Wednesday, December 14, 2022

Digital Privacy: GDPR and Its Lessons for Australia

Digital Privacy: GDPR and Its Lessons for Australia

Ratul Das Chaudhury

Monash University; Monash Business School

Chongwoo Choe

Monash University - Department of Economics

Abstract

Australia’s Privacy Act 1988 is under review with a view to bringing Australia’s privacy laws into the digital era, more in line with the European Union’s General Data Protection Regulation (GDPR). This article discusses how the GDPR can be refined and standardized to be more effective in protecting privacy in the digital era while not adversely affecting the digital economy that relies heavily on data. We argue that an ideal data policy should be informative and transparent about the potential privacy costs while giving consumers a menu of opt-in choices into which they can self-select themselves.

December 14, 2022 | Permalink | Comments (0)

Tuesday, December 13, 2022

Mergers and Acquisitions in the Tech Industry: Are They Different?

Mergers and Acquisitions in the Tech Industry: Are They Different?

 

 

Andrea Asoni

Charles River Associates

Grace Luo

Charles River Associates (CRA) - Competition Practice

Abstract

This Article will compare mergers and acquisitions in the technology industry in the U.S. to mergers and acquisitions in other sectors of the U.S. economy, as well as other countries. This Article will show that the U.S. technology industry is not disproportionately prone to consolidation relative to other important sectors of the U.S. economy. Furthermore, while technology mergers and acquisitions were historically more common in the U.S. than in the rest of the world, other countries are rapidly catching up to the U.S. Lastly, evidence in this Article suggests that the mergers and acquisition activity in the U.S. technology sector is not driven by the largest firms nor by a handful of prolific buyers.

December 13, 2022 | Permalink | Comments (0)

Monday, December 12, 2022

Overview of Privacy in Cases Relevant to Competition

Overview of Privacy in Cases Relevant to Competition

Christophe Carugati

Université Paris II - Panthéon-Assas; Bruegel

Abstract

Privacy in competition cases is becoming common due to the importance of data. The literature thus focuses on the role of data and privacy in antitrust and merger control laws. Yet, the literature does not offer an empirical overview of the cases to understand how countries investigate the issue. This paper fills the gap. From publicly available cases from the first cases in 2007 until September 2022 and online surveys sent to 91 competition authorities in January 2022 in the context of a database of antitrust cases related to privacy for the law journal Concurrences, it offers for the first time a comprehensive overview of the topic. The data collection focuses on competition cases and contains consumer protection and data protection cases relevant to competition. The paper found that several countries are investigating, or have investigated, privacy issues under the three legal regimes, mostly under antitrust laws in the digital sector. Several ongoing cases still pose unresolved questions, especially when competition and privacy conflicts. This requires a cooperation mechanism between competition and non-competition authorities to deal with cross-regulatory issues, in which authorities should deepen their knowledge of other legal regimes, and adapt and use the instruments of international cooperation between competition authorities.

December 12, 2022 | Permalink | Comments (0)

Friday, December 9, 2022

Law, Policy, Expertise: Hallmarks of Effective Judicial Review in EU Competition Law

Law, Policy, Expertise: Hallmarks of Effective Judicial Review in EU Competition Law

Pablo Ibáñez Colomo

London School of Economics - Law School

Abstract

This article discusses the techniques – ‘hallmarks’ – that the EU courts have developed to ensure that judicial review remains effective in EU competition law. These hallmarks can be grouped into three main categories. Some of them concern the interpretation of substantive law, namely the definition of legal tests and their consistent use over time. Some, the need for administrative action to rely on the best available evidence (which comprises both reliance on the expert consensus and the careful examination of the economic and legal context). A third category relates to the scrutiny exercised over the policy statements through which the European Commission chooses to constrain its discretion.

December 9, 2022 | Permalink | Comments (0)

Thursday, December 8, 2022

Upstream Mergers with Divestitures in Vertical Markets

Upstream Mergers with Divestitures in Vertical Markets

 

Yann Delaprez

European University Institute

Morgane Guignard

Institut Polytechnique de Paris

Abstract

This paper analyses a large upstream joint venture with divestiture in the French coffee market. Contrary to previous approaches used to study the effect of upstream divestiture on prices and economic welfare, we model the vertical market structure. First, we show that divestiture can lead to marginal cost savings for the buyer of the divested brand. Second, our results reveal that, accounting for upstream bargaining, the standard policy recommendation corresponding to request divestiture to small recipient firms might not hold.

December 8, 2022 | Permalink | Comments (0)

Antitrust Mergers and Regulatory Uncertainty

Antitrust Mergers and Regulatory Uncertainty

D. Daniel Sokol

USC Gould School of Law; USC Marshall School of Business

Marissa Ginn

Robert Calzaretta

Marcello Santana

Abstract

Estimating antitrust risk is fundamental to identifying, proposing, and pricing deals. A more informed understanding of what to expect when meeting with agency staff and leadership will help antitrust lawyers and economists (or other consultants) anticipate the critical questions and potential paths that should be addressed regarding antitrust merger risk. This article uses practitioner surveys to understand whether and how the change in the Biden administration’s antitrust agenda has affected merger review, investments, decision making, and counsel. The surveys also offer antitrust agencies an opportunity to think about the optimal design of the merger control system and various consequences of certain policy choices and institutional design changes. A quantitative online survey was conducted first, followed by qualitative discussions with practice group leadership across top antitrust law firms. Both studies were designed to identify whether respondents perceived any substantive shifts from prior administrations to the Biden administration, the impact of such shifts (if any) on merging parties, and any notable differences between the DOJ and FTC in enforcement and procedures. Our surveys indicate that practitioners have a more critical perception of the FTC and DOJ compared to prior administrations. Both agencies are perceived as less transparent and less fair in their interactions with merging parties. The enforcement process is seen as more demanding in terms of scope of data collected and is reported to take longer to complete. The agencies have also departed from precedent as they increasingly scrutinize labor issues and vertical deals.

December 8, 2022 | Permalink | Comments (0)

Wednesday, December 7, 2022

Oligopsony Power and Factor-Biased Technology Adoption

I show that buyer power of firms could either increase or decrease their technology adoption, depending on the direction of technical change and on which input markets are imperfectly competitive. I examine this relationship empirically in a setting that features both concentrated labor markets and a large technology shock: the introduction of mechanical cutters in the 19th century Illinois coal mining industry. Using a model of production and labor supply which is estimated with mine-level data, I find that oligopsony power over skilled miners reduced the usage of cutting machines, an unskill-biased technology. However, it would have increased the usage of counterfactual skill-biased and Hicks-neutral technologies.

December 7, 2022 | Permalink | Comments (0)

Tuesday, December 6, 2022

“The Meaning of Section 5 of the FTC Act” on Dec 8, 2022 09:00 AM Pacific Time/12:00 PM Eastern Time

USC Gould School of Law is hosting a very important program on “The Meaning of Section 5 of the FTC Act” on Dec 8, 2022 09:00 AM Pacific Time/12:00 PM Eastern Time. Panelists include Federal Trade Commission alums Daniel FrancisMika IkedaHeather JohnsonJessica Rich, and Willard Tom.

Register in advance for this panel:
https://lnkd.in/dZfe8mFb

December 6, 2022 | Permalink | Comments (0)

Swimming in Pools: Collusion in the Salmon Market

Swimming in Pools: Collusion in the Salmon Market

Danial Asmat

Spotify Economics - R&D

Margaret C. Levenstein

University of Michigan at Ann Arbor - Survey Research Center; The Stephen M. Ross School of Business at the University of Michigan, Business Economics and Public Policy

Valerie Y. Suslow

Johns Hopkins University - Carey Business School

Zhihan (Helen) Wang

University of Michigan, Stephen M. Ross School of Business

 

Abstract

We study the events alleged in recent Norwegian salmon industry antitrust cases to explore the relationship between vertical integration and collusion. In particular, we are interested in whether vertical integration can facilitate the strategic use of coordination devices such as public price indices. The salmon market provides an intriguing opportunity to study these issues, as there was a vertical merger followed by a reformulation of the methodology by which prices for forward and spot contracts were reported for a new price index. We explore possible non-strategic motivations for the merger (e.g., labor cost efficiencies) and whether the confluence of the merger and the creation of the Nasdaq price index is associated with evidence consistent with collusion.

December 6, 2022 | Permalink | Comments (0)

Monday, December 5, 2022

Does EU-Consumer Privacy Harm Financing of US-App-Startups? Within-US Evidence of Cross-EU-Effects

Does EU-Consumer Privacy Harm Financing of US-App-Startups? Within-US Evidence of Cross-EU-Effects

 

Tobias Kircher

TUM School of Management,Technical University of Munich

Jens Foerderer

Technical University of Munich, TUM School of Management

Date Written: December 12, 2021

Abstract

One essential concern regarding consumer privacy regulation is that it harms the business model of app startups, an integral group of B2C startups. Yet, little is known so far about consumer privacy’s consequences on app startups, mostly US-based. We seek to contribute with an empirical study that assesses the consequences of GDPR on two key outcomes of app startups, namely their ability to secure venture capital financing and their survival. We report the results of a difference-in-differences study, comparing affected US-app-startups with unaffected US-control-startups. We observe that GDPR reduced the financing of US-app-startups and increased the likelihood of their closure. Our results advance our understanding of consumer privacy’s impact on the performance of digital consumer products producers, shed light on privacy’s economic costs to previously neglected US-based firms and draw attention to GDPR’s geographic spillovers. Our findings inform policymakers striking a balance between consumer privacy and innovation.

December 5, 2022 | Permalink | Comments (0)

Friday, December 2, 2022

Product Markets, Competition and Corporate Finance: A Review and Directions for Future Research

Product Markets, Competition and Corporate Finance: A Review and Directions for Future Research

Laurent Frésard

Universita della Svizzera italiana (USI Lugano); Swiss Finance Institute

Gordon M. Phillips

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER)

Abstract

We review the literature that examines how product markets and competition interact with corporate finance, and provide some ideas for future research. The main takeaway from more than forty years of research is that product market considerations have first-order effects on our understanding of firms’ decisions. The nature and intensity of firms' interactions in the product market influence their ability to obtain financing, impacts their investment, acquisition, and innovation decisions, as well as affects their organizational and governance structure. Firms’ decisions are not only influenced by their product market environment, but their decisions also directly shape the structure of product markets and the resulting competition. The academic literature in this area is now mature, rich, and complex. It spans multiple areas in finance and economics, builds upon various fundamental economic forces, studies a large array of corporate decisions, and highlights that conclusions are often nuanced and depend heavily on the type and extent of competition. We also discuss practical issues related to the measurement of markets and competition that are relevant for future researchers, as well as recent changes in the nature of competition and markets' boundaries. Overall, the literature delivers many important lessons to better understand the determinants and consequences of firms’ decisions.

December 2, 2022 | Permalink | Comments (0)

Thursday, December 1, 2022

Horizontal Mergers between Asymmetric Cournot Oligopolists

Horizontal Mergers between Asymmetric Cournot Oligopolists

Xiao Fu

Fudan University - School of Management

Ping Lin

Shandong University

Juan Lu

Guangdong University of Finance

Abstract

We analyze the profitability of horizontal mergers in Cournot markets, where firms are divided into two groups based on the extent to which their products are differentiated. We show that both within-group and cross-group mergers are more likely to occur when either products are more distant substitutes or the number of merger outsiders decreases. Moreover, the relative size of each group is a crucial factor that determines which type of merger is more profitable than the other. Therefore, our findings highlight the importance of taking outsiders’ free riding into account when assessing the profitability of mergers.

December 1, 2022 | Permalink | Comments (0)

Wednesday, November 30, 2022

Competition, Quality and Integrated Health Care

Competition, Quality and Integrated Health Care

Kurt Richard Brekke

Norwegian School of Economics (NHH) - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Luigi Siciliani

University of York - Department of Economics and Related Studies

Odd Rune Straume

CESifo (Center for Economic Studies and Ifo Institute); University of Minho - Economic Policies Research Unit (NIPE)

Abstract

Integration of health care services has been promoted in several countries to improve the quality and coordination of care. We investigate the effects of such integration in a model where providers compete on quality to attract patients under regulated prices. We identify circumstances under which integration either increases or reduces the quality of services provided. In the absence of synergies related to costs or benefits, integration generally leads to increases in quality for some services and reductions for others. The corresponding effect on health benefits depends largely on whether integration leads to quality dispersion or convergence across services.

November 30, 2022 | Permalink | Comments (0)

Tuesday, November 29, 2022

Algorithmic Assortment Curation: An Empirical Study of Buybox in Online Marketplaces

Algorithmic Assortment Curation: An Empirical Study of Buybox in Online Marketplaces

Santiago Gallino

University of Pennsylvania - Operations, Information and Decisions Department

Nil Karacaoglu

Fisher College of Business, The Ohio State University

Antonio Moreno

Harvard University - Technology & Operations Management Unit

Abstract

Most online sales worldwide take place in marketplaces that connect sellers and buyers. The presence of numerous third-party sellers leads to a proliferation of listings for each product, making it difficult for customers to choose between the available options. Online marketplaces adopt algorithmic tools to curate how the different listings for a product are presented to customers. This paper focuses on one such tool, the Buybox, that algorithmically chooses one option to be presented prominently to customers as a default option. We leveraged the staggered introduction of the Buybox within a prominent product category in a leading online marketplace to study how the Buybox impacts marketplace dynamics. Our findings indicate that adopting Buybox results in a substantial increase in marketplace orders and visits. Implementing Buybox reduces the frictions customers and sellers face. On the customer side, we find a reduction of search frictions, evidenced by an increase in conversion rates and a higher impact of Buybox on the mobile channel, which has significantly higher search frictions than desktop channel. On the seller side, the number of sellers offering a product increases following the implementation of Buybox. Customers benefit from lower prices and higher average quality levels when competition in Buyboxes is high. After the introduction of the Buybox, the marketplace also becomes more concentrated. Our paper contributes to the burgeoning literature on the role of algorithms in platforms by examining how algorithmic curation impacts the participants of the marketplace as well as the marketplace dynamics.

November 29, 2022 | Permalink | Comments (0)

Monday, November 28, 2022

The Double Helix of Rule of Law And EU Competition Law: An Appraisal

The Double Helix of Rule of Law And EU Competition Law: An Appraisal

 

Maciej Bernatt

University of Warsaw, Faculty of Management

Abstract

By discussing the experiences of two EU Member States: Hungary and Poland, the article aims to demonstrate that there are three layers of rule of law which are relevant for EU competition law. The first one is external: it relates to the legal system of EU Member States which competition law is part of. In national legal systems, rule of law safeguards need to be put in place in order to provide an adequate legal environment for the competition law system to perform its role. The second one is internal: it concerns rule of law safeguards in relation to the Member States’ competition authorities, in particular their independence. The third one is consequential: the weakening of the rule law within the external and internal layers affects the proper functioning of the competition law system. The effective functioning of a decentralised system of EU competition law enforcement is also becoming an issue. As a result, the effectiveness of Articles 101-102 TFEU is endangered and a vicious circle of mutually reinforcing competition law and rule of law crises unfolds. The article speaks to the recent developments in the EU case-law, i.e. the General Court’s judgment of 9 February 2022 in Sped-Pro case (T 791/19) and creeping mutual distrust within the European Union.

November 28, 2022 | Permalink | Comments (0)

Friday, November 25, 2022

Quantifying Spatial and Non-Spatial Differentiation in Omnichannel Grocery

Quantifying Spatial and Non-Spatial Differentiation in Omnichannel Grocery

Jia Li

Wake Forest University

Charles C. Moul

Miami University of Ohio - Department of Economics

Abstract

Differentiation is arguably the most important business strategy, but optimal investment in differentiation requires understanding the magnitudes of its implications. We consider the extent and dimensions of differentiation in omnichannel grocery by examining the impacts of entry events on grocery sales. Specifically, employing data obtained from multiple companies covering all Carolina grocery markets for two years, we empirically quantify the maximum distances that consumers are willing to travel to a grocery store for in-store shopping and curbside pickup, and the extent of non-spatial differentiation between grocery chains and across the two channels. We utilize a recently suggested set of instrumental variables to address the possible concern of endogenous entry. Our empirical results reveal that some consumers are willing to travel four times farther for curbside pickup than for in-store groceries. Non-spatial differentiation is important in both the in-store shopping and the curbside pickup channel, but there is suggestive evidence that curbside pickup exhibits greater differentiation against rival-chains than the in-store shopping experience. These findings can have a direct managerial application in retailers’ geotargeting marketing communications program planning, and retailers’ future business establishment development.

November 25, 2022 | Permalink | Comments (0)

Thursday, November 24, 2022

Does Consumer Demand 'Pull' Scientifically Novel Drug Innovation

Does Consumer Demand 'Pull' Scientifically Novel Drug Innovation

 

David Dranove

Northwestern University - Kellogg School of Management

Craig Garthwaite

Northwestern University; National Bureau of Economic Research (NBER)

Manuel Hermosilla

Johns Hopkins University - Carey Business School

Abstract

Prior literature shows that stronger consumer demand leads to increased pharmaceutical R&D. However, how strong these “demand-pull” effects are for more scientifically novel drug innovation remains unknown. We address this question using comprehensive clinical trial data that include precise characterizations of the scientific approaches used in tested molecules. We characterize scientific novelty as the number of times each approach has been used in the past. Exploiting exogenous demand variation introduced by the introduction of Medicare Part D, we find strong evidence that demand-pull effects are markedly skewed in favor of non-novel or “follow-on” drug R&D.

November 24, 2022 | Permalink | Comments (0)

Wednesday, November 23, 2022

A Commentary on Presenting Efficiencies in a Horizontal Merger Review

A Commentary on Presenting Efficiencies in a Horizontal Merger Review

Malcolm B. Coate

Independent

Arthur DelBuono

Government of the United States of America - Federal Trade Commission

Abstract

The rise of unilateral effects analysis has significantly increased the importance of presenting a comprehensive review of the efficiencies relevant to a potentially problematic merger. Although numerous articles address efficiencies from a theoretical point of view, few practical commentaries exist. This paper provides an extensive discussion intended to aid firms in their efficiency presentations. A range of options for addressing the cognizability of efficiencies (focused on validity, verification, and merger specificity) and the balancing of anticompetitive effects with efficiencies are considered. Although the merging parties might not be able to fully evaluate every issue noted in this overview, a good faith effort to provide a comprehensive analysis should enhance the consideration given to their claims by the enforcement agency.

November 23, 2022 | Permalink | Comments (0)

Tuesday, November 22, 2022

How Does Vertical Integration Affect Incentives to Innovate?

How Does Vertical Integration Affect Incentives to Innovate?

Gaoyang Cai

Northwestern University, Kellogg School of Management

Daniel F. Spulber

Northwestern University - Kellogg School of Management

Abstract

We introduce a model of product innovation to examine how vertical mergers affect incentives to innovate. Incentives to innovate are the same for a vertically integrated platform that innovates in house and a product market gatekeeper that organizes an innovation tournament. A vertically integrated platform, however, has lower incentives to innovate than independent innovators. Competition between two vertically integrated platforms generates more innovation than a vertically integrated platform and less innovation than competing independent innovators. A monopoly upstream innovator with competing downstream sellers has lower incentives to innovate than a vertically integrated platform.

November 22, 2022 | Permalink | Comments (0)

Monday, November 21, 2022

Dynamic Price Competition: Theory and Evidence from Airline Markets

Dynamic Price Competition: Theory and Evidence from Airline Markets

By:

Ali Hortaçsu; Aniko Oery; Kevin R. Williams

Abstract:

We introduce a model of oligopoly dynamic pricing where firms with limited capacity face a sales deadline. We establish conditions under which the equilibrium is unique and converges to a system of differential equations. Using unique and comprehensive pricing and bookings data for competing U.S. airlines, we estimate our model and find that dynamic pricing results in higher output but lower welfare than under uniform pricing. Our theoretical and empirical findings run counter to standard results in single-firm settings due to the strategic role of competitor scarcity. Pricing heuristics commonly used by airlines increase welfare relative to estimated equilibrium predictions.

JEL:

C70 C73 D21 D22 D43 D60 L13 L93

Date:

2022–08

URL:

http://d.repec.org/n?u=RePEc:nbr:nberwo:30347&r=

November 21, 2022 | Permalink | Comments (0)