Tommaso Bighelli, Filippo di Mauro, Marc Melitz, Matthias Mertens, 13 October 2020

Aggregate firm concentration has increased in Europe in the last decade. Using firm-level data, this column shows that concentration is positively associated with productivity at the sector level. As a result, rising concentration should not be viewed as conclusive evidence of a weak competitive environment and need not necessarily be a cause for concern. Rather, rising concentration may be a reflection of more efficient market processes. This has important consequences for industrial and antitrust policy, which must carefully evaluate the costs and benefits of increasing concentration.

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.

Marc Ivaldi, Jiekai Zhang, 10 August 2020

Television channels face a trade-off between the quality service (and number of viewers) and the revenue generated by advertisements. The market is said to be two-sided, with TV channels providing a platform through which advertisers and consumers are brought together during commercial breaks. This column examines the effects of the merge between two digital TV channels in France, and the regulatory intervention, on the quality of programming for viewers and the availability and cost of advertising space for commercial advertisers. 

Thomas Philippon, 12 June 2020

Thomas Philippon's new book argues that in the last 20 years the US has “given up” on free markets. As a result, he tells Tim Phillips, American families are each $5,000 a year poorer.

Francesco Decarolis, Gabriele Rovigatti, 12 September 2019

The concentration in the supply of online advertisement space among a few tech giants has led to their careful scrutiny by competition authorities in both the EU and the US, and some large fines for abuse of dominant position. This column discusses new evidence suggesting that, even without these policy interventions, the market is changing in ways that are reducing the ability of the ad space sellers to gain from their dominant position. Advertisers’ increasing delegation of their ad purchases to demand-side intermediaries has generated a countervailing buyer power capable of leading to marked reductions in online ad prices. 

Andrea Prat, Tommaso Valletti, 26 July 2018

Competition authorities struggle to evaluate the effect of mergers between social media platforms when prices are zero and standard tools like cross-price elasticities are of little use. This column argues that social media platforms are 'attention brokers' that help incumbents maintain market power in other industries by restricting producers’ targeted access to individual consumers. User overlap is more important as a predictor of competition problems than traditional aggregate usage shares. 

Xavier Vives, 22 December 2014

Banking has recently proven much more fragile than expected. This column argues that the Basel III regulatory response overlooks the interactions between different kinds of prudential policies, and the link between prudential policy and competition policy. Capital and liquidity requirements are partially substitutable, so an increase in one requirement should generally be accompanied by a decrease in the other. Increased competitive pressure calls for tighter solvency requirements, whereas increased disclosure requirements or the introduction of public signals may require tighter liquidity requirements.

Hugh Rockoff, 04 October 2014

World War I profoundly altered the structure of the US economy and its role in the world economy. However, this column argues that the US learnt the wrong lessons from the war, partly because a halo of victory surrounded wartime policies and personalities. The methods used for dealing with shortages during the war were simply inappropriate for dealing with the Great Depression, and American isolationism in the 1930s had devastating consequences for world peace.

Tomaso Duso, Klaus Gugler, Florian Szücs, 26 January 2014

In 2004, European merger law was substantially revised, with the aim of achieving a ‘more economic approach’ to merger policy. This column discusses a recent empirical assessment of European merger cases before and after the reform. Post-reform, the outcomes of merger cases became more predictable, and the Commission prohibited fewer pro-competitive mergers. While there remains room for improvement in several aspects, the reform seems to have been successful in bringing European competition law closer to economic principles.

Mario Mariniello, 09 November 2013

Since the adoption of the Anti-Monopoly law in 2007, the Chinese competition authorities have stepped up enforcement of mergers and anti-competitive practices. The Chinese Ministry of Commerce has relied heavily on behavioural remedies in merger cases (as opposed to the more efficient structural remedies favoured by the European Commission). Furthermore, merger policy has been used to protect domestic industries from competition. In contrast, Chinese fines for cartels have shown no foreign bias, and if anything have been too low.

Duarte Brito, Ricardo Ribeiro, Helder Vasconcelos, 28 September 2013

Horizontal acquisitions affect prices through two channels: by eliminating competition between the firms involved, and by changing the incentives for collusion in the affected industry. This column summarises recent research that quantifies these two effects using a new methodology – one that accounts for the difference between financial interests and corporate control. A study of the disposable-razor industry shows that small firms have the greatest incentive to undercut pricing agreements. After acquisitions, acquiring firms have greater incentives to collude, whereas other firms in the industry are more likely to defect.

Neil Gandal, Sarit Markovich, Michael Riordan, 19 September 2013

What are the competitive effects of bundling? This columns presents the results of an empirical study of the market for office productivity software in the 1990s. Counterfactual simulations suggest that the introduction of a bundled office suite increases consumer welfare – provided that preferences for word processors and spreadsheet programs are positively correlated, and that competitors do not exit the market.

Lev Ratnovski, 02 June 2013

Bank competition policy seeks to balance efficiency with incentives to take risk. This calls for an intermediate degree of competition. This column argues that although the traditional policy tools are rules on entry/exit and the consolidation of banks, the Crisis showed that a focus on market structure alone is misplaced. There are other, newer ways in which competition policy can support financial stability: dealing with too-big-to fail and other structural issues in banking, as well as facilitating crisis management.

Roger Smeets, Albert de Vaal, 15 March 2011

Proponents of strong intellectual property rights protection argue that it enhances incentives for innovation and knowledge transfer. Opponents, on the other hand, stress the reduction in knowledge spillovers. Using a sample of large, publicly traded firms from 22 developed countries, this column finds that stronger intellectual property rights have a positive and robust effect on backward knowledge diffusion from multinational firms.

Nicolas Depetris Chauvin, Marcelo Olarreaga, Guido Porto, 11 March 2011

Cash crops provide the livelihoods for millions of people in sub-Saharan Africa. This CEPR/World Bank book explores the effects of increasing competition in these markets. It finds that while competition improves welfare for farmers on the whole, policymakers should still consider the potential winners and losers in each case.

Nicolas Depetris Chauvin, Guido Porto, 11 March 2011

Millions of people in sub-Saharan Africa rely on cash crops for their livelihoods . This column presents a new CEPR/World Bank book exploring the effects of increasing competition in these markets. It finds that while competition improves welfare for farmers on the whole, policymakers should still consider the potential winners and losers in each case.

Josh Lerner, 18 February 2011

Josh Lerner of Harvard Business School talks to Viv Davies about his book, co-authored with Mark Schankerman, ‘The Comingled Code: Open Source and Economic Development’. Lerner discusses the economic impact of open source software and its relationship with innovation and growth. Drawing from a new database, Lerner describes how open source and proprietary software interact and suggests how government policy should ensure that open source competes effectively with proprietary software. The interview was recorded by telephone on 14 February 2011. [Also read the transcript]

Christian Helmers, Mark Rogers, 21 December 2010

There is broad agreement that research at universities has knock-on benefits for innovation and the wider economy in general. The question remains “how?”. This column presents evidence from across the UK suggesting that local university research has a positive effect on the number local small firms that patent and that this effect strengthens the better the university.

Federico Etro, Emanuele Tarantino, 15 November 2010

Europe is discussing how to regulate standardisation agreements in high-tech sectors. This column warns of a dangerous bias against early licensing agreements and proprietary technologies that would be detrimental to innovation and to the optimal selection of standards.

Sebastian Engelhardt, Andreas Freytag, Stephen Maurer, 29 October 2010

Governments are increasingly interested in promoting open source software. Yet policymakers have seldom laid out any clear theoretical or empirical justification for these policies. This column explores recent studies suggesting that open source and proprietary software strengthen each other and should co-exist – too much open source could actually be a bad thing.

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