Considerations of Countervailing Power

Blair, Roger D.; DePasquale, Christina

doi:10.1007/s11151-011-9314-8

Cited by 7 publications

(6 citation statements)

References 5 publications

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“…Second, we use the notion of bargaining power to provide a possible explanation of differences in prices, which arise regardless of market power. This outcome occurs particularly in the instance of bilateral monopoly (Bowley, 1928;Blair and DePasquale, 2011). Our research naturally relates to the literature in industrial organizations, studying the market outcomes in industries with bargaining power asymmetry (Inderst and Valletti, 2011;Shastitko and Pavlova, 2017).…”

Section: Introductionmentioning

confidence: 95%

Deceptive evidence: The experience of product market definition for the purpose of competition law enforcement

Shastitko¹,

Markova²,

Morozov³

2022

RUJEC

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Could identical goods sold by the same company on the same territory and at the same time be attributed to different product markets? In our paper we take a closer look at the case of the wrought-steel wheel industry, which became the subject of an antitrust investigation initiated by the FAS Russia in 2020. During a shortage, one of the largest wrought-steel wheel producers sold small batches of wheels to minor buyers at relatively high prices compared to the industry average. FAS Russia assumed this price difference to be evidence for abuse of market power. In contrast to FAS Russia’s conclusions, we suggest that wrought-steel wheels sold to major and minor buyers constitute at least two separate markets. To test this hypothesis, we define a relevant product market employing a price correlation analysis. To conduct robustness check we also provide a stationarity test on the log price ratio and a cointegration test which fall within the results of correlation analysis. As consumers actually did engage in side transactions, the revealed price difference is not related to price discrimination. We explain this price difference using the new institutional economics, assuming that goods sold to a large buyer do possess special transaction characteristics which do not meet the characteristics of the batches consumed by minor buyers. Another explanation is differences in bargaining power between large and minor buyers. Our result shows that there can be identified at least two wrought-steel wheel product markets: one with Russian Railways as the main buyer and the second one with smaller undertakings.

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Section: Introductionmentioning

confidence: 95%

Deceptive evidence: The experience of product market definition for the purpose of competition law enforcement

Shastitko¹,

Markova²,

Morozov³

2022

RUJEC

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“…Dobbs and Hill (1993) focused on take-or-pay contracts as a mechanism to reduce the uncertainty zone. It is in this context of uncertain solutions that some authors (Campbell, 2007;Baker et al, 2008;Blair and DePasquale, 2011) explored under what conditions antitrust authorities could authorize vertical mergers, without a general agreement on the issue. Blair et al (1989) investigated the treatment of bilateral monopolies in textbooks and found that the third approach prevailed.…”

Section: Initial Synthesesmentioning

confidence: 99%

The curse of antitrust facing bilateral monopoly: Is regulation hopeless?

Shastitko¹,

Ménard²,

Pavlova³

2018

RUJEC

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This paper is about the challenges that antitrust authorities face when dealing with bilateral monopolies. The curse of antitrust refers to traps threatening the efficient applicability of antitrust policies in these situations. Standard theories diverge about the attainability of equilibrium under bilateral monopolies but share skepticism about its efficiency if it ever exists. We suggest a different approach, based on transaction cost theory. First, since bilateral monopolies often develop in the upper segment of value chains, misalignment between parties may generate negative externalities. Second, if parties reach an agreement, the impact of the governance mechanism implemented must be assessed beyond the usual parameters of prices and quantities. Indeed, the risk of negative externalities in the absence of appropriate governance increases dramatically when "critical transactions" are at stake. With vertical integration prohibited, second-best alternatives in which antitrust authorities leave room for innovative hybrid governance may allow internalizing externalities while avoiding high switching costs.

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“…36. For a basic treatment, see Blair et al (1989) and Blair and DePasquale (2011). For applications in the market for physicians services, see Blair and Herndon (2004) and Blair and Coffin (2005).…”

Section: Acknowledgementmentioning

confidence: 99%

Group Purchasing Organizations, Monopsony, and Antitrust Policy

Blair

Durrance

2013

Manage Decis Econ

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Group purchasing organizations (GPOs) consolidate the purchasing power of their members and negotiate contracts with input suppliers on their behalf. GPOs have received attention from the Department of Justice and Federal Trade Commission because of concerns over monopsony power and standardization of hospital production costs. GPOs have been criticized in the literature for their contracting practices, which may appear to be exclusionary, and their funding mechanism, which may lead to incentive incompatibility. We analyze these competitive concerns in turn. We find GPOs to be procompetitive and suggest an antitrust policy that preserves the benefits of GPO operations while protecting consumers from any competitive shortcomings. Copyright © 2013 John Wiley & Sons, Ltd.

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Considerations of Countervailing Power

Abstract: Bilateral monopoly, Countervailing power, Merger guidelines,

Cited by 7 publications

References 5 publications

Deceptive evidence: The experience of product market definition for the purpose of competition law enforcement

Deceptive evidence: The experience of product market definition for the purpose of competition law enforcement

The curse of antitrust facing bilateral monopoly: Is regulation hopeless?

Group Purchasing Organizations, Monopsony, and Antitrust Policy

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