the issued punishment decision should contain more comprehensive information and be subject to judicial review of the court.

April 20, 2020 | Permalink | Comments (0)

An Evaluation of the Impact of the 2010 Horizontal Merger Guidelines

Dennis W. Carlton, University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER) and Mark A. Israel, Compass Lexecon offer An Evaluation of the Impact of the 2010 Horizontal Merger Guidelines.

ABSTRACT: In comparison to the prior Guidelines, the 2010 Guidelines:

(i) de-emphasized market definition;

(ii) introduced the concept of upward price pressure (UPP) explicitly into the Guidelines;

(iii) maintained focus on potential harm from “coordinated effects” despite what appeared to be its diminishing role in merger analyses (but failed to connect the economics of unilateral behavior to the economics of coordinated behavior);

(iv) discussed entry and the implications of profit margins; and

(v) discussed auctions and bargaining.

In this article we address several questions. How have these more novel changes worked out in practice? How does what happened compare to what we thought would happen at the time the 2010 Guidelines were introduced? And what lessons can be learned from experience to date?

April 20, 2020 | Permalink | Comments (0)

Friday, April 17, 2020

ACCESS TO DIGITAL CAR DATA AND COMPETITION IN AFTERMARKET MAINTENANCE SERVICE

Bertin Martens and Frank Mueller-Langer offer thoughts on ACCESS TO DIGITAL CAR DATA AND COMPETITION IN AFTERMARKET MAINTENANCE SERVICE.

ABSTRACT: Before the arrival of digital car data, car manufacturers had already partly foreclosed the maintenance market through franchising contracts with a network of exclusive official dealers. EU regulation endorsed this foreclosure but mandated access to maintenance data for independent service providers to keep competition in these markets. The arrival of digital car data upsets this balance because manufacturers can collect real-time maintenance data on their servers and send messages to drivers. These can be used to price discriminate and increase the market share of official dealers. There are at least four alternative technical gateways that could give independent service providers similar data access options. However, they suffer in various degrees from data portability issues, switching costs and weak network effects, and insufficient economies of scale and scope in data analytics. Multisided third-party consumer media platforms appear to be better placed to overcome these economic hurdles, provided that an operational real-time data portability regime could be established.

April 17, 2020 | Permalink | Comments (0)

ANTITRUST DAMAGES IN FINANCIAL MARKETS

John K Wald has identified ANTITRUST DAMAGES IN FINANCIAL MARKETS.

ABSTRACT: I briefly review the standard regression methods used to estimate damages in antitrust actions, and I analyze how these would be applied to cases in financial markets. I consider applications to three different financial market cases. The first is the NASDAQ odd-eighths litigation, where existing antitrust methods closely resemble the analyses published in the academic literature on this issue. The second type of case is bond market antitrust litigation, where the expert faces an additional hurdle because they have to estimate bid-ask spreads. The third type of case is related to the LIBOR manipulation scandal. I analyzed why existing methods provide a poor fit for the LIBOR damage calculations. Lastly, I evaluate IPO issuance fees as an example of price clustering in financial markets that has not let to antitrust litigation.

April 17, 2020 | Permalink | Comments (0)

ANTITRUST DAMAGES IN FINANCIAL MARKETS

John K Wald has identified ANTITRUST DAMAGES IN FINANCIAL MARKETS.

ABSTRACT: I briefly review the standard regression methods used to estimate damages in antitrust actions, and I analyze how these would be applied to cases in financial markets. I consider applications to three different financial market cases. The first is the NASDAQ odd-eighths litigation, where existing antitrust methods closely resemble the analyses published in the academic literature on this issue. The second type of case is bond market antitrust litigation, where the expert faces an additional hurdle because they have to estimate bid-ask spreads. The third type of case is related to the LIBOR manipulation scandal. I analyzed why existing methods provide a poor fit for the LIBOR damage calculations. Lastly, I evaluate IPO issuance fees as an example of price clustering in financial markets that has not let to antitrust litigation.

April 17, 2020 | Permalink | Comments (0)

Thursday, April 16, 2020

WOMEN & ANTITRUST VOICES FROM THE FIELD - VOL. I

WOMEN & ANTITRUSTVOICES FROM THE FIELD - VOL. I

Evelina Kurgonaite (Curation & Foreword)

Leading competition professionals from around the world present reflections and forecasts on topical issues in antitrust and competition law and policy in this first volume of Women & Antitrust. Over a series of candid conversations, enforcers, in-house counsels, lawyers and academics take on questions regarding, among others, the following areas:

- Assessment & regulation vis-à-vis digital platforms
- Behavioural economics & competition policy
- Public interest concerns, including privacy
- Brexit & its expected impact
- International cooperation
- Policy and enforcement trends for 2020

Nestled among the exchanges are insights into the professional paths of the women interviewed. Through personal anecdotes, they share perspectives on their chosen roles, if and how gender has informed their career choices, and offer advice to young practitioners interested in joining this field.

This volume has been published in cooperation with W@Competition. A second volume will be published in cooperation with Women’s Competition Network (WCN).

With contributions by: Academy of the Netherlands Authority for Consumers & Markets; AILI Consulting; AlixPartners; Allianz; Ashurst; Baker McKenzie; BHP Billiton; Bowmans; Brazilian Administrative Council for Economic Defense; Chiomenti; C-Law; Cobalt Legal; Competition & Consumer Commission of Singapore; CS Associados; Cuatrecasas; Danish Competition and Consumer Authority; DG COMP, European Commission; Freshfields Bruckhaus Deringer; Gattai, Minoli, Agostinelli & Partners; Gilbert + Tobin; Google; Hannes Snellman; Hogan Lovells; HSBC; Infonavit; King & Wood Mallesons; McDermott Will & Emery; Mexican Federal Economic Competition Commission; New South Wales Department of Customer Services; Nortons Inc; O2 Telefónica UK; Oxera; Renmin University; RBB Economics; Siemens; Spanish National Markets and Competition Commission; Sullivan & Cromwell; Swedish Competition Authority; Tauil & Chequer, associated with Mayer Brown; thyssenkrupp; UK Competition and Markets Authority; United Nations Conference on Trade and Development; University of East Anglia; US Department of Justice; W@; ZX Ventures.

Read the Foreword by Evelina Kurgonaite
Browse the Table of Contents
See the List of Contributors

April 16, 2020 | Permalink | Comments (0)

The Economic Consequences of Data Privacy Regulation: Empirical Evidence from GDPR

The Economic Consequences of Data Privacy Regulation: Empirical Evidence from GDPR
Guy Aridor, Yeon-Koo Che, and Tobias Salz #26900

Abstract:

This paper studies the effects of the EU’s General Data Protection Regulation (GDPR) on the ability of firms to collect consumer data, identify consumers over time, accrue revenue via online advertising, and predict their behavior. Utilizing a novel dataset by an intermediary that spans much of the online travel industry, we perform a difference-in-differences analysis that exploits the geographic reach of GDPR. We find a 12.5% drop in the intermediary-observed consumers as a result of the new opt-in requirement of GDPR. At the same time, the remaining consumers are observable for a longer period of time. We provide evidence that this pattern is consistent with the hypothesis that privacy-conscious consumers substitute away from less efficient privacy protection (e.g, cookie deletion) to explicit opt out, a process that would reduce the number of artificially short consumer histories. Further in keeping with this hypothesis, we observe that the average value of the remaini! ng consumers to advertisers has increased, offsetting most of the losses from consumers that opt out. Finally, we find that the ability to predict consumer behavior by the intermediary’s proprietary machine learning algorithm does not significantly worsen as a result of the changes induced by GDPR. Our results highlight the externalities that consumer privacy decisions have both on other consumers and for firms.

April 16, 2020 | Permalink | Comments (0)

Printeos v Commission: Importance Of Equal Treatment And Duty To State Reasons In The Calculation Of Fines On Mono-Product Undertakings

Nuno Calaim Lourenço describes Printeos v Commission: Importance Of Equal Treatment And Duty To State Reasons In The Calculation Of Fines On Mono-Product Undertakings.

ABSTRACT: The General Court (GC), dismissing an appeal from Printeos, held that the application of a non-linear methodology in calculating the amount of fines for different mono-product cartel participants does not, in principle, give rise to a breach of the right to equal treatment and that, by re-imposing a fine on Printeos, the Commission did not breach its right not to be tried twice for the same infringement (the ne bis in idem principle).

April 16, 2020 | Permalink | Comments (0)