Take or Pay Contracts and Market Segmentation

This paper examines competition in the liberalized natural gas market. Each .firm has zero marginal cost core capacity, due to long term contracts with take or pay obligations, and additional capacity at higher marginal costs. The market is decentralized and the firms decide which customers to serve, competing then in prices. In equilibrium each .firm approaches a different segment of the market and sets the monopoly price, i.e. market segmentation. Antitrust ceilings do not prevent such an outcome while the separation of wholesale and retail activities and the creation of a wholesale market induces generalized competition and low margins in the retail segment.Entry, Segmentation, Decentralized market

Judicial Errors, Legal Standards and Innovative Activity

We analyze the effects of judicial errors on the innovative activity of firms. Successful research investment allows to take a new action that may be ex-post welfare enhancing or welfare decreasing (illegal). Deterrence in this setting works by affecting both the incentives to invest in research and the ex-post choice of the action (marginal deterrence). The two goals may contrast each other and their relative importance shapes the optimal policy. For increasing probabilities of social harm, the enforcer initially promotes research and disregards marginal deterrence: in this case no accuracy is chosen and the policy adopts first a per-se legality and then a (moderately enforced) per-se illegality rule. Conversely, for higher likelihood of social harm, the enforcer favors marginal deterrence eliciting the ex-post efficient actions at the cost of depressing firm’s investment: the optimal policy calls for positive .nes and improved accuracy, with a stronger effort to reduce type-I than type-II errors and the adoption of asymmetric protocols of investigation. Improved accuracy allows to discriminate between beneficial and harmful actions, an instance of effect-based legal standard.norm design, innovative activity, enforcement, errors

Norm Flexibility and Private Initiative

We model an enforcement problem where firms can take a known and lawful action or seek a profitable innovation that may enhance or reduce welfare. The legislator sets fines calibrated to the harmfulness of unlawful actions. The range of fines defines norm flexibility. Expected sanctions guide firms’ choices among unlawful actions (marginal deterrence) and/or stunt their initiative altogether (average deterrence). With loyal enforcers, maximum norm flexibility is optimal, so as to exploit both marginal and average deterrence. With corrupt enforcers, instead, the legislator should prefer more rigid norms that prevent bribery and misreporting, at the cost of reducing marginal deterrence and stunting private initiative. The greater is potential corruption, the more rigid the optimal norms.norm design, initiative, enforcement, corruption

Incentives to Innovate and Social Harm: Laissez-Faire, Authorization or Penalties?

We analyze optimal policy design when firms' research activity may lead to socially harmful innovations. Public intervention, affecting the expected profitability of innovation, may both thwart the incentives to undertake research (average deterrence) and guide the use to which innovation is put (marginal deterrence). We show that public intervention should become increasingly stringent as the probability of social harm increases, switching first from laissez-faire to a penalty regime, then to a lenient authorization regime, and finally to a strict one. In contrast, absent innovative activity, regulation should rely only on authorizations, and laissez-faire is never optimal. Therefore, in innovative industries regulation should be softer.innovation, liability for harm, safety regulation, authorization

An Economic Approach to Article 82

This report argues in favour of an economics-based approach to Article 82, in a way similar to the reform of Article 81 and merger control. In particular, we support an effects-based rather than a form-based approach to competition policy. Such an approach focuses on the presence of anti-competitive effects that harm consumers, and is based on the examination of each specific case, based on sound economics and grounded on facts

The optimal enforcement of antitrust law

This paper analyses the optimal enforcement of competition policy against collusion under asymmetric information on cartel's costs and observable prices. The implementable price schedules are increasing, and the net profits decreasing, in cartel's costs, while expected penalties are increasing in observed prices. Hence, more efficient cartels enjoy positive (informational) rents. The optimal price schedule is higher than marginal costs even when enforcement is costless: since penalties can be at best zero, informational rents for more efficient types must be created through price-cost margins. This allocative distortion is lower for more efficient types, while full collusion can be tolerated for high cost cartels. Costly enforcement tends to reduce this distortion for less efficient types. Comparing antitrust enforcement with regulation, we find that regulation with positive transfers is better than antitrust enforcement, which however allows to implement more efficient outcomes than regulations without transfers

The hypoxic transcription factor KlMga2 mediates the response to oxidative stress and influences longevity in the yeast Kluyveromyces lactis

Hypoxia is defined as the decline of oxygen availability, depending on environmental supply and cellular consumption rate. The decrease in O2 results in reduction of available energy in facultative aerobes. The response and/or adaptation to hypoxia and other changing environmental conditions can influence the properties and functions of membranes by modifying lipid composition. In the yeast Kluyveromyces lactis, the KlMga2 gene is a hypoxic regulatory factor for lipid biosynthesis-fatty acids and sterols-and is also involved in glucose signaling, glucose catabolism and is generally important for cellular fitness. In this work we show that, in addition to the above defects, the absence of the KlMGA2 gene caused increased resistance to oxidative stress and extended lifespan of the yeast, associated with increased expression levels of catalase and SOD genes. We propose that KlMga2 might also act as a mediator of the oxidative stress response/adaptation, thus revealing connections among hypoxia, glucose signaling, fatty acid biosynthesis and ROS metabolism in K. lactis

An Economic Approach to Article 82 - Report by the European Advisory Group on Competition Policy

This report argues in favour of an economics-based approach to Article 82, in a way similar to the reform of Article 81 and merger control. In particular, we support an effects-based rather than a form-based approach to competition policy. Such an approach focuses on the presence of anti-competitive effects that harm consumers, and is based on the examination of each specific case, based on sound economics and grounded on facts.Competition Policy; Abuse of Market Power; Article 82

An Economic Approach to Article 82

This report argues in favour of an economics-based approach to Article 82, in a way similar to the reform of Article 81 and merger control. In particular, we support an effects-based rather than a form-based approach to competition policy. Such an approach focuses on the presence of anti-competitive effects that harm consumers, and is based on the examination of each specific case, based on sound economics and grounded on facts.competition policy; abuse of market power