nep-ind New Economics Papers
on Industrial Organization
Issue of 2011‒04‒30
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Competition Law, Antitrust Immunity and Profits: A Dynamic Panel Analysis By Brouwer, E.; Ozbugday, F.C.
  2. How effective is European merger control? By Duso, Tomaso; Gugler, Klaus; Yurtoglu, Burcin B.
  3. The market value of blocking patent citations By Czarnitzki, Dirk; Hussinger, Katrin; Leten, Bart
  4. External referencing and pharmaceutical price negociation. By Garcia Marinoso, Begona; Jelovac, Izabella; Olivella, Pau

  1. By: Brouwer, E.; Ozbugday, F.C. (Tilburg University, Center for Economic Research)
    Abstract: This paper tests whether the transition from the old Economic Competition Act, which was based on the so-called “abuse systemâ€, to the new Competition Act, which was based on “prohibition systemâ€, in the Netherlands had an impact on the price-cost margins in manufacturing industries during the period 1993-2007. The paper further investigates if the price-cost margins were higher in industries where temporary antitrust immunity was granted for subset of firms that engaged in concerted practices. The results indicate that the change in the competition law in the Netherlands had a very small and negative, yet statistically insignificant deterrent effect on the price-cost margins. Elsewhere, markups were higher in industries in which temporary antitrust immunity was granted for some class of coordinated actions.
    Keywords: Price-cost margins;Competition law;Antitrust immunity;Antitrust enforcement;Dynamic panel data model;the Netherlands.
    JEL: K21 L4 L6
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:dgr:kubcen:2011038&r=ind
  2. By: Duso, Tomaso; Gugler, Klaus; Yurtoglu, Burcin B.
    Abstract: This paper applies an intuitive approach based on stock market data to a unique dataset of large concentrations during the period 1990-2002 to assess the effectiveness of European merger control. The basic idea is to relate announcement and decision abnormal returns. Under a set of four maintained assumptions, merger control might be interpreted to be effective if rents accruing due to the increased market power observed around the merger announcement are reversed by the antitrust decision, i.e. if there is a negative relation between announcement and decision abnormal returns. To clearly identify the events' competitive effects, we explicitly control for the market expectation about the outcome of the merger control procedure and run several robustness checks to assess the role of our maintained assumptions. We find that only outright prohibitions completely reverse the rents measured around a merger's announcement. On average, remedies seem to be only partially capable of reverting announcement abnormal returns. Yet they seem to be more effective when applied during the first rather than the second investigation phase and in subsamples where our assumptions are more likely to hold. Moreover, the European Commission appears to learn over time. --
    Keywords: Merger Control,Remedies,European Commission,Event Studies
    JEL: L4 K21 G34 C2 L2
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:zbw:dicedp:15&r=ind
  3. By: Czarnitzki, Dirk; Hussinger, Katrin; Leten, Bart
    Abstract: There is a growing literature that aims at assessing the private value of knowledge assets and patents. It has been shown that patents and their quality as measured by citations received by future patents contribute significantly to the market value of firms beyond their R&D stocks. This paper goes one step further and distinguishes between different types of forward citations patents can receive at the European Patent Office. While a patent can be cited as non-infringing state of the art, it can also be cited because it threatens the novelty of patent applications ('blocking citations'). Empirical results from a market value model for a sample of large, R&D-intensive U.S., European and Japanese firms show that patents frequently cited as blocking references have a higher economic value for their owners than patents cited for nonblocking reasons. This finding adds to the patent value literature by showing that different types of patent citations carry different information on the economic value of patents. The result further suggests that the total number of forward citations can be an imprecise measure of patent value. --
    Keywords: Market Value,Patents,Citations,Patent Value
    JEL: O31 O34 O38
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:zbw:zewdip:11021&r=ind
  4. By: Garcia Marinoso, Begona; Jelovac, Izabella; Olivella, Pau
    Abstract: External referencing (ER) imposes a price cap for pharmaceuticals, based on prices of identical or comparable products in foreign countries. Suppose a foreign country (F) negotiates prices with a pharmaceutical firm, whereas a home country (H) can either negotiate prices independently or implement ER, based on the foreign price. We show that country H prefers ER if copayments in H are relatively high. This preference is reinforced when H's population is small. Irrespective of relative country sizes, ER by country H harms country F. Our model is inspired by the wide European experience with this cost-containment policy. Namely, in Europe, drug authorization and price negotiations are carried out by separate agencies. We confirm our main results in two extensions. The first one allows for therapeutic competition between drugs. In the second one, drug authorization and price negotiation take place in a single agency.
    Keywords: pharmaceuticals; external referencing; price negotiation;
    JEL: L65 I18
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:ner:dauphi:urn:hdl:123456789/5987&r=ind

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