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Unilateral Effects Analysis In Differentiated Product Markets
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Book Synopsis Unilateral Effects Analysis in Differentiated Product Markets by : Malcolm B. Coate
Download or read book Unilateral Effects Analysis in Differentiated Product Markets written by Malcolm B. Coate and published by . This book was released on 2014 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Merger Guidelines highlight unilateral effects analysis as the most prominent theory of concern in differentiated markets. This study evaluates the Federal Trade Commission's historical record to determine what considerations drive the review process, if these considerations depend on the type of differentiated market under review and if policy has changed much over the 20 years since the 1992 Merger Guidelines were issued. Our results highlight the importance of both direct and indirect proxies for diversion, as well as entry and effects evidence. Moreover, an ability to focus the analysis on price-based competition leads to predictions of significantly higher estimates for the probability of a unilateral effects finding, especially when repositioning is difficult. Little change in policy is identified over the 20-year period of the study, although it is possible that the discussion of effects evidence in the 2010 Merger Guidelines has increased the relevance of this consideration.
Book Synopsis Analyzing Horizontal Mergers by : Herbert Hovenkamp
Download or read book Analyzing Horizontal Mergers written by Herbert Hovenkamp and published by . This book was released on 2009 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: This essay offers a brief, non-technical exposition of the antitrust analysis of horizontal mergers in product differentiated markets where the resulting price increase is thought to be unilateral - that is, only the post-merger firm increases its prices while other firms in the market do not. More realistically, non-merging firms who are reasonably close in product space to the merging firm will also be able to increase their prices when the post-merger firm's prices rise. The unilateral effects theory is robust and has become quite conventional in merger analysis. There is certainly no reason for thinking that it involves any more conjecture than what occurs in traditional concentration-increasing merger analysis. Nevertheless, as with all predictions about mergers, we must live with a certain measure of uncertainty.
Book Synopsis The Economic Theory of Product Differentiation by : John Beath
Download or read book The Economic Theory of Product Differentiation written by John Beath and published by Cambridge University Press. This book was released on 1991-02-28 with total page 216 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book presents economic theories that seek to explain the prevalence of differentiated products in market economies. It uses these theories to derive market equilibria and to compare these to social optima for both horizontally and vertically differentiated products. The implications of product differentiation for market structure and power, strategic entry deterrence and international trade are all examined.
Book Synopsis Unilateral Effects from Mergers of Firms Offering Differentiated Products by : Deirdre L. Hay
Download or read book Unilateral Effects from Mergers of Firms Offering Differentiated Products written by Deirdre L. Hay and published by Vandeplas Pub.. This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book considers how courts and regulatory agencies in Australia and in the US can and should assess mergers of firms which produce products or services differentiated in the minds of consumers from other products or services. (Most if not all products and services are differentiated at least to some degree so the topic is relevant to most mergers.) This book seeks the best solution for Australia to the difficulties posed by such mergers. It does so by comparing the approach taken in Australia with that taken in the US. In the US, the main method of merger analysis where there are differentiated products is to consider whether the merger of two firms will create unilateral effects i.e., higher prices, by eliminating the constraint each firm places on the other. In Australia, Courts and the Tribunal, and until recently the Australian Competition and Consumer Commission (ACCC), have not emphasized unilateral effects. Comparatively little use has been made in Australia of economic methods (developed in the US) to isolate and predict unilateral effects of a merger. This book is timely in light of the ACCC's recent Public Competition Assessment in Woolworths Limited - Proposed Acquisition of Kmart and Officeworks from Coles Group Limited in which the ACCC stated explicitly it performed a unilateral effects analysis, and because the Australian Merger Guidelines are likely to be amended soon to include a new section on unilateral effects analysis. Part I defines and explains the significance of product differentiation and how it can lead to unilateral effects. Part II analyses the US approach to predicting the unilateral effects of mergers of firms producing differentiated products. Part III considers how mergers of firms that produce differentiated products and unilateral market power are analysed in Australia. Part IV compares the two jurisdictions. It summarises the problems and insufficiencies of the current Australian approach and the benefits of the US approach, and concludes that the Australian Courts (and to a lesser extent the ACCC) are insufficiently emphasising unilateral effects in predicting the effect of mergers of firms producing differentiated products. It recommends that unilateral effects analysis should be used in Australia to augment the current Australian approach to merger analysis, the Australian Guidelines should be amended, and US economic methods should be used to predict unilateral effects. About the author: Dr. Deirdre Hay is at the law firm Harris Beach PLLC, Ithaca New York. She does antitrust work and represents financial institutions in banking and real estate transactions. She has considerable experience in antitrust counseling, transactional, and litigation matters in both the US and Australia and has practiced intellectual property law in Australia. She has represented international clients before the Department of Justice, the Federal Trade Commission, and Australian Competition and Consumer Commission. Dr. Hay was involved in the successful Full Federal Court appeal, News Limited v. Australian Rugby League Ltd. (1996) 64 FCR 410 (Superleague Appeal), Multigroup Distribution Services Pty. Ltd. v. TNT Australia Pty. Ltd. and Ors., Trade Practices Commission v. Australian Feather Mills Pty. Ltd. (1989) 26 FCR 555, as well as the deregulation hearings for Pennsylvania Power & Light. Dr. Hay is an editor of the American Bar Association's Antitrust Law Journal and has served as Managing Editor.
Book Synopsis Simulation as an Alternative to Structural Merger Policy in Differentiated Products Industries by : Gregory Werden
Download or read book Simulation as an Alternative to Structural Merger Policy in Differentiated Products Industries written by Gregory Werden and published by . This book was released on 1995 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Research Topics in Unilateral Effects Analysis by : Jonathan B. Baker
Download or read book Research Topics in Unilateral Effects Analysis written by Jonathan B. Baker and published by . This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This chapter has been prepared for inclusion in the RESEARCH HANDBOOK ON THE ECONOMICS OF ANTITRUST LAW (Einer Elhauge, ed.). It first explains why unilateral effects may result from horizontal mergers, and then describes several key models that have been developed to gauge the likelihood and/or magnitude of unilateral effects, focusing on mergers in differentiated product Bertrand markets. The remaining sections discuss extensions to these models and measurement issues that arise when implementing unilateral effects analysis in practice, highlighting ongoing and potential future topics for research.
Book Synopsis The Economic Assessment of Mergers Under European Competition Law by : Daniel Gore
Download or read book The Economic Assessment of Mergers Under European Competition Law written by Daniel Gore and published by Cambridge University Press. This book was released on 2013-04-25 with total page 559 pages. Available in PDF, EPUB and Kindle. Book excerpt: Provides a clear, concise and practical overview of the key economic techniques and evidence employed in European merger control.
Book Synopsis Unilateral Effects Analysis in Merger Review by : Malcolm B. Coate
Download or read book Unilateral Effects Analysis in Merger Review written by Malcolm B. Coate and published by . This book was released on 2014 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Many economists believe that unilateral effects analysis should dominate the merger review process for differentiated products. However, it is far from clear if these theoretical models are broadly applicable, as they impose monopoly-style entry assumptions that constrain the competitive process. By abstracting from the complexities of the market process, the standard unilateral effects analysis gives rise to tractable mathematical equilibriums. Of course, the equilibriums may not offer insights if the key assumptions are not valid. This paper will explore the limits to and opportunities for unilateral effects analysis, using the Landes-Posner model of a dominant firm as an initial example, before expanding the discussion to Nash-Bertrand models of competition. These Lerner-based modeling structures are problematic, especially when the entry-related assumptions are not credible. Because economic models may remain applicable even when their assumptions are not valid, the discussion addresses various types of effects evidence that could confirm the predictions of a specific unilateral effects model. Court precedent is reviewed, with an emphasis on a current understanding of the structural presumption, along with the applicability of effects evidence to litigation. By focusing the analysis on facts, unilateral effects analysis serves to aid the merger review process.
Book Synopsis Developments in Unilateral Effects Analysis by : Richard Murgatroyd
Download or read book Developments in Unilateral Effects Analysis written by Richard Murgatroyd and published by . This book was released on 2016 with total page 15 pages. Available in PDF, EPUB and Kindle. Book excerpt: Arguably the most significant development in horizontal merger assessment in recent years, particularly in the UK and the US, has been the increased use of price pressure tests/indices, which use a relatively limited amount of data from the merging parties and a simple formula to provide an indication of whether a merger is likely to give rise to an increase in prices, i.e. to cause upward pricing pressure. These indices are intended to better capture the extent to which the merging parties are close competitors and hence may be more informative than traditional market share based screens when assessing the prospects for a merger to give rise to unilateral effects in a differentiated products setting.The first part of the paper will review the economics of horizontal mergers and explain the underlying economic intuition upon which pricing pressure indices are based. The paper will then set out the most commonly used of these indices and describe how they may be implemented, elaborating on the empirical inputs and assumptions required, drawing on relevant case law where appropriate. Finally, the paper will comment on the likely future implications of using these indices for merger assessment in South Africa, and the extent to which price pressure indices may be probative regarding the prospects for unilateral effects more generally.
Book Synopsis Counting Rivals Or Measuring Share by : Malcolm B. Coate
Download or read book Counting Rivals Or Measuring Share written by Malcolm B. Coate and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores the Federal Trade Commission's unilateral effects merger policy using a sample of 184 investigations undertaken between 1993 and mid-2010. A review of the files suggests that roughly half of the sample is evaluated with a dominant firm/monopoly model, while the rest of the cases require a more complex unilateral effects analysis. Deterministic modeling based on the number of significant rivals suggests that the four-to-three transaction in a market with impediments to entry represents the marginal merger challenge. Case specific facts explain deviations from this rule and suggest that critical diversion ratios fall into the 25-30 percent range. Share based indices (post-merger market share, change in the Herfindahl, or a share-based Gross Upward Pressure on Price variable) can be used, but require the definition of a market and do not predict outcomes as well as the significant rivals' model. An Appendix details the various reasons why the staff declined to apply a unilateral effects analysis to conclude a merger was likely to substantially lessen competition in a broader sample of differentiated products mergers.
Book Synopsis Mergers with Differentiated Products by : Tommaso M. Valletti
Download or read book Mergers with Differentiated Products written by Tommaso M. Valletti and published by . This book was released on 2020 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: On the occasion of the 10th anniversary of the 2010 U.S. Horizontal Merger Guidelines, this article provides an overview of the state of economic analysis of unilateral effects in mergers with differentiated products. Drawing on our experience with merger enforcement in Europe, we discuss both static and dynamic competition, with a special emphasis on the calibration of competitive effects. We also discuss the role of market shares and structural presumptions in differentiated product markets.
Book Synopsis Unilateral Effects Analysis and the Upward Pricing Pressure Model by : Malcolm B. Coate
Download or read book Unilateral Effects Analysis and the Upward Pricing Pressure Model written by Malcolm B. Coate and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores the Federal Trade Commission's unilateral effects analysis from the perspectives of both the 1992 and 2010 Merger Guidelines. Historical enforcement data is used to define a diversion benchmark of 30 percent, but is unable to detect a role for the margin variable. A related analysis shows a deterministic model based on the number of significant rivals appears to out-perform alternative structural proxies. Case study evidence explores the factors that tend to affect the implications of the structural model, with evidence showing diversions are low suggesting closing merger investigations involving few rivals, while evidence of high diversions supports a challenge even in the presence of an unusually high number of rivals. A broader case study identifies a range of considerations under which a unilateral effects model should not be applied to a differentiated products merger. This paper is a reorganized and streamlined version of an earlier working paper "Counting Rivals or Measuring Share: Modeling Unilateral Effects for Merger Analysis," 2011, available at SSRN: http://ssrn.com/abstract=1722846.
Book Synopsis The Coordinated Effects of Mergers in Differentiated Product Markets by : Kai-Uwe Kühn
Download or read book The Coordinated Effects of Mergers in Differentiated Product Markets written by Kai-Uwe Kühn and published by . This book was released on 2004 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Identification in differentiated products markets using market level data by : Steven T. Berry
Download or read book Identification in differentiated products markets using market level data written by Steven T. Berry and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We consider nonparametric identification in models of differentiated products markets, using only market level observables. On the demand side we consider a non-parametric random utility model nesting random coefficients discrete choice models widely used in applied work. We allow for product/market-specific unobservables, endogenous product characteristics e.g., prices), and high-dimensional taste shocks with arbitrary correlation and heteroskedasticity. On the supply side we specify marginal costs nonparametrically, allow for unobserved firm heterogeneity, and nest a variety of equilibrium oligopoly models. We pursue two approaches to identification. One relies on instrumental variables conditions used previously to demonstrate identification in a nonparametric regression framework. With this approach we can show identification of the demand side without reference to a particular supply model. Adding the supply side allows identification of firms' marginal costs as well. Our second approach, more closely linked to classical identification arguments for supply and demand models, employs a change of variables approach. This leads to constructive identification results relying on exclusion and support conditions. Our results lead to a testable restriction that provides the first general formalization of Bresnahan's (1982) intuition for empirically discriminating between alternative models of oligopoly competition.
Book Synopsis Law and Economics in European Merger Control by : Ulrich Schwalbe
Download or read book Law and Economics in European Merger Control written by Ulrich Schwalbe and published by Oxford University Press. This book was released on 2009-10 with total page 477 pages. Available in PDF, EPUB and Kindle. Book excerpt: Co-written by an expert lawyer and economist, this book provides a thorough guide to the economic theory behind the regulation of mergers. The economic theory is then used to analyse the current state of European competition law, and test the success of the European Commission's search for a 'more economic approach' to merger regulation.
Book Synopsis An Econometric Analysis of Competition in a Differentiated Product Industry by : Li-Yu Ma
Download or read book An Econometric Analysis of Competition in a Differentiated Product Industry written by Li-Yu Ma and published by . This book was released on 1997 with total page 330 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Assessing Unilateral Merger Effects in a Two-sided Market by : Lapo Filistrucchi
Download or read book Assessing Unilateral Merger Effects in a Two-sided Market written by Lapo Filistrucchi and published by . This book was released on 2011 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt:
