A comparative assessment of methodologies used to evaluate competition policy

Research by academics and competition agencies on evaluating competition policy has grown rapidly during the last two decades. This paper surveys the literature in order to (i) assess the fitness for purpose of the main quantitative methodologies employed, and (ii) identify the main undeveloped areas and unanswered questions for future research. It suggests that policy evaluation is necessarily an imprecise science and that all existing methodologies have strengths and limitations. The areas where the need is most pressing for further work include: understanding why Article 102 cases are only infrequently evaluated; the need to bring conscious discussion of the counterfactual firmly into the foreground; a wider definition of policy to include success in deterrence and detection. At the heart of the discussion is the impact of selection bias on most aspects of evaluation. These topics are the focus of ongoing work in the CCP

The Impact of Competition Policy: What are the Known Unknowns?

Evaluations of competition policy are increasingly common and typically establish that consumer bene.ts from detected cases easily outweigh the costs of competition authorities (CA). However, such assessments are often driven by data availability and only capture a small part of the total impact because they sidestep the difficult issue of how to evaluate deterrence. Similarly, they ignore the fact that policy does not root out all anti-competitive cases. This paper suggests a broader framework for evaluation which encompasses these unobserved impacts. Calibration is difficult precisely because we cannot rely on empirical observations on cases which have been observed to make deductions about cases which have not (because they are deterred or undetected). It thereby confronts the classic sample selection problem which is endemic in all studies based on data from CA decisions. Drawing on insights from economic theory, it argues that selection bias is likely to be substantial because the unobserved cases could well be those which are most harmful. If so, the deterrence of anti-competitive mergers may have a much greater positive impact, but the effects of non-detected cartels may be more serious than is usually supposed

Scottish bishops and the relic-lists of the cartulary of Christchurch Priory, Twynham, Hampshire, 1200–1221 (with an edition and translation of the text by John Reuben Davies)

No abstract available

The Behavioural Components of Risk Aversion

The risk premium is affected by loss aversion and probability distortions as well as utility curvature. We introduce two variants - the total risk premium relative to objective expected value, and the subjective risk premium relative to perceived expected value. Approximate solutions for each provide analogies to the Pratt-Arrow coefficient of risk aversion (showing how risk attitude depends on each behavioural component), and sufficient conditions for risk aversion. Earlier results of Levy and Levy (2002) which examined decision weights in isolation are revised and extended to show how the curvature and loss aversion conditions are affected by probabilitydistortions

Mergers after cartels: How markets react to cartel breakdown

This paper examines whether cartel breakdown provokes a period of intensive merger activity amongst the former cartelists, designed to re-establish tacit collusion. Using a novel application of recurrent event survival analysis for a pooled sample of 84 European cartels, it finds that mergers are indeed more frequent post-cartel breakdown, especially in markets which are less concentrated. However, it cautions against merely assuming that these mergers are motivated by coordinated effects - alternatively, they may be the consequence of market restructuring, necessitated by more intense competition post-cartel. Further disaggregated analysis of the individual mergers show that on average these mergers are profitable for the acquiring company, and that the tacit collusion motive is likely to be at work for a large minority of the mergers

Industrial specialisation and geographic concentration: Two sides of the same coin? Not for the European Union

Some recent studies have shown that specialisation of countries has tended to increase, while regional concentration of countries has tended to decrease. This seems to be counterintuitive at first glance. In this paper, we use the entropy index - as the indicator of structural change with the neatest aggregation properties to show how this divergence can happen. The main purpose of the paper is methodological, but we also apply the methodology to a specific case study: Manufacturing in the European Union since 1985. We confirm for this interesting period that increasing industrial specialisation has been offset by faster growth in the smaller Member States, with the net effect that industries have become somewhat less geographically concentrated. In terms of economic geography the evidence is in line with the second part of the inverted U-curve (where decreasing transport costs eventually foster de-concentration). This is no contradiction to increasing specialisation of countries in specific industries as predicted by many models in the old as well as the new trade theory.structural change, geographical concentration, industrial specialisation, European integration, entropy

Studies of two-phase intermittent flow in pipelines.

Imperial Users onl

How Far Does Economic Theory Explain Competitive Nonlinear Pricing in Practice?

Liberalisation of the British electricity market, in which previously monopolised regional markets were exposed to large-scale entry, is used to test the propositions of several recent theoretical papers on oligopolistic nonlinear pricing. Consistent with those theories, each oligopolist offered a single two-part electricity tariff, and a lump sum discount to consumers who purchased both electricity and gas. However, inconsistent with those theories, firms’ two-part tariffs are heterogeneous in ways that cannot be attributed to cost. We establish a series of stylised facts about the nature of these asymmetries between firms and use them to confront established theory