The Effects of the Use of a Hybrid Approach to Competition Law in the Regulation of Market Power: the Case of Brazil

PhDThe Brazilian competition law and policy are inspired by the EU and US competition law models and incorporate different aspects of these systems, such as the rule of reason and the concept of abuse of dominance. Based on the analysis of competition cases and in-depth interviews with members of the Brazilian competition authority, the research examines how the authority has dealt with the differences between the EU and the US models when applying its competition law. It identifies the ways in which the authority seeks to adjust its competition system to the particularities of a large developing country, in terms of legislation, economy, culture and institutional framework. The research also analyses the way in which the current competition legislation was intended to give flexibility to the competition authority but at the same time has produced the potential for inconsistencies in its enforcement. The study reveals differences between the formal provisions of the competition law and the manner in which it is applied. In addition, the research argues that the application of diverging concepts drawn from the EU and US models have resulted at times in incoherence in relation to issues such as the definition of the relevant market, the concepts of dominance and abuse, as well as the dissimilar treatment of specific offences. With regards to the latter, the findings suggest that there is a need to address institutional problems, such as the shortage of administrative personnel, political interference, inadequate training and a lack of an ‘institutional memory’. Possible solutions discussed include the publication of guidelines and II authoritative decisions to restate the law, improvements in training and funding, as well as proposals for administrative and legal reform

Technological Changes in the Transportation Sector--Effects on U.S. Food and Agricultural Trade: A Proceedings

ERS sponsored a workshop, Technological and Structural Change in the Transportation Sector: Effects on U.S. Food and Agricultural Trade, March 17-18, 1999, in Washington, DC. The program's objectives were to raise awareness within ERS about the role and importance of transportation in U.S. food and agricultural trade and to discuss the need of an agency research agenda in this area. More than 60 people attended. Bob Thompson of the World Bank and Jeffrey Frankel of the Brookings Institution led with discussions about the role of transportation in the global food system and the importance of integrating geography and transportation in analysis of international trade. Other panels dealt with transportation technology, past and future, the changing policy environment for ocean shipping, logistical and technological developments aiding exports of specific commodities, including the use of supply chain management. Representatives of the Agricultural Marketing Service discussed the availability of transportation cost data, and the availability of other shipping data was discussed by representatives of the PIERS database, a product of the Journal of Commerce. Two ERS research projects were summarized, one using GTAP and another applying the gravity model to estimate the extent to which distance is less of an inhibiting factor in exporting certain U.S. agricultural exports. The administrator of the Agricultural Marketing Service, the ERS associate administrator, and representatives of the Transportation Research Board, the USDA's World Board, and the Farm Foundation discussed potential ways ERS could include the transportation variable in its research. The program was cosponsored by the Farm Foundation and World Perspectives, Inc.transportation, distance, technology, agricultural trade, United States, Public Economics, Research and Development/Tech Change/Emerging Technologies,

The Political Economy of Natural Resource Use: Lessons for Fisheries Reform

This report discusses key lessons drawn from reform experience in the wider natural resource sector that might inform successful reform in fisheries. This report is a compilation of 12 papers prepared by acknowledged international experts in the fields of fisheries and wider natural resource reform which were reviewed at a workshop convened by the Property and Environment Research Center (PERC) in May 2009.The report forms an important initial input into an ongoing enquiry into the political economy of fisheries reform initiated by the World Bank in partnership with the Partnership for African Fisheries (a United Kingdom Department for International Development funded program of the New Partnership for African Development (NEPAD))

The Cooperative as a Proletarian Corporation: The Global Dimensions of Property Rights and the Organization of Economic Activity in Cuba

Since the 1970s, the relationship between productive property, and the state and individual has been contested in Marxist-Leninist nations. Though China has moved to permit robust private activity and the private aggregations of capital in corporate form, Cuba has strictly adhered to traditional communist principles. In the face of recent financial upheavals, Cuba is seeking to liberalize its approach to economic organization, but in a way that would retain a state monopoly of the use of the corporate form while opening a small and well-managed consumer oriented private sector. Among the most innovative alternatives being developed is the cooperative, which has the potential to develop into a useful form of what this Article calls a proletarian corporation. But innovation faces substantial hurdles. This Article examines in Part II the context for the development of this new approach to cooperative organization. Part III then turns to a close study of the cooperative and its constraints, starting with a consideration of the agricultural cooperative as template for changes. It then turns to a critical consideration of the development of a theoretical basis for changing the function and operation of cooperatives developed by Cuban intellectuals, and ends with an examination of the transposition of that theory into the guidelines for restructuring the Cuban economy (Lineamientos) adopted by the Cuban government, and then articulated through a regulatory framework. Part IV then briefly considers the role of the cooperative in efforts to internationalize the Cuban economic model through vehicles such as the Alianza Bolivariana. This Article concludes that while the cooperative fits nicely within Cuba’s efforts to develop a complex and well-integrated program of economic organization, its theoretical elegance remains in tension with the realities of Cuban politics. This tension increases the risk that cooperatives will be reduced to little more than a means of privatizing central planning

The Cooperative as a Proletarian Corporation: The Global Dimensions of Property Rights and the Organization of Economic Activity in Cuba

Since the 1970s, the relationship between productive property, and the state and individual has been contested in Marxist-Leninist nations. Though China has moved to permit robust private activity and the private aggregations of capital in corporate form, Cuba has strictly adhered to traditional communist principles. In the face of recent financial upheavals, Cuba is seeking to liberalize its approach to economic organization, but in a way that would retain a state monopoly of the use of the corporate form while opening a small and well-managed consumer oriented private sector. Among the most innovative alternatives being developed is the cooperative, which has the potential to develop into a useful form of what this Article calls a proletarian corporation. But innovation faces substantial hurdles. This Article examines in Part II the context for the development of this new approach to cooperative organization. Part III then turns to a close study of the cooperative and its constraints, starting with a consideration of the agricultural cooperative as template for changes. It then turns to a critical consideration of the development of a theoretical basis for changing the function and operation of cooperatives developed by Cuban intellectuals, and ends with an examination of the transposition of that theory into the guidelines for restructuring the Cuban economy (Lineamientos) adopted by the Cuban government, and then articulated through a regulatory framework. Part IV then briefly considers the role of the cooperative in efforts to internationalize the Cuban economic model through vehicles such as the Alianza Bolivariana. This Article concludes that while the cooperative fits nicely within Cuba’s efforts to develop a complex and well-integrated program of economic organization, its theoretical elegance remains in tension with the realities of Cuban politics. This tension increases the risk that cooperatives will be reduced to little more than a means of privatizing central planning

How Effective is the Invisible Hand? Agricultural and Food Markets in Central and Eastern Europe

Since the seminal work of Adam Smith, markets have been considered an efficient tool for co-ordinating the behaviour of economic agents. The basic characteristic of a market economy is that the complex system of interaction among individuals is not centrally coordinated. Under the assumption of profit and utility maximisation (and a whole set of assumptions about the institutional framework), relative prices and their change over time provide the signals that guide, like an invisible hand, the allocation of resources, i.e., the structure of production and the intensity of input use in the various production processes. They do this by co-ordinating the activities of economic agents, i.e., of resource owners, producers, intermediaries, traders, and consumers. After system change in the former Soviet Union and in Central and Eastern Europe (CEE) central economic planning had to be replaced by other forms of co-ordination. The general direction in all transition countries was towards a market economy, but the speed and depth of reforms towards an environment in which markets can evolve differed largely between countries, sectors and between different phases during the past 15 years. IAMO Forum 2005 focuses on this development and discusses the functioning of markets, the requirements for this, and the advantages and disadvantages of other co-ordination mechanisms under different environments in the agricultural and food sectors in Central and Eastern Europe. CEE agri-food markets deserve researchers' and policy makers' attention for several reasons. Two of them regard the high demand for support to policy decisions that aim to stimulate economic and social development in the region. In most CEE countries, the significance of the agricultural and food sector is relatively high with respect to income and employment. In particular, rural areas can benefit from the development of this branch of the economy. Also, there is marked indication that agri-food markets in CEE are not ensuring exchange as frictionless as possible. This means that large benefits can be expected if potential improvements of the economic environment are implemented and if individual agents adapt optimally to that environment. Another motivation for economic research on transition countries is that we are looking at a huge region that started almost as a vacuum with regard to institutional settings. This means that a wide range of substantially different settings were introduced in the respective countries, and were only weakly confined by political rigidities or path dependencies. From a distant perspective, the repeated fundamental shifts in recent economic policies almost evoke the impression of a trial and error approach. The consequences of distinctively different options (across countries and periods) can be observed in a way almost similar to a laboratory situation. Such unique opportunity has attracted economists, particularly those interested in institutional economics, to conduct research on CEE. However, this also means that the experiences made in CEEC can enhance the general understanding of what markets can do and what the limitations of market coordination are. This volume contains selected contributions presented at IAMO Forum 2005 and gives an overview of the major topics discussed there. Partial analyses of specific economic problems usually abstract from the general economic framework which is assumed to be more or less constant as expressed in ceteris paribus clauses. Oftentimes, the set of institutional conditions is even assumed to be sufficiently well-described by the framework used in neoclassical models. Particularly for transition countries, this has frequently led to spurious results because crucial aspects of the framework actually in place were not considered, and sometimes were not even thought of. An extreme and very obvious example is the neglect of the effects of the replacement of monetary by nonmonetary exchange in phases of a barter economy. There is no generic approach to avoid unintended omission of crucial framework conditions, but it must generally be emphasised that a broad look at the various interdependent markets and at the entire socioeconomic context of a country is needed before going into detail. Descriptive analyses of the situation in various markets form part of such a broad look. The contributions of POPP, FERTÃ et al., WILKIN et al., and HEIN in the chapter Selected analyses from CEEC provide excellent examples, and focus on market developments in new EU member countries. On the one hand, the papers show the heterogeneity of problems e.g. due to largely differing farm structures. On the other hand, several common patterns can be observed: The market shares and power of large processors and retailers (hypermarkets, etc.) are increasing. Also, international (especially intra-EU) trade in commodities has increased in response to CAP-induced price harmonisation. Both tendencies weaken the market position of farmers, particularly small entities which cannot supply in volumes sufficient for large processing and trade firms. Within the food industry concentration increased as many smaller firms could not comply with EU processing standards and had to quit the market. The increased size and specialization of large producers, as well as of large processors, made many of those firms co-ordinate business with each other through long-term contractual agreements rather than by relying on spot markets. This tendency is very distinct in the fruit and vegetable sector, as WILKINâs contribution describes. Two contributions draw attention to the institutional framework itself, mainly by looking at circumstances which prevent market allocation from leading to an optimal outcome. HOBBS describes factors that impede investment and growth by drawing on transaction cost economics. Situations typical for transition countries are highlighted where e.g. transparency is not sufficient or the existence and reliable enforcement of contract or corporate law are not guaranteed. NUPPENAU stresses the need for the appropriate and precise formulation of land property rights, which should evoke a balance between governance and exclusion. The importance of appropriate and reliable institutions to avoid flaws is emphasised. But even with suitable institutions, transaction costs cannot be reduced to zero. The main reason for this is that since agents may gain form a head start of information, incentives to reveal their knowledge are quite restricted. Furthermore, some of the information required to make correct decisions is not available. This especially concerns information regarding all future contingencies. An uncertain future and the asymmetric distribution of information impose special problems when decisions have long-term effects and agents are linked together through investment decisions. This offers possibilities for opportunistic behaviour, i.e., when an agent behaves in a way that allows him to extract rents from the partners' activities. The friction induced in such situations may result in a market outcome that is biased by transaction costs. Mitigating this bias should be a goal of public policy but it is also in the interest of (at least some of the) private agents involved. This issue is discussed in more detail in the papers dealing with alternative governance structures. A number of contributions to IAMO Forum highlight approaches for measuring the well-functioning of markets. While studies that aim to directly measure transaction costs are very rare and are necessarily limited to comparing only very specific portions of transaction costs, most studies focus on indirect indicators. These usually start from the idea that in a well-functioning, competitive market any supply or demand shocks are reflected in price changes, not only in the particular market where the shock occurs but also in other, related markets, i.e., in different locations or at different stages of the production and marketing chain. Consequently, an approach for assessing the functioning of markets is to compare price differentials with processing-, marketing- or transfer-costs, or â since these costs are usually difficult to quantify â to observe price differentials over time. Accepting the assumption that the costs reflected by price differentials are more or less constant (or stationary) over the observed time span, any additional price changes or a lack of price co-movement is interpreted as an indication for insufficiently connected or insufficiently functioning markets. Three contributions in the chapter Analytical approaches for measuring market efficiency describe analyses which mainly focus on the vertical dimension, i.e., between market stages. BOJNEC, in his descriptive price analysis for several agricultural products in Slovenia since 1991, finds a heterogeneous development of the farm gate/consumer price spread: The processing and marketing margins increased for wheat and beef while they declined for grapes (processed to wine), sugar and poultry. BRÃMMER and ZORYA, as well as BAKUCS and FERTÃ, use cointegration analysis to describe the degree and nature of vertical price integration in the Ukrainian wheat market and the Hungarian pork market, respectively. Both studies find that price changes are transmitted vertically, that there is a tendency to "correct" any deviations from some underlying equilibrium price-relationship. However, such error correction mechanisms are found not to be a constant, universal force. In the Hungarian paper, it could only be found for a sub-period of the observed time span, excluding the highly volatile early 1990s. Also, equilibrium was found to be achieved by adjustment of farm gate prices only while the retail prices were found to be exogenous, i.e., not responding to any disequilibrium. The paper on Ukraine shows that adjustment processes between wheat and wheat flour prices cannot be sufficiently described by a constant error correction mechanism for the period 2000 to 2004. In fact, four different regimes of adjustment processes were found to have been in force, reflecting particular phases of largely differing market situations and political interventions. The functioning of markets depends on several crucial conditions. One of these conditions concerns the availability of information. Only if agents have perfect and complete information will the exchange lead to an outcome in which no individual can be better off without reducing the welfare of others. However, in the real world this condition regarding information is not fulfilled. Information is not perfect, since the future cannot be predicted with certainty. Incomplete information results from, first, not all information being revealed, and second, individuals not possessing the mental capacity to collect and process all information. Moreover, because of its asymmetric distribution, information can be regarded as a resource that can be exploited by agents. This means that there are incentives to hamper the diffusion of information to the public domain. In general, the more uncertain the future is and the more information is tacit, the worse markets will function, and the more beneficial become alternative mechanisms of coordination. Three papers dealing with this issue of organisational choice. HANF focuses on governance structures within supply chain networks that are appropriate for allowing an optimal flow of information between the involved individuals while retaining the necessary hierarchy for efficient implementation of strategic decisions. MAACKâs analysis shows that there is strong mutual interest between producers and processors of berry fruits to reduce marketing and procurement risk, respectively. This can be achieved by switching from spot market exchange to contractual supply agreements. A prerequisite for such agreements is that a well-balanced distribution of risks and risk premiums between the farmer and processor is implemented. This means that processors, who â facing a multitude of small producers â are used to opportunities for exerting market power, have to agree to cover part of the production risk through appropriate contractual clauses. Finally, BALINT looks at the various marketing channels used by Romanian farmers and finds that a self-enforcing dualism exists. For commercially-oriented farmers who can supply large quantities, marketing directly to traders, wholesalers and processors is most favourable and involves relatively low transaction costs. Although this form of supply-relationship is usually not based on contractual agreements, it can still be characterised by a certain stability over time. In contrast, small farmers whose production does not considerably exceed the subsistence level incur relatively high (per unit) transaction costs in selling their produce on local markets and to other farmers. Another aspect of organisational choice is the question of whether ownership of production factors is transferred or only the right to use them temporarily. The uncertainty of future developments implies that the possession of resources cannot be only regarded from the point of view of income generation at a certain point in time. With perfect foresight, there is no difference whether a factor is rented or purchased, because the remuneration would be the same. This perfect substitutability is no longer given when the future is uncertain. Income generation, then, is only one feature of ownership. Additional aspects such as insurance, wealth, and speculation as motivations for possession affect the value of ownership and thus shift the demand and supply curves of the factor. HURRELMAN picks up this issue in her analysis of the Polish land market and shows the impact of additional grounds for valuing property on the decision to rent or to buy land. Uncertainty may also affect the specialization of factor use. Allocating a factor of production to different production activities reduces the risk of income instabilities, but at the cost of specialization gains through economics of scale. Moreover, the decision on income combination is â besides risk â affected by a complex interaction of other determinants. GLAUBEN et al., analyse these interactions for the case of part-time farming in China and show how the decision of income combination is affected by household characteristics, human capital and other variables. Incomplete and imperfect information not only causes individuals to choose optimal governance modes, often it is also understood as a call for government intervention. The selected papers in the chapter on policy intervention plead for careful selection and coherent implementation of policy instruments. BENNER, as well as KUHN, highlight the significance of information diffusion and argue in favour of government intervention in this area. However, both emphasise that these interferences should be used carefully and be adjusted to specific market failures. Both argue that setting up information systems would improve the functioning of markets. BENNER also discusses possible negative impacts if governments that engage in setting up and enforcing product and process standards try, at the same time, to foster a sector like agriculture through support in marketing. The latter activity affects the governmentâs (crucial) credibility in the first activity. KUHN points to negative welfare effects and budgetary requirements of an intervention system which is implemented to increase price stability. Moreover, when a government intervenes in market allocation or intends to provide rules that should facilitate the exchange on markets, it has to take into account that the new regulation has to be implemented in a coherent manner. This requires the various policy regulations and institutional settings to be complementary and not cause frictions which hamper the functioning of the system. LERMAN and SHAGAIDA highlight this aspect in their discussion of the Russian land market, where bureaucracy and high costs for the registration of property rights can be regarded as a major cause of the low number of land transactions. However, since economic activities take place in a dynamic environment, the comparative static point of view may lead to inappropriate policy formulation. WANDEL discusses this aspect in the context of competition policy. From a comparative static point of view, market power has to be assessed negatively because of the distortions of resource allocation. However, monopoly profits are an indicator of extra rents and thus provide incentives for market entry. On the one hand, this thread may lead to special pricing schemes and/or to the accelerated development of technological change so that a monopolist can consolidate its market position. But it is possible, on the other hand, that market entry may in fact happen. In this case, one would observe structural change, which would be accompanied by an improved use of resources. This in turn means that competition policy should not be oriented towards an optimal market structure but towards the facilitation of market entry so that competition can discover market opportunities and determine the optimal structure of the market. The present volume shows the wide range of interesting and controversial topics that are concerned when looking at co-ordination, particularly on markets in CEE agri-food sectors. It remains a hope that the heterogeneity and dynamics of the developments will decrease as successful constellations of framework conditions, organisational choices and individual behaviour become more and more obvious and widespread in the region. Conversion to sustainable, balanced patterns might take place, but this cannot be taken for granted. However, chances for such development are better the more stable and balanced political developments, as well as international co-operation, become. We hope that the academic community will contribute towards such goal.Agribusiness, Community/Rural/Urban Development, Industrial Organization, International Development, Labor and Human Capital, Land Economics/Use, Political Economy,

Livestock, Liberalization, and Democracy: Constraints and Opportunities for Rural Livestock Producers in Reforming Uganda

This paper explores the policy environment surrounding livestock policy improvements in Uganda, a country that has undergone substantial reforms in the last 15 years. It aims to identify opportunities for pro-poor interventions—reforms that would improve the livelihoods of poor rural livestock producers. Towards this end, the paper reviews challenges facing for livestock producers and analyzes the broad political economic context in which livestock sector dynamics are situated. The adoption and implementation of pro-poor livestock sector interventions are in some ways constrained and, in others, enabled by civil conflict in several parts of the country, the semi-authoritarian nature of the Museveni regime, and the reform alliance between the Ugandan national government and its international development partners. Ugandans face an uneasy trade-off between political stability and democracy that inhibits participation