Market Power

In this thesis, I have examined whether the current approach to competition policy is suitable for the distinct characteristics of the digital economy. It is particularly difficult to define the relevant market and rely on market share test as a proxy for market power in the digital economy mainly because of its dynamic nature. As the market boundaries shift so rapidly in dynamic markets, having a static perspective when defining the relevant market might fall short when assessing competitive constraints that an undertaking may face in the near future. In this regard, this thesis calls for a change in the traditional assessment of market power, and it proposes to replace the relevant market/market share paradigm with a more economic effects-based method, such as estimating the elasticity of residual demand. By doing so, competition authorities can assess competitive constraints from a broader perspective without necessarily being limited to a particular relevant market or any formalistic structure.

In order to identify the most suitable way to assess market power in the digital economy, this thesis is structured as follows. Chapter II explains what digital economy is, how it emerged, and what makes it different from the rest of the economy by identifying its distinguishing characteristics. After providing an overview of the digital economy, Chapter III gives more theoretical insight to the concept of market power. First, it explains the importance of market power within the social market economy. In the second part, it introduces various definitions of market power as provided by different institutions and scholars, describing the defining characteristics of these definitions afterwards. Having explained the concept of market power, Chapter IV focuses on how market power is assessed. By doing so, it explains not only the traditional indirect assessment of market power, but also the direct assessment of the latter. After clarifying what the digital economy is, as well as the concept of market power and how it is assessed, Chapter V evaluates the suitability of current understanding of market power in the digital economy. Then it explains what the challenges of assessing market power in the digital economy are when applying conventional techniques. In the light of these findings, it finally suggests a blueprint of how to assess market power in the digital economy. Lastly, Chapter VI provides the summary of findings and the final conclusion.

It is nowadays a common place to say that the sharing economy is not really about sharing but about making profits and benefiting a few much more than others. A movement that takes the best of the technologies of sharing economy platforms but orients it to benefiting all, platform cooperativism, is on the rise. Nonetheless, it is far from being popular and nothing indicates that it will. This paper investigates the reasons why dominant platforms remain dominant and proposes a policy that aims at curtailing their dominance, fostering platform cooperativism and maximizing the beneficial societal effects that can be derived from exploiting the data generated in platforms. The paper is structured as follows. Section 1 reviews current definitions of the sharing economy, points out their contributions and limitations and offers a novel and more accurate definition. Section 2 briefly introduces platform cooperativism to show why it can be a tool to fix many of the problems of the sharing economy. Section 3 explains and discusses market power mechanisms specific to the sharing economy that help dominant platforms to remain dominant. Some already existing and proposed solutions to counter these market power mechanisms such as reputation passports, a market for personal data and antitrust remedies are evaluated. Section 4 presents a general policy proposal based on making data a common in the sharing economy using reciprocity licenses. Section 5 offers some clarifications regarding the proposal and sketches some of its shortcomings and open questions that arise from it.

This article investigates the markup pricing behaviour of U.S. exporters of agricultural products. Agricultural products studied are feed, flour, frozen potatoes, frozen orange juice, five categories of beef, five categories of pork, and two categories of chicken. The popular pricing-to-market (PTM) approach of Krugman (1987) is used to examine market power and imperfect competition for the markets under study. The

This paper develops a simple model of monopoly platform pricing accounting for two pertinent features of matching markets. 1) The trading process is characterized by search and matching frictions implying limits to positive cross-side network effects and the presence of own-side congestion. 2)Matched agents bargain over the division of the match surplus depending on the qualitative characteristics of both parties.

This article examines the implications of the escalation in institutional inves power and heterogeneity for two dominant theories of corporate governanceagency theory and stakeholder theory. From this analysis, a new view of the agency relationship between institutional investors and their portfolio firms emerges, which recognizes the institutions’ market power, complex role as financial intermediaries, and possible involvement in simultaneous and opposing agency contracts. We also conclude that stakeholder theorists should reconsider these newly empowered shareholders’moral standing in relation to their portfolio firms, and they should reexamine the identities and goals of these modern investors. To that end, we demonstrate that a novel, intragroup application of Mitchell, Agle, and Wood’s stakeholder framework to heterogeneous institutional investors illuminates their varying levels of stakeholder salience.

Analysis of market power in electricity markets is relevant for understanding the competitive development of the industry's restructuring and liberalization process. Because the existing literature lacks adequate consideration of line transmission congestion, this paper sets forth a new approach to measuring market power in the Italian Power Exchange (IPEX) by explicitly taking into account transmission line congestion. We construct the residual demand curve to disentangle the measure of unilateral market power from congestion rent for the main Italian generators during the period of April 2004 to December 2007. In Italy, this was a period of stable transmission network structure. Following the approach of Wolak (2003, 2009), we measure the unilateral market power with the Lerner Index (LI) computed as the inverse of the residual demand elasticity. In conclusion, the correct modeling of the residual demand curve including transmission congestions allows us to compute the zonal LI and therefore more accurately measure the market power when congestion occurs. Our results show that various generators exercise market power in only some zones, which provides us with a deeper understanding of the IPEX and better support for designing appropriate market surveillance and competition regulation.

Öz Yoğunlaşma, bir endüstrideki kaynak ve faaliyetler toplamının büyük çoğunluğunun bu toplama sahip olan veya kontrol eden birimlerin çok azı tarafından sahiplenilmesi veya yönetilmesidir. Endüstrideki yoğunlaşmayı ölçen endekslerin amacı da bu ekonomik büyüklüklerin, endüstrideki firmalar arasında nasıl dağıldığını ölçerek endüstride rekabetin ne düzeyde olduğunu belirleyip, endüstrinin yapısı hakkında bilgi vermektir. Gıda ve içecek maddeleri yaşamsal öneme sahiptir ve ertelenemez bir ihtiyaç olmaları nedeniyle de arzının devamlılığı zorunludur. Dolayısıyla içecek sektörü ülke ekonomileri için stratejik düzeyde önemli bir sektördür. Bu çalışmanın amacı, diğer sektörlerden yapısal olarak farklı olan ve insan sağlığı için önemli bir yere sahip olan içecek sektörünü piyasa yapısı ve yoğunlaşma düzeyi açısından incelemektir. Çalışmada, İstanbul Sanayi Odası'nın yayınladığı ilk 1000 sanayi kuruluşu içerisinde yer alan içecek sanayi kuruluşları ele alınmış olup, firmalara ait 2006-2016 dönemlerine ait yıllık net satış rakamları kullanılmıştır. Yapılan analiz sonucunda elde edilen k-firma Yoğunlaşma, Herfindahl-Hirschman, Entropi, Hall-Tideman ve Rosenbluth ve Kapsamlı Yoğunlaşma Endeksleri değerlerine göre, Türkiye içecek sektörünün oligopolistik bir yapıya sahip olduğu görülmüştür. Abstract Concentration is the domination or management of the vast majority of total resources and activities in an industry by very few of the units that own or control this total. The aim of the indexes that measure concentration in the industry is to measure how these economic magnitudes are distributed among firms in the industry and to determine the level of competition in the industry and to inform about the structure of the industry. As food and beverages have a vital need and the continuity of their supply is a must. Therefore, the beverage sector is an important sector at a strategic level for the countries' economies. The aim of this study is to examine the beverage industry, which is structurally different from other sectors and has an important place in human health, in terms of market structure and concentration level. In the study, beverage industrial enterprises included in the first 1000 industrial enterprises published by the Istanbul Chamber of Industry were addressed and annual net sales figures for the period 2006-2016 belonging to the firms were used. As a result of the analysis conducted, according to concentration indexes values, it has been seen that Turkish beverage sector has an oligopolistic structure.

The South African banking industry is a key contributor to economic growth and the concentrated nature of the industry, with four dominant banks, required further interrogation to determine if in fact concentration and by default competition, was a material inhibitor to economic development, or if it impacted negatively on the social welfare of our citizens.
The highly regulated nature of banking is not accommodated by traditional mathematical models such as the popular Herfindahl-Hirschman Index and the paper looks at what policy makers and regulators must consider before targeting the banking industry as a catalyst for change.

Over the last 20+ years, multinational corporations (MNCs) have been confronted with accusations of abuse of market power and unfair and unethical business conduct especially as it relates to their overseas operations and supply chain management. These accusations include, among others, worker exploitation in terms of unfairly low wages, excessive work hours, and unsafe work environment; pollution and contamination of air, ground water and land resources; and, undermining the ability of natural government to protect the well-being of their citizens. MNCs have responded to these accusations by creating voluntary codes of conduct which commit them to specific standards for addressing these issues. These codes are created at both the industry-wide and the individual company level. Unfortunately, these codes have generated little credibility and public trust because their compliance claims cannot be independently verified, and they lack transparency and full public disclosure. In this article, we present a case study of the voluntary code of conduct by Mattel, Inc., the world’s largest toy company. The code, called the Global Manufacturing Principles (GMP), confronts the general criticism leveled against voluntary codes of conduct by (a) creating detailed standards of compliance, (b) independent external monitoring of the company’s compliance with its code of conduct, and (c) making full, and uncensored public disclosure of the audit findings and company’s response in terms of remedial action. We present a detailed account of how Mattel’s voluntary code of conduct was created, implemented, and ultimately abandoned over 9 years. We provide an evaluative analysis of the company’s GMP compliance throughout its life span, which suggests a bell-shaped curve, where early top management commitments were met with pockets of resistance from operational groups, who were concerned about balancing GMP compliance efforts with traditional performance criteria. The early stage response from Mattel’s top management was quick and supported with the requisite resources. As a result, the compliance process accelerated, becoming increasingly more robust and effective. The success of code compliance and increased transparency in public disclosure energized field managers with a sense of professional satisfaction and publicly recognized accomplishments. The decline in GMP compliance was equally steep. When all the easily attainable targets had been reached at the company-operated plants, addressing vendor plants’ compliance presented a new set of challenges, which taxed corporate resources and management commitment. It would seem that value-based and ethics-oriented considerations, i.e., doing the right thing for the right reason, were no longer the driving force for Mattel’s management. Mattel did not see any economic benefit from its proactive stance, when competitors did not seem to suffer adverse consequences for not following suit. The final contributing factor to the code’s abandonment was a widely publicized series of product recalls which absorbed top management’s attention.

Structural change in the agricultural sector as well as in the whole agricultural value chain is an ongoing dynamic process and affords a number of diverse phenomena. The EU Strategy for Biofuels (2006) and the Biomass action plan (2005) set a clear signal that the EU wishes to establish and to support the bio energy-industry. The perceivable aim of the

Mobile money is a relatively new phenomenon that allows banking services to be accessed through a cellular device. It has become a significant tool for poor and rural populations in developing countries to gain access to financial services. As the service is in its infancy, understanding the environmental factors that influence the growth of mobile money is an expanding area of research in academic and practitioner literature. These environmental issues relate to the socio-economic factors, market conditions and regulations that enable mobile money services to grow. By utilizing the economic theory of regulation to create a framework to comparatively analyse the impact that market forces have on regulatory outcomes and mobile money growth, two hypotheses are derived and tested.

This paper argues that certain regulations are not as determinant as identified in the literature, and that certain market and socio-economic conditions have a significant impact on mobile money growth. Specifically, this paper estimates that agent network regulations predict a 7.7% higher mobile money account rate, while consumer protection regulations predict a 10.7% decrease in accounts. Further estimates show that MNO concentration can explain 4% of the mobile money accounts amongst the country sample and financial accounts can explain 5% of the mobile money accounts. In addition, this paper posits that the market forces of competition and concentration within telecommunications and banking industries influence the regulatory outcomes of mobile money regulations. MNO competition reduces the industry’s regulatory influence of consumer protection regulations while banking competition increases the agent network regulation. MNO concentration increases the industry’s influence of e-money legislation and banking concentration decreases it.

In its investigation into Google's search practices, Google Search, the Commission alleges that Google abuses its dominant position on the web search market by giving systematic favourable treatment to its " comparison shopping product " (namely, " Google Shopping ") in its general search results pages. This Article analyses whether the conduct in question in Google Search can be an abuse under Article 102TFEU (prohibiting the abuse of a dominant position in the EU) and, if so, under what conditions. This Article proceeds by first providing a positive assessment of the application of Article 102TFEU and the relevant case law to the issues involved in Google Search on the assumption that the Commission may seek to place the facts under an existing category of abuse. Three categories of abuse are analysed to this end: refusal to deal (including the essential facilities doctrine), discrimination, and tying. The article then proceeds to a normative assessment of the circumstances under which Article 102TFEU should be applied in Google Search under a principled conceptualisation of " abuse, " one which requires exploitation, exclusion, and a lack of an increase in efficiency. The Article finds that the facts in Google Search do not meet the requirements of the existing law to be found abusive unless the established frameworks for the types of abuse examined are unjustifiably disrupted. It also finds that under the principled conceptualisation of abuse adopted in this Article, the facts in Google Search do not represent the type of conduct that should be found abusive either.

Análisis descriptivo del contrato de abastecimiento  de energía eléctrica y el contrato de reserva de potencia de acuerdo a lo que regula la Ley General de Electricidad (LGE), contenida en el Decreto 93-96 del Congreso de la República y  sus reglamentos.
El presente artículo fue publicado originalmente en la Revista del Colegio de Abogados y Notarios de Guatemala.

There is a growing body of evidence that interest rate spreads in Africa are higher for big banks compared to small banks. One concern is that big banks might be using their market power to charge higher lending rates as they become larger, more efficient, and unchallenged. In contrast, several studies found that when bank size increases beyond certain thresholds, diseconomies of scale are introduced that lead to inefficiency. In that case, we also would expect to see widened interest margins. This study examines the connection between bank size and efficiency to understand whether that relationship is influenced by exploitation of market power or economies of scale. Using a panel of 162 African banks for 2001–2011, we analyzed the empirical data using instrumental variables and fixed effects regressions, with overlapping and non-overlapping thresholds for bank size. We found two key results. First, bank size increases bank interest rate margins with an inverted U-shaped nexus. Second, market power and economies of scale do not increase or decrease the interest rate margins significantly. The main policy implication is that interest rate margins cannot be elucidated by either market power or economies of scale. Other implications are discussed.

The universal problematic of market definition poses peculiar challenges in multilingual and fragmented media markets, like in India. This article engages with this problematic by taking up the case of the TV distribution in India. Amidst the heightened expansion of the TV distribution business during the last decade, we notice a series of cases at the Competition Commission of India (CCI) pertaining to ‘relevant market’. This paper provides a critical appraisal of CCI’s engagement with ideas of relevant geographical market and relevant product market between 2011 and 2015. Focusing on key ideas deployed in debating relevant markets, viz. substitutability and service area, the paper unravels conceptual and methodological challenges provoked by market definition in complex media landscapes.