Competition policy

Sadao Nagaoka, 15 May 2019

Standard essential patents are patents that are needed in order to comply with a particular standard. Technologies protected by such patents are granted on the condition that rights holders commit to licensing the patents on fair, reasonable, and non-discriminatory terms. This column surveys three key issues that arise under these licensing agreements: hold-up, reverse hold-up, and ex-ante negotiation. The discussion highlights how patent award procedures affect the incentives for firms to invest in R&D. 

Michael Kremer, Christopher Snyder, Fanele Mashwama, 10 May 2019

Consumers pay more for many pharmaceuticals in the US than in most other countries. This column investigates the welfare implications of such price discrimination using demand curves for HIV pharmaceuticals. A ban on price discrimination exacerbates the potentially large deadweight loss in the market for either a drug or a vaccine. However, this loss is ameliorated by a small government subsidy.

Alessandra Bonfiglioli, Rosario Crinò, Gino Gancia, 08 May 2019

Recent studies documenting the increase of industrial concentration have raised concerns about an era of monopolies, growing profit shares, and low economic dynamism. Using US data, this column investigates the concentration of import sales by country of origin. The results show that among foreign firms selling to the US, the concentration of sales has remained stable by origin country, but it has fallen when pooling firms from all origins. This suggests that intensified competition in international markets coexists with growing concentration among national producers.

Michael Kremer, Christopher Snyder, Albert Chen, 26 March 2019

The deadweight loss from a monopolist’s not producing at all can be much greater than from charging too high a price. The column argues that the potential for this sort of deadweight loss is greatest when the market demand curve has a particular (Zipf) shape. Calibrations based on the world distribution of income generate this shape, with disturbing consequences for potential deadweight loss in global markets.

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.

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