The effects of cartel damage compensations

Damage compensation claims in case of cartels are supposed to increase deterrence, compensate losses and increase efficiency. I show that such claims can instead have adverse effects: If suppliers or buyers of cartelists are compensated in proportion to the profits lost due to the cartel, expected cartel profits can increase. Claims of downstream firms against upstream cartelists who do not monopolize the market increase consumer prices. Suppliers of cartelists can be worse off when eligible to compensation. These results apply also to abuses of dominance and call for a more careful approach towards the private enforcement of competition law

Competitive procurement design: Evidence from regional passenger railway services in Germany

We study competitive awarding procedures of short haul railway passenger services in Germany from 1995 to 2011 by means of a newly collected data set. In particular, we use regression techniques to investigate the determinants of the number of bidders, the identity of the winning bidder and the subsidy level. We find that there are more bidders when the contract duration is high and the revenue risk low. The dominant operator is more likely to win contracts if it is the incumbent, the network is large, the contract duration is high, when used rolling stock is admitted and when there are few other bidders

Resale price maintenance and manufacturer competition for retail services

We investigate the incentives of manufacturers to use resale price maintenance (RPM) when selling products through common retailers. In our model retailers provide product specific pre-sales services. If the competitive retail margins are low, each manufacturer fixes a minimum price to induce favorable retail services. With symmetric manufacturers, products are equally profitable in equilibrium and no product is favored as without RPM, but retail prices are higher. We show that minimum RPM can create a prisoner’s dilemma for manufacturers without increasing, and possibly even decreasing the overall service quality. This challenges the service argument as an efficiency defense for RPM

Aufsätze in Wettbewerbsökonomik

This thesis consists of three essays in the field of competition economics. Chapter 1 contains an essay on resale price maintenance, co-authored by Johannes Muthers, doctoral student at the University of Würzburg. Chapter 2 contains an essay on strategic backward integration, co-authored by Lars-Hendrik Röller and Konrad Stahl. Chapter 3 contains an essay on the design of damage compensations in case of competition law infringements such as price cartels. Each of the three essays is built around a game-theoretical model that is used to analyze how the allocation of rights to profits and control over strategies within a vertical chain influences the market outcome

Backwards integration and strategic delegation

We analyze the effects of downstream firms’ acquisition of pure cash flow rights in an efficient upstream supplier when all firms compete in prices. With an acquisition, downstream firms internalize the effects of their actions on their rivals’ sales. Double marginalization is enhanced. Whereas full vertical integration would lead to decreasing, passive backwards ownership leads to increasing downstream prices and is more profitable, as long as competition is sufficiently intensive. Downstream acquirers strategically abstain from vertical control, inducing the efficient supplier to commit to high prices. All results are sustained when upstream suppliers are allowed to charge two part tariffs

Competition, collusion and spatial sales patterns : theory and evidence

We study competition in markets with significant transport costs and capacity constraints. We compare the cases of price competition and coordination in a theoretical model and find that when firms compete, they more often serve more distant customers that are closer to plants of competitors. By means of a rich micro-level data set of the cement industry in Germany, we provide empirical evidence in support of this result. Controlling for other potentially confounding factors, such as the number of production plants and demand, we find that the transport distances between suppliers and customers were on average significantly lower in cartel years than in non-cartel years

Evaluation of best price clauses in hotel booking

We analyze the best price clauses (BPCs) of online travel agents (OTAs) using meta-search price data of more than 45,000 hotels in different countries. Although OTAs apparently have not changed their standard commission rates following the partial ban of BPCs in Europe, we find that BPCs do influence the pricing and availability of hotel rooms across online sales channels. In particular, the abolition of Booking.com’s narrow BPC is associated with the hotels’ direct channel being the price leader more often. Moreover, hotels make rooms more often available at Booking.com when it does not use the narrow BPC

Mehr Transparenz bei Suchergebnissen auf Onlineplattformen nützt den Verbrauchern

Die Anordnung von Suchergebnissen auf Internetplattformen beeinflusst maßgeblich, welche Güter gekauft und welche Dienstleistungen gebucht werden. Allerdings ist nicht jede Positionierung und Empfehlung bei großen Internetplattformen im Interesse der Nutzer/innen. Unsere Ergebnisse zeigen, dass die Sichtbarkeit eines Zimmerangebots auf einem Buchungsportal niedriger ist, wenn das Hotel auf einem konkurrierenden Buchungsportal oder der eigenen Website das Zimmer günstiger anbietet. Wenn Buchungsportale die Reihung ihrer empfohlenen Suchergebnisse von Preisen auf anderen Kanälen abhängig machen, dann mag das zwar ihre Gewinne maximieren, steht aber nicht unbedingt in Einklang mit dem Interesse von Kunden, die davon ausgehen,dass die „Empfehlungen“ die für sie besten Angebote sind. Diese Praxis birgt zudem Risiken: Ein Portal, das die Anordnung seiner Suchergebnisse davon abhängig macht, wie die Hotels auf anderen Portalen Preise setzen, beeinflusst die Preisgestaltung von Hotels über alle Vertriebskanäle hinweg. Wenn Hotels sich durch ein solches Verhalten gezwungen sehen, ähnliche Preise auf allen Vertriebskanälen zu setzen, wirkt das Verhalten der Portale bis zu einem gewissen Grad wie ein Ersatz für Preisparitätsklauseln. Mit diesen hatten Buchungsportale Hotels in der Vergangenheit vorgeschrieben, stets gleiche Preise auf den Vertriebskanälen zu setzen. Da dies den Wettbewerb zwischen den Buchungsportalen behindern kann, sind sie von Wettbewerbsbehörden und Gesetzgebern in verschiedenen europäischen Ländern verboten worden. Weiterhin kann ein solches Verhalten der Portale dazu führen, dass die Suchergebnisse nicht in Übereinstimmung mit dem Kundeninteresse angeordnet werden, was zu einer niedrigen Suchqualität für die Nutzer/innen führt

Hotel rankings of online travel agents, channel pricing, and consumer protection

We investigate whether online travel agents (OTAs) assign hotels worse positions in their search results if these set lower hotel prices at other OTAs or on their own websites. We formally characterize how an OTA can use such a strategy to reduce price differentiation across distribution channels. Our empirical analysis shows that the position of a hotel in the search results of OTAs is better when the prices charged by the hotel on other channels are higher. This is consistent with the hypothesis that OTAs alter their search results to discipline hotels for aggressive prices on competing channels, thereby reducing the search quality for consumers