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Implications of the State Aid Modernisation for the Assessment of Large Investment Projects
EStAL - Issue: 1/2013 - pp. 46-60.
2012
competition policy, regional state aid, subsidies, anti-competitive effects

The Regional Aid Guidelines foresee specific screens for an in-depth assessment of Large Investment Projects (LIPs): an in-depth assessment is initiated if the market share of the aid beneficiary is above 25% or the investment results in a capacity expansion above 5% in a declining market. It is currently being discussed within the broader State Aid Modernization package and also due to a recent court ruling on the case Propapier whether these market screens should stay as they are. Based on a dataset of all LIP cases notified under the 2006 Regional Aid Guidelines, we evaluate those market screens and find that the screens do have the power to identify problematic cases – cases with a below average expected aid effectiveness and aid measures targeting specific industries. We also find, however, that the market screens are affected by a severe implementation problem and, hence, do not help to shorten phase I investigations. From a conceptual perspective, they are also not capable of identifying some of the potentially most problematic regional State aid cases. Policy options are discussed.

The full paper can be purchased here.

A working paper version is available here.

Upward Pricing Pressure in Two-Sided Markets
TILEC Discussion Paper No. 2012-029
2012
two-sided markets, network effects, UPP
Share the risk : access to Next Generation Networks
E.CA Compact
2012
NGA Networks, access regulation

The telecommunications industry is currently in the midst of a disruptive technological upheaval. Next Generation Networks (NGN) enable higher Internet bandwidths and new applications. However, NGN deployment depends on the conditions under which investors have to grant their competitors access to the new infrastructure. This note describes how E.CA modelled different regulatory regimes for access to NGN and compared the outcomes in terms of consumer welfare.

PDF icon Share the risk : access to Next Generation Networks(application/pdf 115.7 KB)
Regional Aid Guidelines and Large Investment Projects
Presentation at the 10th Experts' Forum on New Developments in European State Aid Law, Brussels, 8 June 2012.
2012
regional aid, investment project
Predicting the future: How pricing regulation affects drug development
E.CA Compact
2012
price regulation, innovation

In an effort to contain healthcare costs, governments around the world are imposing increasingly stricter pricing and reimbursement conditions in particular one "me-too" medicines. We study the consequences that this may have on pharmaceutical innovation in the context of a dynamic model of drug development. Our simulations show that the negative effects of price regulation on drug development are economically significant.

PDF icon Predicting the future: How pricing regulation affects drug development (application/pdf 153.5 KB)
Owner Effect and Sunk Investments
Europäische Zeitschrift für Wirtschaftsrecht, issue 11/2012: 408-413.
Ulrich Soltész
2012
owner effect, sunk investments
Materielle Fusionskontrolle : Leitfaden und 8. GWB-Novelle
Presentation at the Studienvereinigung Kartellrecht,18 October 2012, Berlin.
2012
LGI's Acquisition of KBW - Effects on Competition and Bargaining Power
Bates White's Ninth Annual Antitrust Conference, 7 June 2012, Washington.
2012
Bargaining Power
How to deal with price wars in cartel damages estimations?
E.CA Compact
2012
price wars, damage estimation

A standard approach to damages estimation is to compare prices during the cartel period with prices before or after. However, it is not uncommon to see prices wars right after the cartel breaks down. As price wars are characterised by prices below the competitive level, an inclusion of price wars in the comparison period can lead to overcharges that are too high. This E.CA Compact explains how we modelled the price war period in the example of a German cement cartel.

PDF icon How to deal with price wars in cartel damages estimations(application/pdf 137.4 KB)
Estimating network effects in two-sided markets without data on prices and quantities
Economics Letters, Volume 117, Issue 3, December 2012 , Pages 585-588.
2012
Two-sided markets; Network effects; Semi-structural model

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