Chillin'Competition

Two new leniency videos, respectively by the Swedish and Dutch competition authorities. I actually prefer the second one, which looks  more dramatic and glamorous. Yet, the first one may reach out to a bigger audience. Its characters are ordinary sales persons tempted by cartel activity. The second one abuses the cliché of CEOs smoking cigars and drinking cognac in luxurious venues.

Thanks to Christian Bergqvist (Copenhagen Law School) for the pointer.

I’ll keep it short for today.

A reminder: next week the GCLC will have its next lunch talk on the Commission’s proposed best practices in antitrust proceedings.

An info: the slides of the IEJE conference on the Lisbon Treaty are available here.

Many thanks for your answers. Some readers got it right, others not. To be fair, the question was poorly formulated, and many alternative explanations could apply.

Scott Summer from the Money Illusion provides the answer, and comes back on the question:

I teach at an institution that is well above average, and here is what I have found.  Almost every single student comes into EC101 knowing the impact of supply and demand shocks.  Tell them a frost hits the Florida orange crop, and they can explain what happens to the price of oranges.  Tell them millions of Chinese start buying cars and they can tell you what happens to the price of oil.

I also find that almost no student comes into my class knowing how to interpret price and quantity data.  And what is worse, they leave the course equally ignorant.  I often ask the following question to upper level econ or MBA students who have already taken principles:

Question: A survey shows that on average 100 people go to the movies when the price is $6 and 300 people go when the price is $9.  Does this violate the laws of supply and demand?

Very, very few can answer this question, especially if you ask for an explanation.  Even worse, I think there is a perception that there is something ‘tricky’ about this question, something unfair.  In fact, it is as easy a question as you could imagine.  It’s basic S&D.  It’s merely asking students what happens when the demand for movies shifts.  I cannot imagine a less tricky question, or a more straightforward application of the laws of supply and demand.  In the evening hours the demand for movies shifts right.  Price rises.  Quantity supplied responds.  What’s so hard about that?  And yet almost no student can get it right.  Our students enter EC101 knowing one of the two things they need to know about S&D, and they leave knowing one of the two things they need to know about S&D.  Maybe instead of having them memorize mind-numbing lists of “5 factors that shift supply,” and “5 factors that shift demand,” we should just tell them to read something that will explain what economics is all about, something that portrays economists as detectives trying to solve the identification problem, something like Freakonomics.

(Image possibly subject to copyrights: source here)

Question: A survey shows that on average 100 people go to the movies when the price is $6 and 300 people go when the price is $9.  Does this violate the laws of supply and demand?

Any idea?

Derecho de la competencia has upgraded. see http://lalibrecompetencia.com/

New design, new name and more contributors from different jurisdictions of Latin America:

In addition to Juan David, Ignacio de León (Venezuela, Queen Mary U. of London),Pablo Márquez (Colombia, Harvard U.and U. of Oxford), Victor Pavón Villamayor (México, U. of Oxford), Javier Tapia (Chile, U. College of London), Leopoldo Ubiratan (Brazil, LSE and U. of Sao Paulo) and Natalia Barrera (Colombia, U. Javeriana), have joined the venture.

The brilliant, prolific, US judge and scholar Richard Posner recently had a revelation.  See here. Not a philosophical U-turn, but close.

Found on D. Gutierez’s blog.

(Image possibly subject to copyrights: source here)

European Competition Policy and the Lisbon Treaty: Dawn of a new era or business as usual?– Patrick Vincent (P.Vincent@student.ulg.ac.be)

In the post-Lisbon Treaty era, the reference to “free and undistorted competition” previously enshrined in Article 3(g) EC has disappeared from the forefront of the EU treaties. The present dissertation seeks to assess whether the elimination of this provision – and its replacement by a Protocol appended to the Treaty – is likely to affect the effectiveness of European competition policy. Whilst scholars are divided on this issue, there nonetheless seems to be a growing concern that European competition policy might as a result be increasingly influenced by external, public-policy, considerations, which to date have played a marginal role in the Commission’s orthodox enforcement policy. To test the veracity of this proposition, the present dissertation will review a number of concrete practical issues (environmental agreements, etc.), where considerations alien to core competition concerns might be invoked by stakeholders.

I attach the slides I presented in Madrid. The first set of slides is an introduction to EU competition law. The second set of slides deals with the concepts of agreements, concerted practices and decisions of associations of undertakings.

General introduction – xiii_curso_de_derecho_de_la_competencia_ieb (1

Agreements decisions of association of undertakings and concerted practices – xiii_curso_de_derecho_de_l

BTW: Iberia is amongst the least professional and reliable airlines. My flight, which was supposed to leave Madrid yesterday at 7.15 pm, eventually left at 3.15 am. I arrived at home this morning around 7.00 am…. This is not the first time I have problems with this company. I filed a formal complaint. Let’s see how things turn out.

(image possibly subject to copyrights: see here)