Competition policy

Erica Bosio, Marko Grujicic, Maksym Iavorskyi, 25 September 2020

A trade-off between quality and speed/cost in public procurement regulation is often seen as a challenge for legislators. This column analyses data from 187 economies and finds that this trade-off is not supported by the data. In fact, there is a positive correlation between quality and efficiency of public goods and services. The strong correlation suggests that certain features of governments produce good results across different services.

Ufuk Akcigit, Sina T. Ates, Josh Lerner, Richard Townsend, Yulia Zhestkova, 24 September 2020

The US military community has highlighted the potential security threat posed by foreign venture investments in Silicon Valley, particularly from Chinese stakeholders. This column presents a theoretical and empirical analysis of the relationship between venture capital and national security, focusing on the ability of overseas firms to gain a domestic technological advantage through investing in the US tech sector. The growing importance of this the technology sector, as well as the national security issues at stake, mean that understanding the correlations is a vital avenue of future research.

Fabienne Ilzkovitz, Adriaan Dierx, 27 August 2020

With the increased globalisation and digitalisation of the economy and the challenge of recovery from the COVID-19 crisis, the future of EU competition policy is up for debate. In response, the European Commission is reviewing its enforcement practice and has brought forward new policy initiatives. In an effort to improve the evidence base of its activities, the Commission has become increasingly active in evaluating the economic effects of its competition policy interventions. This column summarises the main lessons learnt from this work and sets out areas for further research.

Cristina Caffarra, Gregory Crawford, 26 August 2020

New law for a Mandatory Bargaining Code has been introduced in Australia to implement a decision that publishers should be compensated for use of news content by giant digital platforms. This reflects a policy view that the large disparity in bargaining power between platforms and individual publishers requires positive intervention to support quality journalism and news production.  This column argues that the Code as formulated by the ACCC has desirable properties in line with bargaining theory (including the use of ‘final offer arbitration’ as a backstop); it also leaves implementation of the regulation to the parties involved, not to an agency suffering from extreme asymmetric information. At a time when the design of regulation for ‘gatekeeper’ platforms is very much top of the agenda, this ‘decentralised regulation’ approach should be considered as part of a menu of possibilities in multiple settings. 

Volker Nocke, Michael D. Whinston, 26 August 2020

Concentration measures such as the post-merger Herfindahl-Hirschman index as well as the merger-induced change in the index are usually key determinants in the review of horizontal mergers by competition agencies and courts. This column studies whether the magnitude of the efficiencies required for a merger not to hurt consumers may be related to the change and the level of the Herfindahl-Hirschman index. On the basis of theoretical analysis substantiated by empirical evidence, it finds that while the critical level of efficiencies depends on the change in the index, it is independent of level of the index. Hence current guidelines should be changed so as to emphasise the change more and the level less.

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