Complementary Monopolies and Bargaining
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Coasean Fictions: Law and Economics Revisited
Seattle Journal for Social Justice Volume 5 Issue 2 Article 28 May 2007 Coasean Fictions: Law and Economics Revisited Alejandro Nadal Follow this and additional works at: https://digitalcommons.law.seattleu.edu/sjsj Recommended Citation Nadal, Alejandro (2007) "Coasean Fictions: Law and Economics Revisited," Seattle Journal for Social Justice: Vol. 5 : Iss. 2 , Article 28. Available at: https://digitalcommons.law.seattleu.edu/sjsj/vol5/iss2/28 This Article is brought to you for free and open access by the Student Publications and Programs at Seattle University School of Law Digital Commons. It has been accepted for inclusion in Seattle Journal for Social Justice by an authorized editor of Seattle University School of Law Digital Commons. For more information, please contact [email protected]. 569 Coasean Fictions: Law and Economics Revisited Alejandro Nadal1 After the 1960s, a strong academic movement developed in the United States around the idea that the study of the law, as well as legal practice, could be strengthened through economic analysis.2 This trend was started through the works of R.H. Coase and Guido Calabresi, and grew with later developments introduced by Richard Posner and Robert D. Cooter, as well as Gary Becker.3 Law and Economics (L&E) is the name given to the application of modern economics to legal analysis and practice. Proponents of L&E have portrayed the movement as improving clarity and logic in legal analysis, and even as a tool to modify the conceptual categories used by lawyers and courts to think about -
Bargaining Power and Contract Design Abstract
Bargaining Power and Contract Design Albert Choi and George Triantis* This draft: February 24, 2012 Abstract Over the past 40 years, an irrelevance proposition has been embraced implicitly in law-and- economics scholarship: bargaining power should affect only price and not non-price terms of a contract. This proposition is based on unstated assumptions that contracting is affected by neither transaction costs nor asymmetrical information and that the parties are risk neutral. In contrast, practitioners and commentators in industry regularly invoke bargaining power to explain static and dynamic patterns in non-price contract terms. The assumptions of the bargaining power irrelevance proposition, therefore, need to be unpacked and analyzed to bridge the gap between theory and the real world. In the first half of the paper, we identify and discuss a variety of explanations for the effect of bargaining power on contract design, under conditions of information asymmetry and positive transaction costs. These include the effects of shifts in market supply and demand and the effect of bargaining through lawyers. In the second half of the paper, we present an in-depth examination of one set of explanations, concerning the impact of bargaining power on screening and signaling incentives, when the value and cost of these terms vary across contracting parties, and when such values are private information. In the extreme cases in which one or the other party enjoys overwhelming bargaining power, the efforts of that party to capture a larger share of the surplus by screening or signaling may compromise the efficiency of the non-price terms. We show that this incentive disappears or is mitigated when bargaining power is more evenly shared between the parties: for example, when a monopolist faces the threat of a future entrant, when the parties can renegotiate, or when they are engaged in bilateral bargaining with even bargaining power. -
The Governance of Energy Displacement Network Oligopolies
THE GOVERNANCE OF ENERGY DISPLACEMENT NETWORK OLIGOPOLIES Discussion Paper 96-08 Federal Energy Regulatory Commission Office of Economic Policy October 1996 Revised, May 1997 DISCUSSION PAPER THE GOVERNANCE OF ENERGY DISPLACEMENT NETWORK OLIGOPOLIES Richard P. O'Neill Charles S. Whitmore and Michelle Veloso Office of Economic Policy Federal Energy Regulatory Commission Washington, D.C. Olin Foundation Conference on Gas Policy Issues Yale University School of Management New Haven, Connecticut October 4, 1996 Revised May 1997 The analyses and conclusions expressed in this paper are those of the authors and do not necessarily represent the views of other members of the Federal Energy Regulatory Commission, any individual Commissioner, or the Commission itself. Contents Page Executive Summary ..........................................................v I. Introduction .............................................................1 II. Historical Background: The Inertial Baggage ...................................3 A. Introduction .......................................................3 Early Public Utility Regulation ......................................3 Modern Public Utility Regulation ....................................4 B. The Mathematical School: The Quest for Efficiency .........................5 The Quest for Perfect Rates ........................................5 Dynamic Efficiency and Auctions ....................................8 Unanswered Questions ............................................9 C. The Political School: the Quest -
Three Conceptions of Power Jayne Seminare Docherty
Marquette Law Review Volume 87 Article 24 Issue 4 Special Issue Three Conceptions of Power Jayne Seminare Docherty Russell Korobkin Christopher Honeyman Follow this and additional works at: http://scholarship.law.marquette.edu/mulr Part of the Law Commons Repository Citation Jayne Seminare Docherty, Russell Korobkin, and Christopher Honeyman, Three Conceptions of Power, 87 Marq. L. Rev. (2004). Available at: http://scholarship.law.marquette.edu/mulr/vol87/iss4/24 This Article is brought to you for free and open access by the Journals at Marquette Law Scholarly Commons. It has been accepted for inclusion in Marquette Law Review by an authorized administrator of Marquette Law Scholarly Commons. For more information, please contact [email protected]. MARQUETTE LA W REVIEW [87:861 POWER IN THE SOCIAL/POLITICAL REALM JAYNE SEMINARE DOCHERTY* "Power is nothing more (or less) than the capacity to get work done against time."' Any metaphor has limitations as well as strengths. The above metaphor of power, taken from physics, is useful for highlighting some features of power in a social encounter such as negotiation. 2 But taken too far, the metaphor can obscure important features of social reality. In the social realm, unlike the world of physics, the definition of work is debatable, time is malleable, and the mere capacity to use power can influence outcomes in a social encounter. Getting a car to run faster or more efficiently is a clear measure of work accomplished. But who defines the measurement of success in any given social encounter? Parties may enter a negotiation with very different goals and objectives and, therefore, different ideas about what constitutes work accomplished. -
European Commission Invites Comments Regarding Collective Bargaining for the Self-Employed
Latham & Watkins Antitrust & Competition Practice 11 January 2021 | Number 2845 European Commission Invites Comments regarding Collective Bargaining for the Self-Employed The European Commission is seeking feedback on introducing regulations or guidance to ensure that EU competition law rules do not prevent self-employed workers from collectively bargaining. On 6 January 2020, the European Commission (EC) published an inception impact assessment that invites comments on the scope of application of EU competition law to collective bargaining agreements for the self-employed. The EC will launch in the first half of 2021 a more detailed public consultation, with a view to the possible adoption of a Council Regulation or an EC Communication in the second quarter of 2022. The inception impact assessment and public consultation will be of interest to clients operating in the platform economy. Their implications are potentially broader, however, and may influence the future application of EU competition rules, and perhaps national employment and tax laws, beyond this sector. Background The EC has identified that digitalisation and the need for increased flexibility in the labour market have led to the emergence of new forms of work. Specifically: A growing number of individuals are engaged in platform work. Outside the platform economy, a growing number of individuals have entered into commercial service contracts. The EC considers that these new forms of work may introduce uncertainty regarding working conditions and access to collective bargaining. According to the EC, the evidence shows that: Platform workers are often not involved in the determination of the price of their services, and may lack the bargaining power on an individual basis to negotiate their terms and conditions. -
Bargaining Power and Unconscionability: a Suggested Approach to Ucc Section 2-302
[Vol.114 COMMENT BARGAINING POWER AND UNCONSCIONABILITY: A SUGGESTED APPROACH TO UCC SECTION 2-302 Section 2-302 of the Uniform Commercial Code provides that a court may refuse to enforce a contract, or any clause thereof, which it finds to have been unconscionable at the time it was made.- The section is new to the law of sales,2 and neither the Code nor the common law provides an established definition of unconscionability.3 Nonetheless, analysis of the section's purpose, as expressed in the Comment thereto, indicates that there are definite and reasonable limits to the intended scope of the section's application. The Official Comment states that the section is intended to prevent "oppression and unfair surprise," 4 two rather common abuses of bargaining power by the stronger party to a contract.5 1 If the court as a matter of law finds the contract or any clause of the con- tract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result. UNIFORM COMM cI LcICODE § 2-302(1). As to the meaning and significance of § 2-302, see generally Note, 45 IowA L. REv. 843 (1960); Note, 109 U. PA. L. Rxv. 401 (1961); Note, 45 VA. L. Rxv. 583 (1959); Note, 63 YALE L.J. 560 (1954); 58 DIcK. L. REv. 161 (1954) ; Comment, 18 U. Cur. -
Theory of the Monopoly Under Uncertainty / by Yooman
THEORY OF THE MONOPOLY UNDER UNCERTAINTY Yooman Kim B.A., California State University, 1971 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MaSTER r?F mTS in the Department 0f Economics and Commerce @ Yooman Kim 1978 SIMON FRASER UNIVERSITY June 1978 All rights reserved. This thesis may not be reproduced in whole or in part, by photocopy or other means, without permission of the author. APPROVAL NAME : Yooman Kim DEGREE : Master of Arts TITLE OF THESIS: Theory of the Monopoly under Uncertainty EXAMINING COMMITTEE : Chairmanf Sandra S. Chris tensen Pao Lun Cheng I - .. -.. - .- - - Dennis R. Maki / Choo-whan Kim Department of Mathematics Simon Fraser University ABSTRACT In the traditional monopoly theory, it is argued that a monopolv firm produces the optimum output quantity characterized bv its marginal revenue being equal to marginal cost, and a monopsony firm employs the optimum input quantity characterized by its marginal expenditure being equal to marginal revenue product of input. Traditional in these theories is the presumption that agents act as if economic environments were nonstochas tic. However, recent studies of firms facing uncertainty indicate that several widely accepted results of the riskless theories must be abandoned. This paper extends the traditional monopoly theory to the case where monopolists are interested in maximizing expected utility from profits and they are risk-averse. This paper also examines the behaviors of a monopoly firm facing demand uncertainty and monopsony firm facing cost uncertainty. In the last section of this paper, we will examine the implications of uncertainty in the case of bilateral monopoly. -
R. Congleton Microeconomics II GMU Study Guide II
EC812 Study Guide II Spring 2001 R. Congleton Microeconomics II GMU 7. Suppose that a monopolist, UNO, faces the inverse demand curve, P = K - aQ where Q is the total supply of all firms in the market, and has a cost function C = bQ. Suppose that 1. Identify and/or Define the following: entry in this market occurs as in a symmetric Cournot Nash Model. a. Monopolist n. market failure a. Determine UNO's profit maximizing output and profit level. b. Natural Monopoly o. Pareto optimal b. Now allow entry to occur. Entry implies that market output is NQ * where Q * is the c. Harberger Triangle p. social welfare function f f equilibrium output of each of N firms in the market. Determine the Nash equilibrium for two d. Price Discrimination q. externality firms, for three firms, ... for N firms. e. All or Nothing Offer r. technological externality c. Determine the profit levels associated with each part of "b." f. Entry Barrier s. Pigovian tax d. Determine the long run equilibrium in this market . g. Contestable Market t. Coase theorem e. How does this case differ from the usual case of monopolistic competition where competitors are i. Stackelberg Duopoly u. signaling game prevented from selling the same products or perfect substitutes for firms already in the market j. Monopolistic Competition v. principal-agent problem (because of patent, copyright or trademark protection)? k. Conjectural Variation w. risk aversion 8. Suppose that Ichi sells its output in two markets. In one it faces an inverse demand curve l. Bilateral Monopoly x. pooling equilibrium of P= 1000 - 5Q and in the other it faces the inverse demand curve P = 800- Q. -
Buyer Power and Healthcare Prices
Seattle University School of Law Digital Commons Faculty Scholarship 2015 Buyer Power and Healthcare Prices John B. Kirkwood Follow this and additional works at: https://digitalcommons.law.seattleu.edu/faculty Part of the Law Commons Recommended Citation John B. Kirkwood, Buyer Power and Healthcare Prices, 91 WASH. L. REV. 253 (2015). https://digitalcommons.law.seattleu.edu/faculty/751 This Article is brought to you for free and open access by Seattle University School of Law Digital Commons. It has been accepted for inclusion in Faculty Scholarship by an authorized administrator of Seattle University School of Law Digital Commons. For more information, please contact [email protected]. BUYER POWER AND HEALTHCARE PRICES John B. Kirkwood Abstract: One major reason why healthcare spending is much higher in America than in other countries is that our prices are exceptionally high. This Article addresses whether we ought to rely more heavily on buyer power to reduce those prices, as other nations do. It focuses on two sectors where greater buyer power could easily be exercised: prescription drugs covered by Medicare and hospital and physician services covered by private insurance. The Article concludes that the biggest buyer of all, the federal government, should be allowed to negotiate Medicare prescription drug prices. This would likely reduce the prices of many branded drugs substantially without causing a large reduction in innovation. Multiple studies indicate that drug companies have been exceptionally profitable in recent years. As a result, they could lower prices on many drugs and still earn a competitive return on most research and development. Moreover, the incentive to develop important new medicines would remain high because the government would have little leverage over the prices of these drugs. -
Introduction to Microeconomics E201
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ INTRODUCTION TO MICROECONOMICS E201 $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ Dr. David A. Dilts Department of Economics, School of Business and Management Sciences Indiana - Purdue University - Fort Wayne $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ May 10, 1995 First Revision July 14, 1995 Second Revision May 5, 1996 Third Revision August 16, 1996 Fourth Revision May 15, 2003 Fifth Revision March 31, 2004 Sixth Revision July 7, 2004 $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ Introduction to Microeconomics, E201 8 Dr. David A. Dilts All rights reserved. No portion of this book may be reproduced, transmitted, or stored, by any process or technique, without the express written consent of Dr. David A. Dilts 1992, 1993, 1994, 1995 ,1996, 2003 and 2004 Published by Indiana - Purdue University - Fort Wayne for use in classes offered by the Department -
Module –IV Market Structure
Mrs. K.Chandra, Assistant Professor, GCWK Study material Module –IV Market Structure Market Structure: Meaning, Characteristics and Forms According to Prof. R. Chapman, “The term market refers not necessarily to a place but always to a commodity and the buyers and sellers who are in direct competition with one another.” The market for a product refers to the whole region where buyers and sellers of that product are spread and there is such free competition that one price for the product prevails in the entire region. The essential features of a market are (1) An Area: In economics, a market does not mean a particular place but the whole region where sellers and buyers of a product ate spread. Modem modes of communication and transport have made the market area for a product very wide. (2) One Commodity: In economics, a market is not related to a place but to a particular product. Hence, there are separate markets for various commodities. For example, there are separate markets for clothes, grains, jewelry, etc. (3) Buyers and Sellers: The presence of buyers and sellers is necessary for the sale and purchase of a product in the market. In the modem age, the presence of buyers and sellers is not necessary in the market because they can do transactions of goods through letters, telephones, business representatives, internet, etc. (4) Free Competition: There should be free competition among buyers and sellers in the market. This competition is in relation to the price determination of a product among buyers and sellers. (5) One Price: The price of a product is the same in the market because of free competition among buyers and sellers. -
Monopsony 2013: Still Not Truly Symmetric Presented and Authored By: Jonathan M
61ST ANNUAL ANTITRUST LAW SPRING MEETING April 12, 2013 • 8:15–9:45 am Monopsony: What’s the Latest on (Too) Low Prices? Monopsony 2013: Still Not Truly Symmetric Presented and Authored By: Jonathan M. Jacobson Prepared March 4, 2013 Monopsony 2013: Still Not Truly Symmetric Jonathan M. Jacobson* ▬ Presented at the 61st Spring Meeting of the Section of Antitrust Law, American Bar Association ▬ Panel Discussion: “Monopsony: What’s the Latest on (Too) Low Prices?” April 12, 2013 ____________________ * Partner, Wilson Sonsini Goodrich & Rosati, New York. This paper draws on two prior works, cited below, that were co-authored with a great friend, the late Dr. Gary Dorman. Many thanks to Dr. Lauren Stiroh and Susan Creighton for helpful comments. We have been assured for years that “monopoly and monopsony are symmetrical distortions of competition,”1 and that statement is precisely true. But the conclusion some have told us to draw, that symmetric legal and economic treatment is necessarily required, 2 is sometimes quite wrong. Despite the superficial appeal of symmetric outcomes, economic analysis frequently yields a different result. And, indeed, the case law over many decades has been consistent in authorizing conduct by buyers that symmetric treatment would prevent. To that end, the courts routinely uphold practices such as purchasing cooperatives whose counterparts are invariably condemned as unlawful per se on the selling side.3 And to this day, no reported case has found a firm guilty of unilateral monopsonization, notwithstanding the numerous occasions in which single-firm conduct has been held to constitute unlawful monopolization under Section 2 of the Sherman Act.4 The purposes of this paper are, first, to explain the important real world economic differences between monopoly and monopsony and, second, to analyze why the outcomes in the relevant case law are generally consistent with sound economic analysis.