Practice questions

I haven't sent most of you grades because most of you didn't write enough. Here is one crack at the question:

I would ask what are the effects of banning territories and having territories replaced by RPM.

First move would be to compare whether competing retailers exhaust rents under each alternative and why the two cases are different. Which leads to greater service competition and why?

Next move would be to think through double marginalization in each case. Ideally the upstream monopolist wants to control price at the downstream level, but are there cases when controlling quality, or territories, is an acceptable or even preferable substitute.

I'd also work through cases where the vertical restriction is preferred by the upstream supplier only, the downstream seller only, or both. In which of these scenarios would the price restriction and the territory restriction make a difference?

When does it matter that a territory restriction is much easier to enforce than a price restriction?

That would get me going and constitute at least ten paragraphs. The rest would depend on how quickly I could write.

Should Borders buy Barnes and Noble?

More here. You can, by the way, use Google to read about the pending EU antitrust suit against...Google.

New food safety bill

I'll talk about this a bit tonight, read this for background.

Your practice question is in the comments

Time yourself (30 minutes, let's say) and it should be a surprise. Please type up your answer if you can. Please bring it to class this coming Tuesday, one week from today, or the next Tuesday (it is less good to send me a file, do this only if you cannot make class).

After that the offer to grade it expires, although of course you can still use it for your own practice.

Strictly optional, in any case!

Here is *a* practice question, not *the* practice question

Let's say the TSA makes airline boarding procedures more onerous. How does the sector equilibrium shift, under various assumptions?

Medical and health care issues

Read here.

A new paper using ADS securities methods

Strictly optional, but at least read the abstract.

M&A to hit $3 trillion this year

The story is here.

How Ireland guaranteed all liabilities

And what happened.

France outlaws discount pricing for eBooks

Story here.

Canada blocks the bid for Potash

Story here.

Interesting post on Microsoft

Here.

The hybrid model for non-profits?

Read here.

Health insurance markets

I'll talk a little bit about this paper tonight, no need to read it, strictly optional. Gated newer version is here.

Today they announced a new antitrust suit against Blue Cross of Michigan.

Vertical control at Amazon

Read here.

New UK ruling on exclusive dealing

The article is here, another (possibly gated) is here.

pdfs

If you have not received them, please let me know...

The British are moving from two antitrust authorities to one

Story here. Excerpt:

Britain’s competition regime is to be revamped in a shake-up under which the Office of Fair Trading and the Competition Commission will merge.

The restructuring of the competition bodies, to reduce costs and speed up investigations, will probably be one of the most contentious cuts to public bodies to be announced on Thursday in the government’s “bonfire of the quangos”.

The government’s plan to merge the OFT and the commission rolls back the long-standing two-tier competition system, reinforced by the Labour government, in favour of the single-body model favoured by many other industrialised countries.

The new body will probe mergers, market dominance and cartels, but it and other competition bodies will probably farm out many consumer functions to Citizens Advice and local trading standards officers.

Big companies have long pressed for faster and less onerous antitrust probes, claiming the overlap between the OFT and the commission is wasteful and confusing.

Another simple problem, practice for the Final

Right now the Euro is rising and the U.S. dollar is falling. Will this affect the price of a Mercedes in a Tysons Corner showroom?

How does your answer depend on your underlying model of market structure?

The Henry Farrell chapters

Part of the assignment is missing from Reserve, fear not we will get it to you, thanks for your patience but do grab what is there.

Strictly optional

A long video lecture on IO, by Glen Weyl, one of the smartest and best new IO economists.

Hold-up problems

Read about them here.

Practice question for the final exam

"Slotting fees" are used when a manufacturer pays to buy shelf space, or buy good shelf space, from a retailer. (It may or may not be per unit, which gives you two different cases to analyze.) Supermarkets are a common example. Right now slotting fees are legal but some commentators have suggested they be banned. Work through the analysis of what would happen if they were banned.

One class member reports receiving this letter today

Dear XXXX,

Do you have a love-hate relationship with your cable company? Do you love the programming and choice of shows, but hate the high cost, lousy customer service, and service interruptions?

Or maybe you've tried to change to a different cable company and were stuck, because your cable provider is the only option in your area.

So why would it make sense to allow Comcast — one of the nation's largest cable giants — to get even bigger and take over NBC, the network that bring us Sunday Night Football, popular shows like "The Biggest Loser," and the free online TV site Hulu.com? Who would be the "biggest loser" then?

If you think this merger will increase costs to consumers, use our easy petition to tell the FCC now!

Comcast is trying to take over NBC, claiming nothing will change. But that doesn't make sense. If successful, Comcast would be one of the country's largest media conglomerates with massive control over news, information, entertainment and cultural programming.

A combined Comcast/NBC/Universal would control a major television network and film studio, 36 cable television channels, the nation's largest cable company, and one of the nation's largest residential Internet providers.

Our cable rates will likely increase due to this purchase, as Comcast can charge its cable competitors more to get NBC's channel line-up. And a lot of the free content we now get from NBC, including free shows online, may be available only to Comcast customers.

It just takes a minute to weigh in with your own thoughts or just sign on to our petition — we make it easy!

The FCC has said it will make its decision this fall, so we want to make sure they hear from as many consumers as possible. Please send in your thoughts to the FCC via our easy link, and then forward this e-mail to friends and family so they can do the same.

Sincerely,
Chris Meyer,
Vice President, External Affairs
Consumer Reports
101 Truman Ave
Yonkers, NY 10703

More on the Southwest merger

Read it here.

New airline merger in the works

Story here.

New RPM case

Here is some background on a new RPM investigation, namely for on-line bookings of hotel rooms in the UK. It is striking how little comes up if you type "resale price maintenance" into news.google.com.

New article on French bookselling

There is an article in today's WSJ, "Discounted E-books Spark Outcry from French Shops," try to read it, at some point it should pop up on-line. The French law bans book discounts of more than five percent and so E-Books are being protested. The piece also discusses the controversies with Amazon.com and other related matters.

If any of you find a link, please post it in the comments, thanks!

Here is an interesting "monopoly" problem

The story, about rare earths.

The ongoing destruction of Barnes & Noble

This is what it reads like as companies are headed down the tubes.

More mergers

Global companies seeking a foothold in fast-growing countries such as China and Brazil have pushed deal-making in emerging markets above that of Europe for the first time.

So far this year, emerging market targeted M&A volume is up by more two-thirds to $575.7bn (€441bn), while European volume has increased by barely 20 per cent to $550.2bn, according to data from Dealogic.

Deals by companies in emerging markets now account for 30 per cent of global M&A activity, while Europe’s share has fallen to 29 per cent – the lowest level in 12 years.

The article, possibly gated, is here.

Assorted information

So far I have not myself located the Breit paper; perhaps you have visited my office, if so you will understand. My apologies, in any case it is not on the quiz.

For electronic reserve, I am told:

Your password is: industry

Do not use spaces or caps for passwords.

A Canadian defense of Potash remaining...Canadian

Read it here.

Might China enter the Potash bidding war?

Further information, on various issues, including the previous stock price, here.

Sherman Act violations with fines of $10 million or more

The list is here, read it. Is that a lot of cases or a little? What do you notice about the category "geographic scope"?

Potash takeover case

This recent story is remarkably relevant to what we have been discussing in class.

Does testosterone drive some mergers?

This article says yes.

A good essay on writing

By Michael Munger.

Good piece on antitrust so far under Obama

Read it here.

Mergers

The United-Continental merger is expected to be seen through Oct.1 or so. Read up on this, using Google, and come to class prepared to discuss the economic issues involved.