Recent Developments in Antitrust: Theory and Evidence (CESifo Seminar Series) PDF
Preview Recent Developments in Antitrust: Theory and Evidence (CESifo Seminar Series)
R R d Jay Pil Choi is Professor of Economics at Michigan State economics R d University and a CESifo Research Network Fellow. A A Contributors A Mark Armstrong, Francesca Barigozzi, Randy Brenkers, Duarte Brito, Jay Pil Choi, David Theory and Evidence CESifo Seminar Series S. Evans, Vivek Ghosal, Jos Jansen, Franco Mariuzzo, Martin Peitz, Pedro Pereira, Michael Salinger, Frank Verboven, Michael Waldman, Patrick Paul Walsh, Ciara Whelan edited by Jay Pil Choi d Theor y and Evidence Antitrust policy in the United States and Europe relies Of related interest increasingly on economic analysis. Economic theory and empirical analysis play a central role in antitrust decisions TAX POLICY AND LABOR MARKET PERFORMANCE in the courts and in the formulation and enforcement of edited by Jonas Agell and Peter Birch Sørensen High unemployment in many European OECD countries has been attributed to factors policy. Antitrust cases are argued using sophisticated economic thinking; both plaintiffs and defendants in U.S. ranging from rigid wages and low job mobility to an interaction of high taxes and generous v. Microsoft,for example, made extensive use of game social benefits that may discourage labor force participation and encourage the growth of theory, the economics of information, and transaction cost an underground economy. This CESifo volume analyzes the effect of tax policy and, more economics in their arguments. In this CESifo volume, generally, welfare state incentives on the performance of the labor market. specialists from the United States and the European Union examine conceptual and empirical issues involved in PRIVATIZATION EXPERIENCES IN THE EUROPEAN UNION antitrust policy in light of recent developments in the field. edited by Marko Köthenbürger, Hans-Werner Sinn, and John Whalley The first three chapters address theoretical issues that Privatization is broadly supported by most academic economists, but the results of actual privatization efforts seem mixed. In this CESifo volume, international experts examine the C have been important in recent antitrust actions: durable h goods markets, two-sided markets and platform experiences of ten European Union countries, evaluating the real outcomes of privatization o competition, and tying arrangements. Contributors then policies in Austria, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, i , take up empirical concerns, discussing such topics as Spain, and the United Kingdom. e bundling and tying as seen in the market for cold and d i pain-relief medicine; the political aspects of merger t o control; and market definition and differentiated products r in the car and soft drink markets. Contributors also address antitrust and regulatory issues in markets with imperfect information, examining comparative advertising and incentives for information disclosure. The final chapter treats the ownership structure of cable television networks and its effect on competition in the local access market. The importance of economic analysis in antitrust The MIT Press policy makes this overview of recent theoretical and Massachusetts Institute of Technology empirical developments essential reading for academics Cambridge, Massachusetts 02142 and policymakers. edited by Jay Pil Choi http://mitpress.mit.edu 0-262-03356-9 978-0-262-03356-5 Seminar Series Recent Developments in Antitrust CESifo Seminar Series Edited by Hans-Werner Sinn Inequality and Growth: Theory and Policy Implications,Theo S. Eicher and Stephen J. Turnovsky, editors Public Finance and Public Policy in the New Century,Sijbren Cnossen and Hans- Werner Sinn, editors Spectrum Auctions and Competition in Telecommunications, Gerhard Illing and Ulrich Klüh, editors Managing European Union Enlargement, Helge Berger and Thomas Moutos, editors European Monetary Integration, Hans-Werner Sinn, Mika Widgrén, and Marko Köthenbürger, editors Measuring the Tax Burden on Capital and Labor,Peter Birch Sørensen, editor A Constitution for the European Union, Charles B. Blankart and Dennis C. Mueller, editors Labor Market Institutions and Public Regulation,Jonas Agell, Michael Keen, and Alfons J. Weichenrieder, editors Venture Capital, Entrepreneurship, and Public Policy,Vesa Kanniainen and Chris- tian Keuschnigg, editors Exchange Rate Economics: Where Do We Stand?,Paul De Grauwe, editor Prospects for Monetary Unions after the Euro,Paul De Grauwe and Jacques Mélitz, editors Structural Unemployment in Western Europe: Reasons and Remedies, Martin Werding, editor Institutions, Development, and Economic Growth, Theo S. Eicher and Cecilia García-Peñalosa, editors Competitive Failures in Insurance Markets: Theory and Policy Implications, Pierre- André Chiappori and Christian Gollier, editors Japan’s Great Stagnation: Financial and Monetary Policy Lessons for Advanced Economies,Michael M. Hutchison and Frank Westermann, editors Tax Policy and Labor Market Performance,Jonas Agell and Peter Birch Sørensen, editors Privatization Experiences in the European Union, Marko Köthenbürger, Hans- Werner Sinn, and John Whalley, editors Recent Developments in Antitrust: Theory and Evidence,Jay Pil Choi, editor See http://mitpress.mit.edu for a complete list of titles in this series. Recent Developments in Antitrust Theory and Evidence edited by Jay Pil Choi Seminar Series The MIT Press Cambridge, Massachusetts London, England © 2007 Massachusetts Institute of Technology All rights reserved. No part of this book may be reproduced in any form by any elec- tronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the publisher. MIT Press books may be purchased at special quantity discounts for business or sales promotional use. For information, please e-mail [email protected] or write to Special Sales Department, The MIT Press, 55 Hayward Street, Cambridge, MA02142. This book was set in Palatino by SNPBest-set Typesetter Ltd., Hong Kong, and printed and bound in the United States of America. Library of Congress Cataloging-in-Publication Data Recent developments in antitrust : theory and evidence / edited by Jay Pil Choi. p. cm.—(CESifo seminar studies) Includes bibliographical references and index. ISBN-13: 978-0-262-03356-5 (alk. paper) ISBN-10: 0-262-03356-9 (alk. paper) 1. Competition. 2. Antitrust law. 3. Economic policy. I. Choi, Jay Pil. HF1414.R425 2007 338.8—dc22 2006049442 10 9 8 7 6 5 4 3 2 1 Contents Series Foreword vii Introduction ix 1 Antitrust Perspectives for Durable-Goods Markets 1 Michael Waldman 2 Two-Sided Markets: Economic Theory and Policy Implications 39 Mark Armstrong 3 Antitrust Analysis of Tying Arrangements 61 Jay Pil Choi 4 Curing Sinus Headaches and Tying Law: An Empirical Analysis of Bundling Decongestants and Pain Relievers 91 David S. Evans and Michael A. Salinger 5 Economics, Politics, and Merger Control 125 Vivek Ghosal 6 Market Definition with Differentiated Products—Lessons from the Car Market 153 Randy Brenkers and Frank Verboven 7 Merger Control in Differentiated-Product Industries 187 Franco Mariuzzo, Patrick Paul Walsh, and Ciara Whelan vi Contents 8 Comparative Advertising and Competition Policy 215 Francesca Barigozzi and Martin Peitz 9 The Effects of Disclosure Regulation of an Innovative Firm 265 Jos Jansen 10 Ownership Structure of Cable Networks and Competition in Local Access 293 Duarte Brito and Pedro Pereira Contributors 321 Index 323 Series Foreword This book is part of the CESifo Seminar Series. The series aims to cover topical policy issues in economics from a largely European perspective. The books in this series are the products of the papers and intensive debates that took place during the seminars hosted by CESifo, an international research network of renowned economists organized jointly by the Center for Economic Studies at Ludwig-Maximilians- Universität, Munich, and the Ifo Institute for Economic Research. All publications in this series have been carefully selected and refereed by members of the CESifo research network. Introduction Economic analysis now plays a crucial role in formulating antitrust policy (referred as competition policy in Europe) across the Atlantic, and courts have endorsed a central role for economic theory and empir- ical analysis in rendering their decisions. For instance, economic con- cepts are widely adopted in the U.S. Merger Guidelines, and the recent discussion of European merger reform also mirrors this trend, with more emphasis on economics-based merger enforcement. In addition, antitrust court cases are increasingly argued with sophisticated eco- nomic analysis by all parties concerned. In major cases such as Eastman Kodak Co. v. Image Technical Services, Inc. and the US v. Microsoft, both plaintiffs and defendants made extensive use of game theory, the eco- nomics of information, and transaction cost economics in advancing their arguments.1 The need for sophisticated economic reasoning is reflected in the substantial presence of economists in antitrust agencies and major consulting firms. Two U.S. antitrust agencies, the Department of Justice and the Federal Trade Commission, each employ fifty to sixty PhD-level economists headed by Chief Economists who are usually respected academics. As part of the reform process, the European Commission also recently created the position of Chief Economist. Against this background, this book brings together a panel of spe- cialists to discuss the conceptual and empirical issues involved in the formulation and enforcement of competition policy. The chapters in the book reflect the wide range of issues in antitrust analysis and provide a broad picture of recent developments by discussing the current state of the art and identifying avenues for further research. The first set of three chapters deals with theoretical issues that have played important roles in recent antitrust cases such as Eastman Kodak Co. v. Image Technical Services, Inc., et al., the Visa and MasterCard
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