Competition policy

Mengjia Ren, Lee Branstetter, Brian Kovak, Daniel Armanios, Jiahai Yuan, 16 March 2019

Despite leading the world in clean energy investment in recent years, China continues to engage in massive expansion of coal power thanks to policies that effectively subsidise and (over)incentivise coal power investment. This column examines the effects of the 2014 devolution of authority from the central government to local governments on approvals for coal power projects. It finds that the approval rate for coal power projects is about three times higher when the approval authority is decentralised, and provinces with larger coal industries tend to approve more coal power.

Luis Aguiar, Joel Waldfogel, 16 February 2019

Streaming platforms give a diverse range of music creators direct access to large audiences, but whether their songs reach these audiences can depend on the platforms’ decisions about what to promote. This column examines the impact of inclusion on Spotify playlists. The overall effect of appearing on the Spotify-curated Today's Top Hits playlist is about 19.4 million streams on average. Inclusion in top selling or new music playlists also has a significant impact on song success. The results suggest that growing concentration in the streaming market, as well as other markets dominated by one or a few players, may create a need for scrutiny of how platforms exercise their power.

Emilio Calvano, Giacomo Calzolari, Vincenzo Denicolò, Sergio Pastorello, 03 February 2019

Antitrust agencies are concerned that the autonomous pricing algorithms increasingly used by online vendors may learn to collude. This column uses experiments with pricing algorithms powered by AI in a controlled environment to demonstrate that even relatively simple algorithms systematically learn to play sophisticated collusive strategies. Most worrying is that they learn to collude by trial and error, with no prior knowledge of the environment in which they operate, without communicating with one another, and without being specifically designed or instructed to collude.

Thomas N. Hubbard, 30 January 2019

Harold Demsetz, who passed away earlier this year, was an enormously influential figure in industrial organisation, the economics of organisation, and law and economics. This column, written by a friend and colleague, outlines some of his most influential ideas and characterises his thinking as rigorous, insightful and highly relevant to central problems in industrial organisation and business strategy today.

Vitezslav Titl, Benny Geys, 13 January 2019

Despite public concerns about the role and influence of big donors on politics, questions remain regarding the mechanisms behind political favouritism to donor corporations. Using 2006–2014 data on political donations and public procurement allocations in the Czech Republic, this column finds that firms that increase their donations to a political party see the value of their public procurement contracts rise in the following year. Contracting authorities appear to engage in different forms of strategic behaviour to favour corporate donors, who tend to face fewer competitors in more regulated and open procurement procedures.

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