Capacity constraints and irreversible investments: defending against collective dominance in UPM Kymmene/Norske Skog/Haindl.

Scrutiny of potential mergers by the European Commission often focuses on unilateral effects or single firm dominance. But some cases have involved concerns over coordinated effects: the concern that the merger could increase the likelihood of consumer harm through tacit collusion by the reduced number of firms in the industry (this is known as collective dominance). The economic and legal issues are far less certain in these cases and a particular challenge is how to bring empirical evidence to bear on the decision. In this chapter we examine a case in newsprint and magazine paper - UPM Kymmene/Norske Skog/Haindl . Here, coordinated effects were at the centre of the Commission’s concerns. We discuss how collusion theory and evidence were used to help clear the merger without remedies in the final Decision.

Leveraging Monopoly Power by Degrading Interoperability: Theory and Evidence from Computer Markets

When will a monopolist have incentives to foreclose a complementary market by degrading compatibility/interoperability of his products with those of rivals? We develop a framework where leveraging extracts more rents from the monopoly market by "restoring" second degree price discrimination. In a random coefficient model with complements we derive a policy test for when incentives to reduce rival quality will hold. Our application is to Microsoft's strategic incentives to leverage market power from personal computer to server operating systems. We estimate a structural random coefficients demand system which allows for complements (PCs and servers). Our estimates suggest that there were incentives to reduce interoperability which were particularly strong at the turn of the 21st Century.Foreclosure, anti-trust, demand estimation, interoperability

Communication, Renegotiation, and the Scope for Collusion

We study the effect of communication in an experimental game where cooperation is consistent with equilibrium play if players share an understanding that cheating will be punished. Consistent with communication acting as a coordinating device, credible preplay threats to punish cheating are the most effective message to facilitate collusion. Promises to collude also improve cooperation. Credible threats do not occur in a treatment with a limited message space that permits threats of punishment. Contrary to some theoretical predictions, renegotiation possibilities facilitate collusion

Leveraging Monopoly Power by Degrading Interoperability: Theory and Evidence from Computer Markets

When will a monopolist have incentives to leverage her/his market power in a primary market to foreclose competition in a complementary market by degrading compatibility/interoperability of her/his products with those of her/his rivals? We develop a framework where leveraging extracts more rents from the monopoly market by ‘restoring’ second‐degree price discrimination. In a random coefficient model with complements, we derive a policy test for when incentives to reduce rival quality will hold. Our application is to Microsoft's alleged strategic incentives to leverage market power from personal computer to server operating systems. We estimate a structural random coefficients demand system that allows for complements (personal computers and servers). Our estimates suggest that there were incentives to reduce interoperability that were particularly strong at the turn of the 21st century

Leveraging monopoly power by degrading interoperability: theory and evidence from computer markets

When will a monopolist have incentives to leverage his market power in a primary market to foreclose competition in a complementary market by degrading compatibility/interoperability of his products with those of her rivals? We develop a framework where leveraging extracts more rents from the monopoly market by .restoring. second degree price discrimination. In a random coefficient model with complements we derive a policy test for when incentives to reduce rival quality will hold. Our application is to Microsoft’s alleged strategic incentives to leverage market power from personal computer to server operating systems. We estimate a structural random coefficients demand system which allows for complements (PCs and servers). Our estimates suggest that there were incentives to reduce interoperability which were particularly strong at the turn of the 21st Century

Leveraging Monopoly Power by Degrading Interoperability: Theory and Evidence from Computer Markets

When will a monopolist have incentives to foreclose a complementary market by degrading compatibility/interoperability of his products with those of rivals? We develop a framework where leveraging extracts more rents from the monopoly market by “restoring” second degree price discrimination. In a random coefficient model with complements we derive a policy test for when incentives to reduce rival quality will hold. Our application is to Microsoft’s strategic incentives to leverage market power from personal computer to server operating systems. We estimate a structural random coefficients demand system which allows for complements (PCs and servers). Our estimates suggest that there were incentives to reduce interoperability which were particularly strong at the turn of the 21st Century.

Elevated impulsivity and impaired decision-making cognition in heavy users of MDMA ("Ecstasy”)

Rationale: In animal studies, the common club drug 3,4-methylendioxymethamphetamine (MDMA, "Ecstasy”) consistently caused a prolonged loss of presynaptic serotonergic neurons, and evidence suggests that MDMA consumption may also affect the human serotonergic system. Serotonin (5-HT) has been implicated in the regulation of impulsivity and such executive functions as decision-making cognition. In fact, MDMA users have shown elevated impulsivity in two studies, but little is known about decision making in drug-free MDMA consumers. Objective: The aim of this study was to examine the cognitive neurotoxicity of MDMA with regard to behavioral impulsivity and decision-making cognition. Methods: Nineteen male, abstinent, heavy MDMA users; 19 male, abstinent cannabis users; and 19 male, drug-naïve controls were examined with the Matching Familiar Figures Test (MFFT) as well as with a Go/No-Go Task (GNG) for impulsivity and with a Gambling Task (GT) for executive functioning. Results: MDMA users showed significantly elevated impulsivity in the MFFT Impulsivity score (I-score), but not in commission errors of the GNG, compared with controls. Cannabis users did not yield altered impulsivity compared with controls. In the GT, MDMA users performed significantly worse than cannabis consumers and controls, whereas cannabis users exhibited the same decision-making capacity as controls. In addition, the I-score as well as the decision-making performance was correlated with measures of MDMA intake. The I-score and the decision-making performance were also correlated. Conclusion: These results suggest that heavy use of MDMA may elevate behavioral impulsivity and impair decision-making cognition possibly mediated by a selective impairment of the 5-HT syste

How Market Fragmentation Can Facilitate Collusion

Economists have recommended the fragmentation of capacities before regulated markets are liberalized because static oligopoly models imply that outcomes approximate perfect competition with a fragmented enough market structure. This intuition fails under collusion. When individual firms are capacity constrained relative to total demand, the fragmentation of capacity facilitates collusion and increases the highest sustainable collusive price. Collusive outcomes remain feasible even for arbitrarily fragmented capacity. These results can explain the finding in Sweeting (2007 , Economic Journal , 117, 654–685), that dramatic fragmentation of generation capacity in the English electricity industry did not reduce price cost margins.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/93695/1/j.1542-4774.2012.01083.x.pd