Steve Salop, Serge Moresi, and John Woodbury have posted a very useful primer on the new HMGs new “value of diverted sales” approach to unilateral effects: the gross upward pricing pressure index (GUPPI).  Here’s the basic idea…

Read the full piece here. 

Intel Chairman and CEO Paul Otellini recently gave the keynote address at the Technology Policy Institute’s Aspen Forum on the US regulation environment and its effect of innovation and economic growth (HT: CNET, WSJ).  The speech got some play in the media because of its overall depressing tone for the US, and its frank criticism of the current state of US regulatory affairs.

Read the full piece here.

Barring some sort of last extension Medicare, Medicaid and SCHIP Extension Act (MMSEA) of 2007 will require all property casualty insurers to report all settlements, awards and judgments that involve a Medicare beneficiary to the Centers for Medicare and Medicaid Services. Essentially the MMSEA turns subrogation rules on their head by requiring the defendant to notify a third-party if the plaintiff might owe them money. Under subrogation rules a third-party insurer with an interest in a case, think a health insurer who wants to be reimbursed by a defendant for the injuries caused to the insurer’s beneficiary, would have to join the case which of course would require finding out about the case in the first place.

Read the full piece here. 

Earlier this week, the WSJ reported on a nuance in the New York state tax code that has come take a bite out of at least one bagel company’s profits, and it illustrates how the complexities of arbitrary taxation schemes can rear their ugly heads and create incentives–and challenges–for consumers and sellers alike that would seem silly were it not for their very real economic impacts.

Read the full piece here.

The Economist points to a very interesting study by Stanford’s David Larcker and Anastasia Zakolyukina on the use of deception in the business environment (HT: Brian McCann).  The article’s title, “How to Tell When Your Boss is Lying,” gets at the thrust of the piece.  Larcker and Zakolyukina look at conference call transcripts from 2003 and 2007 for evidence of determinants of companies who later ran into problems in the form of serious financial restatements or accounting errors.  Can you identify a CEO or CFO engaging in deceptive conduct during a conference call?  What sort of “tells” would you look for?

Read the full piece here. 

Abstract

Antitrust observers and football fans alike awaited the Supreme Court’s decision in American Needle v. National Football League for months – inspiring over a dozen articles, and even one from the quarterback of the defending champion New Orleans Saints. Yet the implications of the Court’s decision, effectively narrowing the scope of the “intra-enterprise immunity” doctrine to firms with a complete “unity of interests,” are unclear. While some depict the decision as a schism from the last several decades of antitrust law, we explain why this interpretation is meritless and discuss the practical impact of the Court’s holding. The Court’s antitrust jurisprudence over the past several decades, including that of the Roberts Court and American Needle, has broadly embraced rules that are both relatively easy to administer as well as conscious of the error costs of deterring pro-competitive conduct. Intra-enterprise immunity potentially provided such a “filter” that enabled judges to dismiss a non-trivial subset of meritless claims prior to costly discovery. The doctrine, however, proved notoriously difficult to consistently apply in situations involving common organizational structures. Consistent with error-cost principles that have been the lodestar of the Court’s recent antitrust output, American Needle gave the Court an opportunity to effectively abandon intra-enterprise immunity in favor of the Twombly “plausibility” standard. Rather than marking a drastic change in antitrust jurisprudence, therefore, American Needle should be viewed as the Supreme Court substituting an unreliable screening mechanism in favor of a more cost-effective alternative.

Today’s Wall Street Journal has an article tailor made for anyone wishing to defend free-markets from overreaching regulation. The story details the legal battle between the monks of St. Joseph Abbey in Louisiana with the Louisiana state funeral regulatory board.  As is typical with such boards, the Louisiana version is dominated by the industry. Of course this is just what Stigler would have predicted 40 years ago in his classic article on regulatory capture.  Two things struck me about the story however.  First is how the “captured” funeral board doesn’t even make a pretext of some sort of health or safety motivation for its actions.  In what might be the most honest statement ever made by a cartel member to a newspaper one of the monks’ competitors states…

Read the full piece here. 

In the WSJ, Scott Hemphill (Columbia) and Jeannie Suk (Harvard) defend Charles Schumer’s proposed bill, which would extend copyright protection to fashion design…

Read the full piece here. 

One of the primary concerns with the Proposed HMGs was that the new approach would lead to small relevant markets in order to better reflect the Agencies’ views that the traditional approach understated the importance of competition between close substitutes.   I highlighted one analytical concern with this approach in a previous blog post…

Read the full piece here.