Competition policy

Ryoko Ueda, Keiichiro Kobayashi, 18 November 2017

Strategic shareholding – companies holding minority shares in other companies for the sake of business relations – can be used for anticompetition purposes or to reduce pressure from shareholders. This column explores strategic shareholding in Japan. Roughly one third of shareholders are found to be strategic, with three quarters of these being business corporations. However, in Japanese corporate culture it is not uncommon for such shareholding to occur as part of technical or business partnerships without affecting managerial independence.

Monika Schnitzer, Martin Watzinger, 31 October 2017

Conventional wisdom holds that venture capital-financed start-up companies generate positive spillovers for other businesses, but these spillovers are hard to measure accurately. This column uses a broader analysis of patent spillovers than previous studies to argue that venture capital-financed start-up companies help established companies innovate, and play a significant role in the commercialisation of new technologies. This suggests that subsidies for venture capital investment should be at least as large as current R&D subsidies.

Mark Schankerman, Florian Schuett, 27 October 2017

Critics of the patent system argue that ineffective patent office screening is posing an impediment to innovation. This column develops a model to examine the effect of examination, fees, and court litigation on patent quality. Results show that frontloading fees (i.e. higher fees for application versus approval), capping litigation costs, and intensifying patent office examination all lead to increases in social welfare. Simulations calibrated with existing data suggest that about 65-85% of granted patents are invalid.

Murillo Campello, Daniel Ferrés, Gaizka Ormazabal, 07 September 2017

Strategies for cartel detection and prosecution differ across countries. This column uses a US dataset to show that independent directors of cartel-indicted firms favour the implementation of corrective actions in order to mitigate damage to their personal reputations. Firms with a larger fraction of independent directors on their boards observe smaller value losses and lower cartel duration during cartel-busting episodes.

Rafael Dix-Carneiro, Brian Kovak, 23 August 2017

The effects of foreign competition have been shown to vary substantially across regions within a country. Using administrative and household survey data from Brazil, this column examines the various margins of adjustment in response to trade-induced regional shocks. The results demonstrate a key role for the non-tradable sector and informal employment in the adjustment process.

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