Portfolio Effects and Merger Control: Full-line Forcing as an Entry Deterrence Strategy.

The ''portfolio effect theory'' developed by the European Commission in merger control is at the center of a fierce international row with the US authorities who believe that this theory has no economic foundations. This paper aims to provide a counter-argument and shows that full-line forcing may be used by the holder a comprehensive range of products as an entry deterrence device to maintain its monopoly power. However, due to buyer power on the retail market, this will happen only if entry is not profitable for the industry as a whole. The effects on consumer welfare are ambiguous. Full-line forcing will reduce prices in the first period, but as it helps maintaining monopoly power, is harmful in the long-term.Portfolio effects, competition policy, full-line forcing, entry deterrence.

Multiproduct Monopolist and Full-line Forcing: The Efficiency Argument Revisited

Shaffer (1991) shows that a multiproduct monopolist selling differentiated products through a unique retailer cannot earn monopoly profit using brand specific two-part tariffs and that full-line forcing restores monopoly power. We extend this analysis to more general contracts and shows that full-line forcing is efficient as it increases both industry profits and consumers' surplus.

Bilateral Control with Vertical Contracts

A supplier is known to be subject to opportunism when contracting secretly with downstream competitors, particularly when downstream firms have "passive beliefs." We stress that in many situations, an equilibrium with passive beliefs may not exist and passive beliefs appear less plausible than "wary beliefs", introduced by McAfee and Schwartz, that account for multilateral deviations. We show that in a broad range of situations, equilibria with wary beliefs exist and reflect opportunism. Last, we confirm the insight, derived by O'Brien and Shaffer using a more ad-hoc equilibrium concept, that RPM eliminates the scope for opportunism.Opportunism, Secret Contracts, Beliefs, Resale Price Maintenance

Optimal Audit Policy and Heterogenous Agents

Frauds can be explained not only in terms of individual willingness to cheat, but may also be driven by opportunities to behave dishonestly. The audit policy should therefore be different for different categories of agents. This paper focuses on the optimal audit policy when there are two categories of agents and shows that the auditor adopts different policies depending on its budget. When resources are quite limited, the auditor sets identical audit probabilities for both types. On the other hand, in most of the cases, the authority should first ensure that people with lower opportunities choose not to commit an offence.Fraud, audit, opportunities, budget allocation.

The Effects of Retail Regulations on Prices Evidence form the Loi Galland

In 1997, a new legislation banning below-invoice retail prices came into force in France. Individually negotiated discounts could no longer be passed on to consumers, which is equivalent to allowing industry-wide price oors. The anti-competitive effects of such practices are well-known. The elimination of intra-brand competition is expected to lead to a sharp increase in the retail prices. Using CPI raw data, we nd evidence supporting this claim. The modification or revocation of the existing legislation (as it has been done in Ireland in December 2005) would then be expected to reduce retail prices.retail prices, pricing regulations, resale price maintenance

Application of a Combined Active Control and Fault Detection Scheme to an Active Composite Flexible Structure.

In this paper, the problem of increasing reliability of active control procedure is considered. Indeed, a design method of rejection perturbation in presence of potentially faults, on a flexible structure with integrated piezo-ceramics, is presented. The piezo-ceramics are used as actuators and sensors. A single unit based solution, which handles both control action and fault diagnosis is proposed. The algorithm uses H∞ optimization techniques. A full order model of the structure is first obtained via both finite-element (FE) approach and identification procedure. This model is then reduced in order to be used in our robust approach. By a suitable choice of weightings functions, the provided method is able to reject disturbance robustly and to estimate occurred faults. The case of sensors and actuators faults is discussed. The choice of weightings for diagnosis and control systems is also tackled. Finally, the effectiveness of this integrated method is confirmed by both simulation and experimental results