‘Do Competition Authorities’ Cartel Investigations exhibit a Life-Cycle?’

The Spring Seminar Series continues on Friday 27th February with our master empiricist Prishnee Armoogum (CCP & ECO) asking ‘Do Competition Authorities’ Cartel Investigations exhibit a Life-Cycle?‘. Prishnee is a PhD researcher and Associate Tutor in the School of Economics at the University of East Anglia. Her thesis topic explores the experiences of competition enforcement across different competition authorities around the world, with a particular interest in small economies. Prishnee is also a member of the Competition Commission of Mauritius. An abstract for her paper can be found below.

Abstract

Although there are numerous recent papers which have studied the relationship between deterrence and cartel formation, there is not much literature on the empirical assessment of the Competition authority’s behaviour in the presence of deterrence. The purpose of this paper is to investigate the presence of deterrence on cartels during the life cycle of a competition authority (CA). The intuition of proposed theory developed in this work is used to study the lifecycle of the CA and the impact of competition law and policy deterrence on its cartel activities. A yearly panel data set of 32 countries (33 competition institutions) for period 2006-2012 is used empirically to test the model. Choosing the most preferred model, we find that the number of cartel investigations do not have a life cycle. However, the results show that tools used to deter cartels, i.e. cartel fines, years of imprisonment and number of leniency applications, do have an influence on the number of cartel investigations. The number of phase II merger investigations is also found to be negatively related to the number of cartel investigations.

The seminar takes place from 13:00-14:00 in the Thomas Paine Study Centre, Room 1.03.

CCP research cited in CMA issues statement on GB energy markets

Research undertaken by two CCP members has been referenced in the Competition and Market Authority’s updated issues statement as it continues its on-going investigation into British energy markets.

A CCP Working Paper by Professor Catherine Waddams (CCP & Norwich Business School) and Dr Minyan Zhu (CCP & Nottingham University Business School) is cited by the CMA in relation to the impact of the introduction of the Standard Licence Condition 25A (the SLC 25A non-discrimination clause) in 2009. The paper, ‘Pricing in the UK retail energy market 2005-2013‘, found that the non-discrimination clause prompted an adverse effect on competition in the energy market after its inception. An abstract for the paper can be found below.

UK governments and the energy regulator have shown increasing concern about the health of competition in the residential energy market, following their pioneering deregulation at the end of the last century. We identify the effects of introducing the non-discrimination clauses in 2009, a major regulatory intervention and the first since deregulation. We explore the effect of this intervention on the price movements of the six major players, and find that the nature of competition in the industry has changed, with less effective rivalry between the regional incumbents and large regional competitors following the intervention; companies seem to have ‘retreated’ to their home regions, leaving a market where pricing behaviour resembles more closely a duopoly between British Gas and the regional incumbent.

See also:

Catherine Waddams, ‘Is an in-depth energy market inquiry worth it?‘ (March 27, 2014) Competition Policy Blog.

Morten Hviid & Catherine Waddams, ‘Non-discrimination Clauses in the Retail Energy Sector‘ (2012) 122 The Economic Journal 236-252.

‘Strategic Updates in Mobile Apps’

The Spring Seminar Series continues on Friday 13th February with the marvellous Franco Mariuzzo (CCP & ECO) presenting his latest research project, ‘Strategic Updates in Mobile Apps‘. Franco is a Lecturer in Econometrics in the School of Economics at UEA. He has conducted extensive research in the areas of Applied Econometrics and Industrial Organisation. An abstract for Franco’s paper can be found below.

Abstract

In September 2014, more than 1.3 million apps were available in the Apple and Android app stores. Despite this tremendous size, the characteristics and the functioning of app markets are still little known. App markets are characterized by very low entry barriers and extremely high degree of competition. In such environment one of the critical issues is how to attract the attention of users. In this paper we focus on a specific strategy that app developers may use to stimulate demand for their products: versions management. It is recognized by practitioners and developers that managing app updates (i.e., releasing new versions of an existing app) is critical to increase app visibility and to keep users engaged, disguising a hidden strategy to stimulate downloads. We develop a theoretical model to describe why and when major and minor updates should be released. We then use an unbalanced panel with characteristics on the top 1000 apps on Apple stores for 5 European countries to test empirically these theoretical predictions. Our results confirm that updates are more often released when the app is experiencing a decrease in downloads. We interpret this finding as evidence that app developers use updates as a “bet for resurrection” strategy.

The seminar takes place from 13:00-14:00 in the Thomas Paine Study Centre, Room 1.03.