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Joseph A Clougherty - One of the best experts on this subject based on the ideXlab platform.
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Antitrust holdup source cross national institutional variation and corporate political strategy implications for domestic mergers in a global context
Research Papers in Economics, 2004Co-Authors: Joseph A CloughertyAbstract:Managers are increasingly uncertain over the source (home-nation or foreign-nation) of Antitrust holdup for domestic mergers with significant international implications. I propose a conceptual framework that predicts the source of Antitrust holdup for domestic mergers. Under idealized institutional assumptions, I find an industry's global competitiveness to be the primary driver behind holdup source: a contention supported by empirical tests based on the merger policies of 27 Antitrust jurisdictions over the 1992-2000 period. I also relax the idealized institutional conditions to yield more precise propositions tailored to the cross-national environment for Antitrust Policy. Finally, I generate prescriptive propositions that yield implications for effective political strategies. ZUSAMMENFASSUNG - ("Ein institutioneller Landervergleich von 'hold-up' durch Wettbewerbs-behorden in Fusionsverfahren und deren Implikationen fur die Fusions-strategien von globalen Unternehmen") Bei grosen Fusionen, die fur den internationalen Markt Bedeutung haben, stehen Manager zunehmend vor der Unsicherheit, im Vorfeld nicht erkennen zu konnen, ob die kartellrechtlichen Uberprufungen der Fusion eher im Heimatland oder im Ausland zu einem aus Unternehmenssicht negativen Ergebnis fuhren, also die Fusion abgelehnt oder nur unter restriktiven Auflagen genehmigt wird ('hold-up'). Hier wird ein konzeptioneller Ansatz entwickelt, mit dem sich vorhersagen lasst, welche der kartellrechtlichen Prufungen zu dem restriktivsten Ergebnis fuhrt. Unter idealisierten Annahmen uber die institutionelle Ausgestaltung der nationalen Kartellbehorden lasst sich die theoretische Hypothese aufstellen, dass vor allem die weltweite Wettbewerbsfahigkeit einer Branche eine Rolle bei der Zuordnung des hold-up-Problems spielt, was auch empirisch durch die Entscheidungen von 27 Kartellinstitutionen im Zeitraum von 1992-2000 bestatigt wird. Die idealisierten institutionellen Bedingungen in den verschiedenen Landern werden daraufhin aufgegeben, um exaktere und auf die tatsachlichen kartellrechtlichen Umgebungen in den einzelnen Landern abgestimmte Empfehlungen formulieren zu konnen. Fur die Unternehmen werden schlieslich Empfehlungen fur effektive politische Fusionsstrategien entwickelt.
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Antitrust holdup source cross national institutional variation and corporate political strategy implications for domestic mergers in a global context
Social Science Research Network, 2004Co-Authors: Joseph A CloughertyAbstract:Managers are increasingly uncertain over the source (home-nation or foreign-nation) of Antitrust holdup for domestic mergers with significant international implications. I propose a conceptual framework that predicts the source of Antitrust holdup for domestic mergers. Under idealized institutional assumptions, I find an industry's global competitiveness to be the primary driver behind holdup source: a contention supported by empirical tests based on the merger policies of 27 Antitrust jurisdictions over the 1992-2000 period. I also relax the idealized institutional conditions to yield more precise propositions tailored to the cross-national environment for Antitrust Policy. Finally, I generate prescriptive propositions that yield implications for effective political strategies.
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a political economic approach to the domestic airline merger phenomenon
Journal of Transport Economics and Policy, 2002Co-Authors: Joseph A CloughertyAbstract:The late 1980s witnessed a wave of cross-national domestic airline mergers that met with consistent Antitrust Policy approval. This paper explains the Antitrust-review success of domestic airline mergers by focusing on international competitive effects. These promote the concurrence of private and public interest political forces behind lenient Antitrust reviews, thus furthering political support for Antitrust approval. The analysis extends Farrell and Shapiro's (1990) framework for analysing the national welfare merit of mergers, in order to encompass international competitive effects. A dual method (quantitative and qualitative) empirical strategy yields supporting evidence for the political economic hypothesis.
Carl Shapiro - One of the best experts on this subject based on the ideXlab platform.
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Antitrust evaluation of horizontal mergers an economic alternative to market definition
Industrial Organization, 2008Co-Authors: Joseph Farrell, Carl ShapiroAbstract:We propose a simple, new test for making an initial determination of whether a proposed merger between rivals is likely to reduce competition and thus lead to higher prices. Under current Antitrust Policy, the government can establish a presumption that a proposed horizontal merger will harm competition by defining the relevant market and showing that the merger will lead to a substantial increase in concentration in that market. However, this approach can perform poorly in markets for differentiated products, where market boundaries are unclear and the proximity of the products sold by the merging firms is a key determinant of the merger's effect on competition. Our test looks for upward pricing pressure (UPP) resulting from the merger. We develop a simple diagnostic for UPP based on the price/cost margins of the products sold by the merging firms and the magnitude of direct substitution between the two firm's products. We argue that our approach is well grounded in economics, workable in practice, and superior to existing methods in a substantial class of mergers.
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Antitrust Policy a century of economic and legal thinking
Journal of Economic Perspectives, 2000Co-Authors: William E Kovacic, Carl ShapiroAbstract:Passage of the Sherman Act in the United States in 1890 set the stage for a century of jurisprudence regarding monopoly, cartels, and oligopoly. Among American statutes that regulate commerce, the Sherman Act is unequaled in its generality. The Act outlawed every contract, combination or conspiracy in restraint of trade and monopolization and treated violations as crimes. By these open-ended commands, Congress gave federal judges extraordinary power to draw lines between acceptable cooperation and illegal collusion, between vigorous competition and unlawful monopolization.
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Antitrust Policy a century of economic and legal thinking
Social Science Research Network, 1999Co-Authors: William E Kovacic, Carl ShapiroAbstract:Passage of the Sherman Act in the United States in 1890 set the stage for a century of jurisprudence regarding monopoly, cartels, and oligopoly. Among American statutes that regulate commerce, the Sherman Act is unequaled in its generality. The Act outlawed every contract, combination or conspiracy in restraint of trade and monopolization and treated violations as crimes. By these open-ended commands, Congress gave federal judges extraordinary power to draw lines between acceptable cooperation and illegal collusion, between vigorous competition and unlawful monopolization. By enlisting the courts to elaborate the Sherman Act's broad commands, Congress gave economists a singular opportunity to shape competition Policy. Because the statute's vital terms directly implicated economic concepts, their interpretation inevitably would invite contributions from economists. What emerged is a convergence of economics and law without parallel in public oversight of business. As economic learning changed, the contours of Antitrust doctrine and enforcement Policy eventually would shift, as well. This article follows the evolution of thinking about competition since 1890 as reflected by major Antitrust decisions and research in industrial organization. We divide the U.S. Antitrust experience into five periods and discuss each period's legal trends and economic thinking in three core areas of Antitrust: cartels, cooperation, or other interactions among independent firms; abusive conduct by dominant firms; and mergers.
William E Kovacic - One of the best experts on this subject based on the ideXlab platform.
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u s convergence with international competition norms Antitrust law and public restraints on competition
2010Co-Authors: James C Cooper, William E KovacicAbstract:In this Article we focus upon an area in which greater convergence of U.S. Policy with the practice of many foreign countries is long overdue: the treatment of public policies that suppress competition. Whereas the European Union (“EU”) and numerous other jurisdictions have taken strong measures to limit restraints imposed by national government authorities and political subdivisions, U.S. Antitrust Policy in many ways is more tolerant of public restraints upon business rivalry. Since the early twentieth century, Supreme Court doctrines have evolved to grant states and the federal government broad rights to enact laws that restrain competition. Further, individual groups are largely free to lobby for laws designed to erect marketplace barriers, and in many cases to mire their competitors in a morass of governmental processes. Because government action (and private conduct to obtain such action) is challengeable in only relative narrow circumstances, much of the battle takes place in the legislative and regulatory arenas rather than in courts. Accordingly, advocacy is the primary tool available to both public and private enforcers of the U.S. Antitrust laws to challenge state-imposed restraints on competition. Although the U.S. competition advocacy program has achieved important success, it is not enough. United States enforcers should stand on equal footing with their EU and other foreign counterparts in being able to challenge state action that threatens competition in the same manner as they can challenge private conduct. In this paper, we describe measures available to competition authorities in the U.S. and other jurisdictions to resist encroachments by government policies on the competitive process. We suggest approaches by which the framework of controls upon anticompetitive government policies could be strengthened in the United States.
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Antitrust Policy a century of economic and legal thinking
Journal of Economic Perspectives, 2000Co-Authors: William E Kovacic, Carl ShapiroAbstract:Passage of the Sherman Act in the United States in 1890 set the stage for a century of jurisprudence regarding monopoly, cartels, and oligopoly. Among American statutes that regulate commerce, the Sherman Act is unequaled in its generality. The Act outlawed every contract, combination or conspiracy in restraint of trade and monopolization and treated violations as crimes. By these open-ended commands, Congress gave federal judges extraordinary power to draw lines between acceptable cooperation and illegal collusion, between vigorous competition and unlawful monopolization.
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Antitrust Policy a century of economic and legal thinking
Social Science Research Network, 1999Co-Authors: William E Kovacic, Carl ShapiroAbstract:Passage of the Sherman Act in the United States in 1890 set the stage for a century of jurisprudence regarding monopoly, cartels, and oligopoly. Among American statutes that regulate commerce, the Sherman Act is unequaled in its generality. The Act outlawed every contract, combination or conspiracy in restraint of trade and monopolization and treated violations as crimes. By these open-ended commands, Congress gave federal judges extraordinary power to draw lines between acceptable cooperation and illegal collusion, between vigorous competition and unlawful monopolization. By enlisting the courts to elaborate the Sherman Act's broad commands, Congress gave economists a singular opportunity to shape competition Policy. Because the statute's vital terms directly implicated economic concepts, their interpretation inevitably would invite contributions from economists. What emerged is a convergence of economics and law without parallel in public oversight of business. As economic learning changed, the contours of Antitrust doctrine and enforcement Policy eventually would shift, as well. This article follows the evolution of thinking about competition since 1890 as reflected by major Antitrust decisions and research in industrial organization. We divide the U.S. Antitrust experience into five periods and discuss each period's legal trends and economic thinking in three core areas of Antitrust: cartels, cooperation, or other interactions among independent firms; abusive conduct by dominant firms; and mergers.
Israel M Kirzner - One of the best experts on this subject based on the ideXlab platform.
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entrepreneurial discovery and the competitive market process an austrian approach
1997Co-Authors: Israel M KirznerAbstract:Presents the entrepreneurial discovery perspective as an Austrian approach to microeconomics. Focus in this new approach is on the role of knowledge and discovery in the process of market equilibration. The reason behind the creation of this new approach is that current neoclassical microeconomics does not offer a sufficient theoretical framework for understanding market economies. The neoclassical theory is criticized for the manner in which individual decisions are modeled and the manner in which satisfaction of equilibrium conditions is met through real world market outcomes. This entrepreneurial discovery perspective is based on the work of Mises and Hayek. Mises' work allowed one to see the market as an entrepreneurially driven process while Hayek helped to appreciate the role of knowledge and its enhancement through market interaction. The idea of the entrepreneurial discovery approach is to see "the market process as consisting of systematic equilibrating tendencies, made up of episodes of mutual discovery and learning." Three concepts for this approach emerge: (1) the entrepreneurial role, (2) the role of discovery, and (3) rivalrous competition. The entrepreneurial discovery approach leads to very different conclusions than the neoclassical theory in several areas including Antitrust Policy, economic justice, welfare economics, and central planning under socialism. Those individuals who take issue with this approach predominantly fall into one of two categories: those who disagree with the asserted equilibrative character of the market process or those who disagree with the emphasis on systematic mutual learning as critical to the market process. (SRD)
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entrepreneurial discovery and the competitive market process an austrian approach
Journal of Economic Literature, 1997Co-Authors: Israel M KirznerAbstract:Modern Austrian Economics, building on earlier work of Mises and Hayek, explains the determination of market prices in terms of entrepreneurial discovery processes. Dissatisfied with mainstream equilibrium models, Austrians see market equilibrating tendencies as series of competitive discoveries increasing mutual awareness among market participants. (Unlike deliberate search, discovery consists in alert entrepreneurs noticing profit opportunities, generated by earlier errors, which had been entirely unsuspected.) This approach entails unconventional implications for such issues as: Antitrust Policy, economic justice under capitalism, the meaning of economic welfare, and the possibility of rational planning under socialism.
Robert J Town - One of the best experts on this subject based on the ideXlab platform.
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countervailing market power and hospital competition
The Review of Economics and Statistics, 2021Co-Authors: Eric Barrette, Gautam Gowrisankaran, Robert J TownAbstract:While economic theories indicate that market power by downstream firms can potentially counteract market power upstream, Antitrust Policy is opaque about whether to incorporate countervailing market power in merger analyses. We use detailed national claims data from the healthcare sector to evaluate whether countervailing insurer power does indeed limit hospitals’ exercise of market power. We estimate willingness-to-pay models to evaluate hospital market power across analysis areas. We find that countervailing market power is important: a typical hospital merger would raise hospital prices 4.3% at the 25th percentile of insurer concentration but only 0.97% at the 75th percentile of insurer concentration.
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countervailing market power and hospital competition
Social Science Research Network, 2020Co-Authors: Eric Barrette, Gautam Gowrisankaran, Robert J TownAbstract:While economic theories indicate that market power by downstream firms can potentially counteract market power upstream, Antitrust Policy is opaque about whether to incorporate countervailing market power in merger analyses. We use detailed national claims data from the healthcare sector to evaluate whether countervailing insurer power does indeed limit hospitals’ exercise of market power. We estimate willingness-to-pay models to evaluate hospital market power across analysis areas. We find that countervailing market power is important: a typical hospital merger would raise hospital prices 4.3% at the 25th percentile of insurer concentration but only 0.97% at the 75th percentile of insurer concentration. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.