‘Monopolization Conduct by Cartels’

The CCP Seminar Series continues on Friday 5th February 2016, as another exciting new recruit, Lily Samkharadze (CCP & NBS), makes her CCP debut with her presentation, ‘Monopolization Conduct by Cartels‘ (joint work with Robert Marshall and Leslie Marx). Lily has recently started  her new role as a Lecturer in Competition Economics at the Norwich Business School. She writes extensively in the field of competition policy and competition economics, and has also been nominated for a 2016 Antitrust Writing Award for an article in the International Journal of Industrial Organization. An abstract for Lily’s paper can be found below.


Collusion enhances profits of cartel firms, but collusive profits are reduced by the presence of rival firms outside the cartel. We construct a model in which a firm that was not invited to join, or that chose to remain outside the cartel, can potentially be eliminated through monopolization conduct by the cartel. This conduct increases profits for cartel members due to both the diminished competition and the decreased potential for secret deviations by cartel firms. Because of this latter effect, incentives for monopolization conduct are stronger for cartels that have not fully suppressed rivalry relative to those that have.

The seminar takes place from 13:00-14:00 in TPSC 2.03. Tea will be provided directly afterwards in the MBA Café (Floor 2, TPSC).

‘Unsolicited sovereign ratings and the sovereign-bank ceiling: An unintended consequence of regulatory disclosure’

We can look forward to another debut performance at the CCP Seminar Series on Friday 29th January 2016, as the magnificent Patrycja Klusak (CCP & NBS) takes the stage to present ‘Unsolicited sovereign ratings and the sovereign-bank ceiling: An unintended consequence of regulatory disclosure‘ (joint work with Rasha Alsakka and Owain ap Gwilym at Bangor University). Patrycja recently joined the Norwich Business School as a Lecturer in Banking and Finance and became a CCP Faculty Member in January 2016. Her numerous research interests include: analysing the regulatory changes to the Credit Rating Agency (CRA) industry, empirical banking and applied econometrics. An abstract for Patrycia’s paper can be found below.


This paper integrates three themes on regulation, unsolicited credit ratings, and the sovereign-bank rating ceiling. We reveal an unintended consequence of the EU rating agency disclosure rules upon rating changes, using data for S&P-rated banks in 44 countries between 2006 and 2013. The disclosure of sovereign solicitation status for 13 countries in February 2011 has an adverse effect on the ratings of intermediaries operating in these countries. The unsolicited sovereign rating status transmits risk to banks via the rating channel. The results suggest that banks bear a penalty for the solicitation status of their host sovereign’s ratings, thus revealing an unintended and adverse impact of EU regulation.

The seminar takes place from 13:00-14:00 in QUEENS 1.04. Tea will be provided directly afterwards on Floor 0 in the Elizabeth Fry Building.

‘The 10 x 8 Meter Relay: An assessment of how introducing comparative information may induce inter-group competition in energy efficiency’

The CCP Seminar Series continues on Friday 22nd January 2016, where we will be treated to a debut performance by the brilliant Mike Brock (CCP & ECO) who joined the Centre as a member in June 2015. Mike has been a Lecturer in Microeconomics at the UEA School of Economics since August 2014 and has numerous research interests, including specialist interest in the relationship between environmental assets and subjective well-being. His seminar will introduce his most recent project, ‘The 10 x 8 Meter Relay: An assessment of how introducing comparative information may induce inter-group competition in energy efficiency‘. An abstract for his seminar can be found below.


This presentation will introduce a new natural field study currently underway at UEA. The project provides weekly information to students living in Halls of Residence on their absolute and relative energy usage.  Provided at an aggregated (flat-level) degree, the motivation for this study is to decipher how and to what extent non-financial stimuli can be used to try and incite behavioural change and invite participants to consider their empirical choices and actions. The study forms part of a wider literature which seeks to assess how and why consumers can be induced into making more conscious decisions and the necessary level of persuasion and reinforcement such methods require to achieve long-lasting success.

The seminar takes place from 13:00-14:00 in the Elizabeth Fry Building, Room 01.10. Tea will be provided directly afterwards in the Elizabeth Fry Staff Room.

‘Trading Flexibility in Power Markets’

We are rounding off our Autumn seminar series in style on Friday 18th December, where our esteemed guest Peter Møllgaard (Copenhagen Business School) will present ‘Trading Flexibility in Power Markets‘. Peter is both a Professor of Industrial Organization and Head of the CBS Department of Economics. His main research interests lie in the application of industrial economics to competition policy, and he has published on a wide array of topics (including mergers, dominance, and damages claims). An abstract for his paper can be found below.


Due to increased amounts of renewable energy supply, power markets increasingly value flexibility, i.e., the possibility to modify generation or demand within a timescale ranging from minutes to hours in response to variability. We set up an economic model of bilateral trade between a prosumer that offers to sell flexibility to an aggregator who, in turn, resells this flexibility in a marketplace. We show that flexibility trading is welfare enhancing as long as a transaction-cost reducing technology is in place.

The seminar takes place from 13:00-14:00 in the Thomas Paine Study Centre, Room 1.03. Tea will be provided directly afterwards in the MBA Café (TPSC, Floor 2).

This is the final CCP seminar of the Autumn semester, but we will return in January 2016 with more cutting-edge commentary from the world of competition policy and regulation. You can keep up-to-date with our future seminars by visiting the designated pages on our website.

‘The Incidence of Fines on Cartel Dynamic Pricing’

Friday 27th November sees the long-awaited return of our delightful former colleague Anna Rita Bennato (Oxford Brookes University) who will be presenting ‘The Incidence of Fines on Cartel Dynamic Pricing‘, which she has co-researched with Franco Mariuzzo (ECO and CCP). An abstract for her seminar can be found below.


With Regulation 1/2003 the European Commission D-G for Competition has introduced administrative fines on corporation turnover to punish any breach of Article 101 and 102 of the Treaty. To confine obvious adverse effects of a too harsh punishment fines have been limited to a thirty per cent cap of the undertaking’s worldwide turnover (Guidelines 2006/C 210/02). However, the assessment of the gravity is made on a case-by-case basis for all types of infringement. As a general rule, fines are calculated as a proportion of the value of sales.

In this paper we study the distortion in pricing that stems from the application of fines on turnover in an environment where cartels choose their optimal pricing under uncertainty and business cycles. Our model shows how in a dynamic setting fines may resemble the effect of an ad-valorem taxation. The effect of fines on prices varies depending on the position on the cycle (expected demand growing or falling).

We test our model using 328 weekly data on the Joint Executive Committee (JEC) and the econometric methodology suggested by Borenstein and Shepard (1996). While JEC was a legal cartel, in a counterfactual exercise we simulate the effect of the cartel being detected and fined on turnover.


Anna’s presentation takes place from 13:00-14:00 in the Thomas Paine Study Centre, Room 1.03. 

‘Endogenous antitrust enforcement and strategic cartel pricing: Experimental evidence’

The next presentation in our Autumn seminar series takes place on Friday 6th November, with the return of Carsten Crede (CCP and ECO) who will be presenting ‘Endogenous antitrust enforcement and strategic cartel pricing: Experimental evidence‘, a joint project with Liang Lu (CCP and ECO). An abstract for his presentation can be found below.


We experimentally examine the effects of endogenous antitrust enforcement, i.e. an enforcement that increases in the cartel overcharge, on cartel prices and stability. With a novel experimental design, we capture the non-profitability-related strategic effects of cartel pricing as a reaction to the endogenous punishment. By allowing self-selection of the cartel into expected low punishment, endogenous enforcement is effective when both fine and detection probability are sufficiently high. However, it may render deterrence less effective if fines are not sufficiently high, suggesting that the substitutability with respect to deterrence between fines and detection probabilities is limited. Nevertheless, both enforcement elements have welfare implications due to strategic effects: whereas high fines directly reduce cartel formation and undermine stability, high detection probabilities decrease the longevity of existing cartels and with it their economic harm.

The seminar will take place from 13:00-14:00 in the Thomas Paine Study Centre, Room 2.03. To find out about the other seminars in this series, visit the seminar pages on our website.

‘Private v public sanctions: the case of cartels’

On Friday 10th July, we rounded off our Summer Seminar Series in style with the dream pairing of Franco Mariuzzo (CCP and ECO) and Peter Ormosi (CCP and NBS) presenting ‘Private v public sanctions: the case of cartels‘, a joint project with Antonios Karatzas (Warwick). An abstract for their presentation can be found below.


Economics literature on the relationship between private and public sanctions has led to a consensus that private (market-based) sanctions can act as an important deterrent to corporate misbehaviour inasmuch as they internalise the social costs of these offences. On the other hand public sanctions are needed where the harm caused by the offence is not internalised (for example because the damaged party remains oblivious to the offence); in these cases the amount of the sanction should equal the un-internalised social cost. We provide further empirical evidence to this literature by looking at cartels, using a novel methodology that enables us to directly control for the magnitude of the private sanction in our model. This allows us to empirically study the substitutability between fines and reputation for firms that have been found guilty of cartel illegal conduct.

We measure reputation with a composite of the frequency of media exposure and the intensity of the media content. Media exposure is captured by a count of sources that document a firm’s illegal behaviour in the cartel and intensity is measured by a sentiment analysis of the text of the published news. We employ an event study technique over a sample of about 300 public companies that belong to about 100 cartels detected by the Competition Commission during the period 1990-2012. Our results confirm that public and private sanctions are not perfect substitutes, and that the intensity of the media content has a larger punishment effect than exposure; we call this “quality for quantity” effect. In addition we find that the effect of reputation is larger for firms that belong to cartels with non-atomistic customers.

This is the final seminar of the Summer but we will return in September for another excellent series of interdisciplinary presentations on competition policy and regulation. We will be announcing the programme for the Autumn Seminar Series in due course and you can keep up-to-date by visiting our designated seminar pages on the CCP website.

‘In Gov We Trust: Voluntary Compliance in Networked Investment Games’

Only two seminars remain in this semester’s CCP Seminar Series but they have most certainly been worth the wait. This week’s penultimate seminar on Friday 3rd July sees Natalia Borzino (CCP and ECO) presenting her research entitled ‘In Gov We Trust: Voluntary Compliance in Networked Investment Games‘, which she has undertaken with Enrique Fatas (CCP & UEA) and Emmanuel Peterle (University of Goettingen). Natalia is a PhD Researcher and Associate Tutor in the School of Economics at UEA. In addition to CCP, Natalia is also a member of the Centre for Behavioural and Experimental Social Science (CBESS) at UES. An abstract for her paper can be found below.


We conduct a controlled laboratory experiment to investigate trust and trustworthiness in a networked investment game in which two senders interact with a receiver. We investigate to what extent senders and receivers comply with an exogenous and non-binding recommendation. We also manipulate the level of information available to senders regarding receiver’s behaviour in the network. We compare a baseline treatment in which senders are only informed about the actions and outcomes of their own investment games to two information treatments. In the reputation treatment, senders receive ex ante information regarding the average amount returned by the receiver in the previous period. In the transparency treatment, each sender receives ex post additional information regarding the returning decision of the receiver to the other sender in the network.

Across all treatments and for both senders and receivers, the non-binding rule has a significant and positive impact on individual decisions. Providing senders with additional information regarding receiver’s behaviour affects trust at the individual level, but leads to mixed results at the aggregate level. Our findings suggest that reputation building, as well as allowing for social comparison could be efficient ways for receivers to improve trust within networks.

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

‘Collective Switching’

Our seminar series continues on Friday 12th June with the tremendous Catherine Waddams (CCP and NBS) presenting ‘Collective Switching‘. Catherine is a Professor of Regulation at the Norwich Business School. Her research interests lie in the area of Industrial Organisation, and she has published widely on privatisation, regulation and the introduction of competition into markets, particularly energy markets. An abstract for her presentation can be found below.


We had the opportunity to observe over a hundred thousand ‘real’ switching decisions in the retail energy market by participants in The Big Switch collective switching exercise, organised by Which?, in 2012.  Our main initial findings are that:

1. The probability of switching rises with increases in the gains available;

2. Despite substantial gains available (median value around a tenth of the bill), and very little further effort required to switch, only a third of participants chose to change their supplier;

3.Participants who saw two offers were less likely to switch than those who saw only one.

We are particularly interested in understanding what lies behind this third finding.

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

This presentation is based on the results gathered by CCP during the Big Switch project, in conjunction with the Which? consumer group. You can download the full CCP report at the following link [PDF, 1.75MB].

‘False Advertising and Consumer Protection Policy’

The CCP seminar series continues on Friday 5th June and we are delighted to welcome back CCP alumnus Christopher Wilson (Loughborough University) who will be presenting ‘False Advertising and Consumer Protection Policy‘. Chris is a Senior Lecturer at the School of Business and Economics at Loughborough University. His research interests encompass industrial organisation and behavioural economics, with a particular interest in the interaction between consumer behaviour and firms’ pricing strategies. An abstract for his paper can be found below.


There is widespread evidence that some firms use false advertising to overstate the value of their products. Using a model in which a regulator is able to punish false claims, we characterize a natural equilibrium in which false advertising occurs probabilistically and actively influences rational consumers. We solve for the optimal level of regulatory punishment under different welfare objectives and establish a set of demand and parameter conditions where optimal policy permits a positive level of false advertising. Further analysis considers wider issues, including the implications for industry self-regulation, product investment, and optimal policy across multiple heterogeneous markets.

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