nach oben

Review of Industrial Organization

Erschienen in:

17.07.2017

Sectoral Regulators and the Competition Authority: Which Relationship is Best?

verfasst von: Pedro P. Barros, Steffen H. Hoernig

Erschienen in: Review of Industrial Organization | Ausgabe 3/2018

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

We consider the interplay between regulatory agencies with overlapping competencies: for example, a competition authority and a sectoral regulator. This reflects the current situation in the European Union and in the US. We analyse how authorities’ incentives to act are affected if they can decide independently, or must follow each others’ opinions, respectively, and consider how this relationship performs in the presence of institutional biases and lobbying efforts. A higher likelihood of closing a case tends to be achieved when the authorities act independently of each other: the probability of coming to a decision is higher, and decisions are less vulnerable to lobbying.

Vorheriger Artikel Sharing Audience Data: Strategic Participation in Behavioral Advertising Networks

Nächster Artikel Ex-post Evaluation of Mergers in the Supermarket Industry

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Nur mit Berechtigung zugänglich

For details of how regulatory reform was performed in different countries, consult the OECD’s Global Forum on Competition at \(\langle\) http://www.oecd.org \(\rangle\).

For example, in the telecommunications sector, the OFT Guideline 417 sets the background for application of competition policy by either the sectoral regulator or the competition authority.

Castro (2004) provides an overview of the institutional and informational arguments that are associated with competing economic authorities.

In Sect. 5 we also discuss the issue of having two agencies or just one agency.

These concepts are made precise below. They are related to the notions of “hierarchy” and “polyarchy” in Sah and Stiglitz (1985) and further work by the same authors. These papers do not consider effort, though, which is our focus. Gehrig (2004) considers efforts, but in the context of joint ventures.

We are aware that authorities may intervene at different times and with different cost; but since we are addressing the incentives to intervene, a useful benchmark is identical “intervention technology”. Qualitatively the results would not differ much if we assumed that authorities were somewhat different.

This is the traditional weighted welfare function of partial equilibrium analysis, with the weight \(\lambda _{i}\) on profits indicating the bias, as in Baron and Myerson (1982). Baron (1988) is an early instance where this weight is explicitly chosen by parliament. Other formulations would lead to qualitatively similar results.

Firms have a passive role in our model. We may see the decision about violation of competition law by companies as pre-determined. Stated in a different way, we treat here the second stage of a broader game. In that broader game, firms would decide, first, on their business strategies, with the anticipation of the ensuing application of competition policy.

These conditions are necessary to start an investigation, but not sufficient, as zero effort can be optimal if the expected gain from an investigation is small relative to its cost, as will be discussed below.

The logic of the resulting game is analogous to the well-known Stackelberg model, with the subgame-perfect equilibrium as solution concept.

We thank the editor for pointing out that in the 1990s just such a case occurred in the US: the Federal Trade Commission first inconclusively investigated Microsoft, and then the Department of Justice stepped in and found proof of a violation of antitrust rules.

We will not consider the latter in the following since being unstable it is not a reasonable prediction of outcomes.

Dewatripont and Tirole (1999) consider “advocates” who specialize in defending one of the two sides of an issue. Their approach is different because they assume that utility depends only on winning the case for one side, which is more likely to occur if only information in favour of one side is found. This muffles the incentives of a single entity to investigate in both directions.

We would like to thank the editor for pointing this out.

Aghion, P., & Tirole, J. (1997). Formal and real authority in organizations. Journal of Political Economy, 105(1), 1–29.CrossRef

Baron, D. (1988). Regulation and legislative choice. RAND Journal of Economics, 19(3), 467–477.CrossRef

Baron, D., & Myerson, R. B. (1982). Regulating a monopolist with unknown costs. Econometrica, 50, 911–930.CrossRef

Barros, P. P., Hoernig, S., & Nilssen, T. (2015). Transversal agency and crowding out. Journal of Institutional and Theoretical Economics, 171(4), 589–608.CrossRef

Bubb, R., & Warren, P. L. (2014). Optimal agency bias and regulatory review. Journal of Legal Studies, 43(1), 95–135.CrossRef

Castro, R. (2004). Essays on the institutional arrangement between the industry-specific and the antitrust agencies. Dissertation, Universitat Pompeu Fabra.

Dewatripont, M., & Tirole, J. (1999). Advocates. Journal of Political Economy, 107(1), 1–39.CrossRef

Gehrig, T. P. (2004). Organizational form and information acquisition. Journal of Institutional and Theoretical Economics, 160(1), 39–51.CrossRef

Laffont, J.-J., & Martimort, D. (1999). Separation of regulators against collusive behavior. RAND Journal of Economics, 30(2), 232–262.CrossRef

Laffont, J.-J., & Tirole, J. (1993). A theory of incentives in procurement and regulation. Cambridge: MIT Press.

Martimort, D. (1996). The multiprincipal nature of government. European Economic Review, 40, 673–685.CrossRef

McCubbins, M., Noll, R., & Weingast, B. (1987). Administrative procedures as instruments of political control. Journal of Law, Economics and Organization, 3(2), 243–277.

Olson, M. (1965). The logic of collective action: Public goods and the theory of groups. Cambridge: Harvard University Press.

Prendergast, C. (2007). The motivation and bias of bureaucrats. American Economic Review, 97(1), 180–186.CrossRef

Sah, R. K., & Stiglitz, J. E. (1985). Human fallibility and economic organization. American Economic Review Papers and Proceedings, 75, 292–297.

Stigler, G. J. (1971). The theory of economic regulation. Bell Journal of Economics and Management Science, 2(1), 3–21.CrossRef

Ting, M. (2003). A strategic theory of bureaucratic redundancy. American Journal of Political Science, 47, 274–292.CrossRef

Wilson, J. (1989). Bureaucracy: What Government Agencies do and why they do it. Basic Books.

Titel: Sectoral Regulators and the Competition Authority: Which Relationship is Best?
verfasst von: Pedro P. Barros
Steffen H. Hoernig
Publikationsdatum: 17.07.2017
Verlag: Springer US
Erschienen in: Review of Industrial Organization / Ausgabe 3/2018
Print ISSN: 0889-938X
Elektronische ISSN: 1573-7160
DOI: https://doi.org/10.1007/s11151-017-9582-z

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft"

Springer Professional "Wirtschaft+Technik"

Weitere Artikel der Ausgabe 3/2018

Ex-post Evaluation of Mergers in the Supermarket Industry

Optimal Leniency Programs When Firms Have Cumulative and Asymmetric Evidence

An Empirical Analysis of Countervailing Power in Business-to-Business Bargaining

A Brief History of the Review of Industrial Organization (RIO) and the Industrial Organization Society (IOS)

Sharing Audience Data: Strategic Participation in Behavioral Advertising Networks