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Microeconomics > IO/Competition Policy > Flashcards

IO/Competition Policy Flashcards

1
Q

Connor (2003)

A

CARTELS

  1. Median no. participants in cartel = 5
  2. 77% of cartels have 6/fewer participants
  3. Only 13% of cartels had 10/more participants
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2
Q

CARTELS

  1. Median no. participants in cartel = 5
  2. 77% of cartels have 6/fewer participants
  3. Only 13% of cartels had 10/more participants
A

Connor (2003)

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3
Q

….. (…..)

  1. Median no. participants in cartel = …..
  2. …..% of cartels have …../fewer participants
  3. Only …..% of cartels had …../more participants
A

Connor (2003)

  1. Median no. participants in cartel = 5
  2. 77% of cartels have 6/fewer participants
  3. Only 13% of cartels had 10/more participants
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4
Q

Real-world examples of determination of market size

A
  1. Nestle/Perrier
    (i) Relevant product market = mineral waters
    (ii) Relevant geographical market = France (due to high transport costs + difficulty of entry)
    (iii) Nestle + Perrier had ~80% of French mineral water market, so authorities required divestiture
  2. Volvo/Scania
    (i) Market definition – heavy trucks, national markets
    (ii) Volva + Scania market share in Sweden, Norway, Finland, Ireland and Denmark ranged from 49%-91%
    (iii) Price elasticity of demand estimated from 0.28-1.63
    (iv) Merger forbidden due to analysis that welfare would decrease, even w/10% cost efficiencies
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5
Q

Volvo/Scania example

A

(i) Market definition – heavy trucks, national markets
(ii) Volva + Scania market share in Sweden, Norway, Finland, Ireland and Denmark ranged from 49%-91%
(iii) Price elasticity of demand estimated from 0.28-1.63
(iv) Merger forbidden due to analysis that welfare would decrease, even w/10% cost efficiencies

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6
Q

Nestle/Perrier example

A

(i) Relevant product market = mineral waters
(ii) Relevant geographical market = France (due to high transport costs + difficulty of entry)
(iii) Nestle + Perrier had ~80% of French mineral water market, so authorities required divestiture

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7
Q

Nestle/Perrier example

(i) Relevant product market = …..
(ii) Relevant geographical market = ….. (due to ….. + …..)
(iii) Nestle + Perrier had …..% of French mineral water market, so authorities required divestiture

A

(i) Relevant product market = mineral waters
(ii) Relevant geographical market = France (due to high transport costs + difficulty of entry)
(iii) Nestle + Perrier had ~80% of French mineral water market, so authorities required divestiture

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8
Q

Volvo/Scania example

(i) Market definition – …..
(ii) Volva + Scania market share in Sweden, Norway, Finland, Ireland and Denmark ranged from ….% to …..%
(iii) Price elasticity of demand estimated from ….. to …..
(iv) Merger forbidden due to analysis that welfare would decrease, even w/…..% cost efficiencies

A

(i) Market definition – heavy trucks, national markets
(ii) Volva + Scania market share in Sweden, Norway, Finland, Ireland and Denmark ranged from 49%-91%
(iii) Price elasticity of demand estimated from 0.28-1.63
(iv) Merger forbidden due to analysis that welfare would decrease, even w/10% cost efficiencies

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9
Q

Bonnet and Schain (2017)

A

EMPIRICAL ANALYSIS OF MERGERS IN DAIRY MARKET

  1. Large heterogeneity in potential merger gains means rules of thumb misleading
  2. Just <1/2 of mergers produce zero synergies
  3. Less than 1/5 mergers produce synergies amounting to more than 5% of marginal costs
  4. Avg. marginal cost savings = 2.6%
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10
Q

EMPIRICAL ANALYSIS OF MERGERS IN DAIRY MARKET

  1. Large heterogeneity in potential merger gains means rules of thumb misleading
  2. Just <1/2 of mergers produce zero synergies
  3. Less than 1/5 mergers produce synergies amounting to more than 5% of marginal costs
  4. Avg. marginal cost savings = 2.6%
A

Bonnet and Schain (2017)

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11
Q

….. and ….. (…..)

  1. Large heterogeneity in potential merger gains means rules of thumb misleading
  2. Just ….. of mergers produce zero synergies
  3. Less than ….. mergers produce synergies amounting to more than …..% of marginal costs
  4. Avg. marginal cost savings = …..%
A

Bonnet and Schain (2017)

  1. Large heterogeneity in potential merger gains means rules of thumb misleading
  2. Just <1/2 of mergers produce zero synergies
  3. Less than 1/5 mergers produce synergies amounting to more than 5% of marginal costs
  4. Avg. marginal cost savings = 2.6%
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12
Q

Empirical evidence of merger synergies

A

Bonnet and Schain (2017)

  1. Large heterogeneity in potential merger gains means rules of thumb misleading
  2. Just <1/2 of mergers produce zero synergies
  3. Less than 1/5 mergers produce synergies amounting to more than 5% of marginal costs
  4. Avg. marginal cost savings = 2.6%
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13
Q

Connor and Bolotova (2006)

A

Avg. price over-charge by cartels = 29%

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14
Q

Avg. price over-charge by cartels = 29%

A

Connor and Bolotova (2006)

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15
Q

…… and ….. (…..)

Avg. price over-charge by cartels = …..%

A

Connor and Bolotova (2006)

Avg. price over-charge by cartels = 29%

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Microeconomics (4 decks)

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