Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Monday, September 19, 2016

On Prices' Cyclical Behaviour in Oligopolistic Markets

Luca Lambertini (Department of Economics, University of Bologna, Italy; The Rimini Centre for Economic Analysis, Italy) and Luigi Marattin (Department of Economics, University of Bologna, Italy) provide thoughts On Prices' Cyclical Behaviour in Oligopolistic Markets.

ABSTRACT: We revisit the discussion about the relationship between price's cyclical features, implicit collusion and the demand level in an oligopoly supergame where a positive shock may hit demand and disrupt collusion. The novel feature of our model consists in characterising the post-shock noncooperative price and comparing it against the cartel price played in the last period of the collusive path, to single out the conditions for procyclicality to arise both in the short and in the long-run.

September 19, 2016 | Permalink | Comments (0)

Quantity Competition under Resale Price Maintenance when Most Favored Customers are Strategic

Yossi Aviv and Andrei Bazhanov and Yuri Levin and Mikhail Nediak conceptualize Quantity Competition under Resale Price Maintenance when Most Favored Customers are Strategic.

ABSTRACT: Legal studies usually treat a policy of a manufacturer or retailer as socially harmful if it reduces product output and increases the price. We consider a two-period model where the first-period price is fixed by resale price maintenance (RPM) and resellers endogenously decide to use another "collusion suspect," meet-the-competition clause with a most-favored-customer clause (MFC), to counteract strategic customer behavior. As a result of MFC, second-period (reduced) price increases, and resellers' inventories decrease. However, customer surplus may increase and aggregate welfare increases in the majority of market situations. MFC can not only decrease the losses in welfare and resellers' profits due to strategic customers but, under reseller competition, may even lead to higher levels of these values than with myopic customers, i.e., to gains from increased strategic behavior. MFC may create "MFC-traps" for resellers, where one of possible market outcome! s yields a gain from increased strategic behavior while another results in a reseller profit less than the worst profit in any stable outcome without MFC. With growing competition, benefits or losses from MFC can be higher than losses from strategic customer behavior.

September 19, 2016 | Permalink | Comments (0)

Friday, September 16, 2016

How Firms Navigate Cooperation and Competition in Nascent Ecosystems

Douglas Hannah, University of Texas at Austin - Red McCombs School of Business and Kathleen M. Eisenhardt, Stanford University - Management Science & Engineering discuss How Firms Navigate Cooperation and Competition in Nascent Ecosystems.

ABSTRACT: Competition and cooperation are fundamental to strategy, and often closely intertwined. But how firms successfully navigate both competition and cooperation over time, particularly in dynamic industries, is not clear. Via an in-depth multiple-case study of five firms in the US residential solar industry, we induct a theoretical framework to explain how firms successfully navigate nascent ecosystems over time. We identify three distinct strategies, each of which distinctively balances cooperation and competition, and each of which carries its own unique advantages and disadvantages. In doing so, we contribute insights into research on bottlenecks, kingpins, and the origins of strategy. Overall, we offer insight into the interplay between cooperation and competition, and crystallize the pivotal role of bottlenecks.

September 16, 2016 | Permalink | Comments (0)

Antitrust Chronicle September 2016

Antitrust Chronicle – Patents and Standard Settings
Antitrust Chronicle – Patents and Standard Settings

Antitrust Chronicle – Patents and Standard Settings

This month, the Antitrust Chronicle brings you an interesting and complex issue at the crossroads of antitrust and intellectual property rights, the analysis of standard settings. Fair, Reasonable and Non-Discriminatory… the infamous ‘FRAND.’ We see this term time and time again in antitrust policy. None more so than when linked to the issue of standard […]…


September 16, 2016 | Permalink | Comments (0)

Happy Mid-Autumn Festival

I want to wish all of my friends in East Asia a Happy Mid-Autumn Festival.


I thought that Neil Young's Harvest Moon might be an appropriate song to honor the festival.



September 16, 2016 | Permalink | Comments (0)

Mergers and Innovation: Evidence from a Panel of U.S. Firms

Mahdiyeh Entezarkheir, University of Western Ontario - Huron University College and Saeed Moshiri, Allameh Tabatabaei University - Economics; Saint Thomas More College University of Saskatcehwan view Mergers and Innovation: Evidence from a Panel of U.S. Firms.

ABSTRACT: The impact of post-merger changes in market structure on innovation is a concern for anti-trust policies. Combining four different data sets, we construct a panel data set of mergers among publicly traded U.S. manufacturing firms from 1980 to 2003 and investigate merger impacts on innovation, controlling for endogeneity and factors such as market share, size, industry, and time. Our proxy for innovation is based on the citation-weighted patent stocks, which includes information on not only the merged entities in the post-merger period similar to previous studies, but also both target and acquiring firms in the pre-merger period and the merging year. We find that mergers are positively and significantly correlated with firms' innovation, and firms with large market share experience a greater boost in innovation from mergers. Merger effects on innovation are larger in the long run and heterogeneous across industries. Our findings are robust to alternative measures of innovation.

September 16, 2016 | Permalink | Comments (0)

The Empirical Economics of Online Attention

Andre Boik, Shane Greenstein, and Jeffrey Prince examine The Empirical Economics of Online Attention.

ABSTRACT: In several markets, firms compete not for consumer expenditure but instead for consumer attention. We model and characterize how households allocate their scarce attention in arguably the largest market for attention: the Internet. Our characterization of household attention allocation operates along three dimensions: how much attention is allocated, where that attention is allocated, and how that attention is allocated. Using click-stream data for thousands of U.S. households, we assess if and how attention allocation on each dimension changed between 2008 and 2013, a time of large increases in online offerings. We identify vast and expected changes in where households allocate their attention (away from chat and news towards video and social media), and yet we simultaneously identify remarkable stability in how much attention is allocated and how it is allocated. Specifically, we identify (i) persistence in the elasticity of attention according to income and (ii) complete stability in the dispersion of attention across sites and in the intensity of attention within sites. We illustrate how this finding is difficult to reconcile with standard models of optimal attention allocation and suggest alternatives that may be more suitable. We conclude that increasingly valuable offerings change where households go online, but not their general online attention patterns. This conclusion has important implications for competition and welfare in other markets for attention. 

September 16, 2016 | Permalink | Comments (0)

Thursday, September 15, 2016

IEEE IP Policy Update Under the Scrutiny of the EC Guidelines on Horizontal Cooperation

Olia Kanevskaia, Tilburg Law and Economics Center (TILEC) and Nicolo Zingales, Tilburg Law and Economics Center (TILEC); Tilburg University - Tilburg Institute for Law, Technology, and Society (TILT) offer IEEE IP Policy Update Under the Scrutiny of the EC Guidelines on Horizontal Cooperation.

ABSTRACT: In 2015, the Institute of Electrical and Electronics Engineers’ Standardization Association (IEEE-SA) made some controversial changes to its patent policy. The changes include in particular a prescribed method of calculation of FRAND royalty rates, and a request to members holding a standard essential patent (SEP) to forego their right to seek an injunction except under limited circumstances. The amended patent policy was adopted by the IEEE Board following favorable business review letter by the US Department of Justice, which found any potential competitive harm from the policy to be outweighed by potential pro-competitive benefits.

In this paper, we examine whether these changes might impact the regime of “safe harbor” set up for standardization agreements under EU competition law, in particular the guidelines provided by the European Commission. Given the importance placed by the guidelines on procedural safeguards to prevent SSO activities from resulting in anti-competitive cooperation, we contrast the ad hoc process leading to this policy change with the procedures in place for regular standard-setting activity.

September 15, 2016 | Permalink | Comments (0)

No Shortage of Theories: The Role of Capacity in Antitrust Analysis

Seth B. Sacher, Federal Trade Commission and Jeremy Sandford, Federal Trade Commission offer No Shortage of Theories: The Role of Capacity in Antitrust Analysis.

ABSTRACT: Issues of productive capacity can play a role in nearly every aspect of competition analysis. This paper provides an overview of the economic literature on capacity and the role that capacity has played in actual antitrust and competition law enforcement. The goal is to aid practitioners in matters where capacity issues potentially play a significant role. For the most part, the theoretical role of capacity in various aspects of competition analysis is ambiguous and the empirical literature is similarly inconclusive. Moreover, in many situations, measuring excess capacity may be quite difficult. Given the theoretical and empirical ambiguity regarding the role of excess capacity, or the lack thereof, the overall theme of our analysis is that practitioners should not presume any particular impact in the absence of strong case-specific evidence regarding capacity’s effects.



September 15, 2016 | Permalink | Comments (0)

Conference “Impact Assessment of Interventions of Competition and Consumer Authorities” November 16, 2016

ACM Conference

Aerial view of NEMO science museum

The Netherlands Authority for Consumers & Markets (ACM) is organising a conference on “Impact Assessment of Interventions of Competition and Consumer Authorities”, to pay tribute to the ten-year anniversary of the ACM’s (former NMa’s) Chief Economist Office. The conference will take place on November 16 at NEMO Science Museum in the centre of Amsterdam.

Over the last few years, impact assessment has received a lot of attention from government and market authorities. ACM has also invested in estimating the effectiveness of its interventions. Due to impact assessment, market authorities can learn and improve upon their future interventions. Moreover, they can publicly justify their work, since the effectiveness of their actions are made insightful: economic effects for consumers as well as behavioural changes by producers and suppliers. During the conference we assess various methodologies used in impact assessment, and the lessons learned in impact assessments carried out by various competition and consumer authorities.

Registration form

Register for the conference 

Impact assessment logo conference


September 15, 2016 | Permalink | Comments (0)

Antitrust liability for licensing boards after North Carolina Dental: antitrust preemption as a penalty default?

James Cooper, George Mason asks Antitrust liability for licensing boards after North Carolina Dental: antitrust preemption as a penalty default?

ABSTRACT: Most professions in the USA are regulated by boards composed of industry practitioners, who in their official roles routinely engage in anticompetitive conduct. Until the Supreme Court’s landmark decision in North Carolina State Board of Dental Examiners v FTC, many believed that such conduct was beyond the reach of antitrust enforcement as long as it was taken pursuant to state policy to displace competition—a standard met with relative ease. After North Carolina Dental, states now must additionally take ownership of the anticompetitive actions of these boards to avoid the full force of the antitrust laws. In this manner, North Carolina Dental has the potential to prompt a large-scale restructuring of the state regulatory apparatus. This article explores the potential for antitrust preemption to play a role in this restructuring. I argue that, to the extent that unsupervised boards’ anticompetitive conduct would be justified only by non-competition concerns, they are rendered defenceless in any rule of reason inquiry. As such, the conduct at issue is subject to a de facto per se standard, potentially subjecting the law authorizing such conduct to antitrust preemption. Rather than adjusting the rule of reason inquiry to allow courts to weigh non-competition concerns in these cases, the better alternative would be to preempt the laws altogether. This approach has several advantages. First, it would avoid a dissonance between antitrust and due process inquiries into the same conduct. Secondly, it would act as a penalty default for states, and like penalty defaults in contracts, such a rule would assign the regulatory decision to the low-cost information provider—the state, rather than the court. Finally, this approach vindicates federalism to a greater extent than a modified rule of reason. The only role for a federal court under a preemption approach would be to uphold or strike down the law granting the board authority to engage in the suspect conduct. This decision, moreover, would be based on an objective analysis of the board’s regulatory structure, rather than a subjective weighing of competition and non-competition concerns.

September 15, 2016 | Permalink | Comments (0)

Complementary Monopolies and Bargaining

Dan Spulber, Northwestern has a paper that (surprisingly) is against antitrust forbearance, at least in the area of conglomerate and vertical mergers where the justification is the Cournot effect regarding complementarities in his paper Complementary Monopolies and Bargaining.

ABSTRACT: How should complementarities affect antitrust merger policy? I introduce a two-stage strategic model in which complementary input sellers o¤er supply schedules to producers and then engage in bilateral bargaining with producers. The main result is that there is a unique weakly dominant strategy equilibrium and the equilibrium attains the joint profit maximizing outcome. Output equals that of a bundling monopoly and total input prices are lower than prices with a bundling monopoly. The result holds with perfect competition in the downstream market. The result also holds with oligopoly competition in the downstream market. This implies that the Cournot Effect does not hold when companies negotiate supply contracts rather than using posted prices. The analysis has implications for antitrust policy towards vertical, conglomerate, and horizontal mergers.



September 15, 2016 | Permalink | Comments (0)

Wednesday, September 14, 2016

Prices and Competition. Evidence from a Social Program

Emilio Aguirre (Ministerio de Desarrollo Social (Uruguay)) ; Pablo Blanchard (Ministerio de Desarrollo Social (Uruguay)) ; Fernando Borraz (Banco Central del Uruguay) ; and Joaquin Saldain (Banco Central del Uruguay) offer Prices and Competition. Evidence from a Social Program.

ABSTRACT: We use a micro-price dataset to analyze the impact on prices of a social program in Uruguay that allow the beneficiaries to purchase food, beverages and cleaning items exclusively in certain small retailers. We find that the beneficiaries pay significantly higher prices in relation to prices in other retailers. We find this result for the whole country with the exception of areas with the highest retailer density in the capital city, Montevideo.

September 14, 2016 | Permalink | Comments (0)

EU Competition Law An Analytical Guide to the Leading Cases - 5th edition

EU Competition Law An Analytical Guide to the Leading Cases - 5th edition

EU Competition Law

An Analytical Guide to the Leading Cases

By: Ariel Ezrachi
Media of EU Competition Law
Published: 08-09-2016
Format: Paperback
Edition: 5th
Extent: 768
ISBN: 9781509909834
Imprint: Hart Publishing
Dimensions: 246 x 189 mm
RRP: £40.00
  • See more at:

About EU Competition Law This book is designed as a working tool for the study and practice of European competition law. It is an enlarged and updated fifth edition of the highly practical guide to the leading cases of European competition law.This fifth edition focuses on Article 101 TFEU, Article 102 TFEU and the European Merger Regulation. In addition it explores the public and private enforcement of competition law, the intersection between intellectual property rights and competition law, the application of competition law to state action and state aid laws.Each chapter begins with an introduction which outlines the relevant laws, regulations and guidelines for each of the topics, setting the analytical foundations for the case entries. Within this framework, cases are reviewed in summary form, accompanied by analysis and commentary.Praise for the book'This book should be in the library of every competition law practitioner and academic. The summary of cases is first class. But what makes it really stand out is the quality of the commentary and the selection of the material which includes not only the most important European judgements and decisions but also some of the leading cases from the US and European Member States.'Ali Nikpay, Gibson, Dunn & Crutcher LLP'The study of EU Competition law requires the analysis and understanding of a number of increasingly complex European Commission and European Court decisions. Through the provision of case summaries, excerpts from the important passages and concise commentary linking these decisions to other key case law and Commission documents, this unique and impressive book, now in its fifth edition, provides the student and practitioner of EU competition law with an extremely clear and useful introduction to these leading decisions.'Dr Kathryn McMahon, Associate Professor, School of Law, University of Warwick - See more at:

September 14, 2016 | Permalink | Comments (0)

Pricing Patterns over Product Life-Cycle and Quality Growth at Product Turnover: Empirical Evidence from Japan

Nobuhiro Abe (Bank of Japan) ; Yojiro Ito (Bank of Japan) ; Ko Munakata (Bank of Japan) ; Shinsuke Ohyama (Bank of Japan) ; and Kimiaki Shinozaki (Bank of Japan) explore Pricing Patterns over Product Life-Cycle and Quality Growth at Product Turnover: Empirical Evidence from Japan.

ABSTRACT: This paper examines pricing patterns over the product life-cycle and quality growth at the time of product turnover regarding a wide range of durable consumer goods sold in Japan. Applying hedonic regressions with time dummies to large granular data sets obtained from, the most popular price comparison website in Japan, we find out that sellers tend to raise product prices more than those justified by quality improvements to ensure the profitability at product turnover. A glance at the pricing patterns reveals that the prices of new products decrease gradually with the elapse of time, however, the pace of falling in prices varies considerably among commodities. The quality improvement ratio, which measures the contribution of quality growth to the price difference between matched pair of a new product and an old one by commodities, exhibits a unimodal distribution slightly fat-tailed to the right. The mode value of the distribution is about 0.5! -0.6 for home electrical appliances and about 0.6-0.7 for digital consumer electronics. Those results provide an empirical support to the existing quality adjustment method in the field of the price index, so-called 50% rule, which has been implemented by some statistical agencies. Our findings bring significant implications for improving quality adjustment methods under uncertainty of quality evaluation and lead to the better understanding of the firms' price setting behavior.

September 14, 2016 | Permalink | Comments (0)

New Firms and Post-Entry Performance: The Role of Innovation

Colombelli, Alessandra ; Krafft, Jackie ; Vivarelli, Marco (University of Turin) study New Firms and Post-Entry Performance: The Role of Innovation.

ABSTRACT: This paper investigates the reasons why entry per se is not necessarily good and the evidence showing that innovative startups survive longer than their non-innovative counterparts. In this framework, our own empirical analysis shows that greater survival is achieved when startups engage successfully in both product innovation and process innovation, with a key role of the latter. Moreover, this study goes beyond a purely microeconomic perspective and discusses the key role of the environment within which innovative entries occur. What shown and discussed in this contribution strongly supports the proposal that the creation and survival of innovative start-ups should become one qualifying point of the economic policy agenda.

September 14, 2016 | Permalink | Comments (0)

Regulation versus Regulated Monopolization of a Cournot Oligopoly with Unknown Costs

Ismail Saglam theorizes about Regulation versus Regulated Monopolization of a Cournot Oligopoly with Unknown Costs.

ABSTRACT: This paper studies whether a Cournot oligopoly with unknown costs should be left unregulated, or regulated according to the optimal mechanism of Gradstein (1995), or first monopolized and then regulated according to the optimal mechanism of Baron and Myerson (1982). We show that the answer to this question depends on the number of the oligopolistic firms and the size of their fixed costs, as well as on the weight of the producer welfare in the social objective function.

September 14, 2016 | Permalink | Comments (0)

Tuesday, September 13, 2016

Entry under an information-gathering monopoly

Alex Barrachina (Department of Economics, Universitat Jaume I, Castellón, Spain) has written on Entry under an information-gathering monopoly.

ABSTRACT: The effects of information-gathering activities on a basic entry model with asymmetric information are analyzed. In the basic entry game, an incumbent monopoly faces potential entry by one firm without knowing with certainty whether this potential entrant is weak or strong. If the entrant decides to enter, the monopoly must compete with him and decide whether to accommodate or to fight. To include information-gathering activities, it is considered that the monopoly has access to an Intelligence System (IS) of a certain precision (exogenous and common knowledge) that generates a noisy signal about the entrant's type. When the monopoly believes that the entrant is weak, the probability of market entry increases only for the relatively inaccurate precision of the IS and decreases for relatively accurate precision. If the monopoly is not sure about the entrant’s level of strength or considers him to be strong, the information-gathering activities either have no effect on market entry or decrease the probability of entry. Not only do these results suggest that to inform the entrant credibly about information-gathering activities can be considered as a monopoly’s entry deterrence strategy, but they also provide give an idea about when to allow or not allow monopoly’s information-gathering activities.

September 13, 2016 | Permalink | Comments (0)

Vertical Integration and Downstream Collusion

Sara Biancini, University of Cergy-Pontoise - THEMA and David Ettinger, CNRS, National Center for Scientific Research, France - CERAS examine Vertical Integration and Downstream Collusion.

ABSTRACT:  We investigate the effect of a vertical merger on downstream firms’ ability to collude in a repeated game framework. We show that a vertical merger has two main effects. On the one hand, it increases the total collusive profits, increasing the stakes of collusion. On the other hand, it creates an asymmetry between the integrated firm and the unintegrated competitors. The integrated firm, accessing the input at marginal cost, faces higher profits in the deviation phase and in the non cooperative equilibrium, which potentially harms collusion. As we show, the optimal collusive profit-sharing agreement takes care of the increased incentive to deviate of the integrated firm, while optimal punishment erases the difficulty related to the asymmetries in the non cooperative state. As a result, vertical integration generally favors collusion.

September 13, 2016 | Permalink | Comments (0)

Comment of the Global Antitrust Institute, George Mason University School of Law, on the Proposed Revisions to the Guidelines of the Anti-Monopoly Commission of the State Council on Determining the Illegal Gains Generated from Monopoly Conduct and on Sett

Bruce H. Kobayashi, George Mason University - School of Law, Koren W. Wong-Ervin, George Mason University School of Law - Global Antitrust Institute, Joshua D. Wright, Antonin Scalia Law School, George Mason University, and Douglas H. Ginsburg, U.S. Court of Appeals for the District of Columbia Circuit; Antonin Scalia Law School, George Mason University offer Comment of the Global Antitrust Institute, George Mason University School of Law, on the Proposed Revisions to the Guidelines of the Anti-Monopoly Commission of the State Council on Determining the Illegal Gains Generated from Monopoly Conduct and on Setting Fines.

Abstract: We respectfully recommend that the Draft Guidelines be revised to limit the application of disgorgement (or the confiscating of illegal gain) and punitive fines to matters in which: (1) the antitrust violation is clear (i.e., if measured at the time the conduct is undertaken, and based on existing laws, rules, and regulations, a reasonable party should expect that the conduct at issue would likely be found to be illegal) and without any plausible efficiency justifications; (2) it is feasible to articulate and calculate the harm caused by the violation; (3) the measure of harm calculated is the basis for any fines or penalties imposed; and (4) there are no alternative remedies that would adequately deter future violations of the law.  In the alternative, and at the very least, we strongly urge the NDRC to expand the circumstances under which the Anti-Monopoly Enforcement Agencies (AMEAs) will not seek punitive sanctions such as disgorgement or fines to include two conduct categories that are widely recognized as having efficiency justifications: unilateral conduct such as refusals to deal and discriminatory dealing and vertical restraints such as exclusive dealing, tying and bundling, and resale price maintenance.

We also urge the NDRC to clarify how the total penalty, including disgorgement and fines, relate to the specific harm at issue and the theoretical optimal penalty.  As explained below, the economic analysis determines the total optimal penalties, which includes any disgorgement and fines.  When fines are calculated consistent with the optimal penalty framework, disgorgement should be a component of the total fine as opposed to an additional penalty on top of an optimal fine.  If disgorgement is an additional penalty, then any fines should be reduced relative to the optimal penalty.

Lastly, we respectfully recommend that the AMEAs rely on economic analysis to determine the harm caused by any violation.  When using proxies for the harm caused by the violation, such as using the illegal gains from the violations as the basis for fines or disgorgement, such calculations should be limited to those costs and revenues that are directly attributable to a clear violation.  This should be done in order to ensure that the resulting fines or disgorgement track the harms caused by the violation.  To that end, we recommend that the Draft Guidelines explicitly state that the AMEAs will use economic analysis to determine the but-for world, and will rely wherever possible on relevant market data.  When the calculation of illegal gain is unclear due to a lack of relevant information, we strongly recommend that the AMEAs refrain from seeking disgorgement.   

September 13, 2016 | Permalink | Comments (0)