‘Collusion under Private Monitoring with Asymmetric Capacity Constraints’

On Friday 21st March 2014, the Centre welcomes the return of an old friend in the form of former CCP Research Associate and Post Doctoral Fellow Luke Garrod (Loughborough University). Luke will be presenting his paper entitled ‘Collusion under Private Monitoring with Asymmetric Capacity Constraints‘ which he has written with fellow CCP alumna Matthew Olczak (Aston University). An abstract for their article can be found below.

Abstract

We explore the effects of asymmetries in capacity constraints on collusion where demand is uncertain and where firms must monitor the agreement through their privately observed sales and prices. We show that deviations will be detected perfectly when demand fluctuations are sufficiently small. Otherwise, monitoring is imperfect and punishment phases must occur on the equilibrium path. Collusion is hindered in both cases when the largest firm has more capacity and when the smallest firm has less. We demonstrate that a merger with a collusive symmetric outcome can have a lower average best equilibrium price than a more asymmetric noncollusive outcome.

The seminar will take place from 13:00-14:00 in the Thomas Paine Study Centre, Room 1.1.

‘The consumer attention deficit syndrome: Consumer choices in complex markets’

At this week’s CCP seminar, we are delighted to welcome two distinguished guests in the form of Lisbet Berg (SIFO) and Åse Gornitzka (University of Oslo). On Friday 14th March, Lisbet and Åse will be presenting their paper entitled ‘The consumer attention deficit syndrome: Consumer choices in complex markets‘. An abstract for their article can be found below and the full paper is available for download for subscribers to the Acta Sociologica journal.

Abstract

Consumers’ attention is a scarce resource. It is virtually impossible for a consumer to keep informed about all the markets he or she visits. This article describes a mechanism that is likely to evolve in sophisticated societies with multiple complex markets. Since the nature of consumer areas differs substantially and thus requires different kinds of consumer competences, such competences cannot be easily transferred from one consumer area to another. People therefore tend to give their limited attention to consumer areas of similar nature, while neglecting others.
This phenomenon is conceptualised as the Consumer Attention Deficit Syndrome (CADS). Empirically, if such a mechanism exists, this will be reflected in consumers’ tendency to develop specialised consumer competence profiles. In three nationally representative data sets collected in Norway in 2005, 2007 and 2009, specialised consumer competence profiles were distinguished. The following analysis indicates that, on an individual level, CADS is quite widespread. While it cannot be claimed that some social groups are more vulnerable to the syndrome than
others, different groups’ lack of attention is concentrated on different consumer areas. Leaning on choice and decision-making theories, the implications of CADS for the functioning of markets are discussed.

The seminar will take place from 13:00-14:00 in the Thomas Paine Study Centre, Room 0.1.

Policy Briefing: Is the Korean Innovation of Individual Informant Rewards a Viable Cartel Detection Tool?

Policy Briefing of CCP Working Paper 14-3:

Stephan A, ‘Is the Korean Innovation of Individual Informant Rewards a Viable Cartel Detection Tool?’. (Available to download from our Working Papers pages on the CCP website).

BACKGROUND

  • The defining characteristic of modern cartel enforcement is the use of leniency programmes. This innovation, first employed by the US in the late 1970s, has been emulated by the vast majority of competition law enforcement regimes around the world.

  • The basic principle of these programmes is to offer immunity to the first firm to report a cartel infringement to the competition authority.

  • It is thought leniency programmes have been instrumental in destabilising and uncovering cartel infringements, thereby undermining the trust that exists between cartel members and increasing the rate at which cartels are detected.

  • Despite the offer of leniency and the increasing levels of fines imposed on cartels, competition authorities continue to uncover a high volume of infringements. This might suggest that more could be done to strengthen deterrence in cartel enforcement. It has been suggested that the next logical step in advancing antitrust enforcement may be the use of rewards or bounties to individual whistle-blowers.

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‘The globalization of energy regulation: networks and politics intertwined’

The latest offering in the CCP’s Spring seminar comes courtesy of the hugely gifted Francesca Vantaggiato (CCP) , a Research Associate at the Centre, who will be presenting her research on ‘The globalization of energy regulation: networks and politics intertwined‘ on Friday 7th March. An abstract for her seminar can be found below.

Abstract

The presentation will tackle the topic of regionalism and globalization of energy regulation, as implemented by energy regulators themselves. Regionalism and/or globalization in regulatory matters have been explored in a number of other sectors, namely securities, banking, standard-setting by private bodies, competition. Energy is, among the utilities, the sector in which such developments were to be expected given the geopolitical dimension of energy issues. Currently, there are 11 energy Regional Regulatory Networks in the world, which collectively represent over 200 energy national/state regulatory authorities from all continents. RRNs usually respect a geographical criterion and have both an internal and an external function: internally, they serve to enhance members’ capacity and to socialize members; externally, they serve as means of contact with regulators and other energy stakeholders in other countries. It is hypothesised that energy regulators, in both developed and developing countries, far from being unconcerned with political and power relations, endorse domestic foreign policy objectives with regard to energy issues, and help in carrying them out also through RRNs. The regulators’ motivation to do so could be traced in their willingness to increase their own institutional relevance and legitimacy, both nationally and internationally. By examining the history and the features of these RRNs, the presentation will introduce a set of research questions that aim to investigate the extent and the goals of these regionalization processes. In particular, the role EU and USA regulators have played and play in shaping the features of other RRNs will be presented as evidence of the stated hypothesis.

The seminar takes place from 13:00-14:00 in the Thomas Paine Study Centre, Room 1.1.