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10Th Annual FTC Microeconomics Conference In the Matter of: 10th Annual FTC Microeconomics Conference November 2, 2017 Day 1 Condensed Transcript with Word Index For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Day 1 10th Annual FTC Microeconomics Conference 11/2/2017 1 3 1 FEDERAL TRADE COMMISSION 1 P R O C E E D I N G S 2 2 - - - - - 3 3 WELCOME AND OPENING REMARKS 4 4 MR. VITA: My name is Mike Vita. I am the 5 5 Deputy Director for Research and Management, as well 6 6 as currently Acting Director here at the FTC's Bureau 7 7 of Economics, and I just want to welcome everybody to 8 THE TENTH ANNUAL 8 the -- this is now the Tenth Annual Micro Conference 9 9 we have held here, and it's hard to believe it's been 10 FEDERAL TRADE COMMISSION 10 that long. 11 11 The purpose of this conference, like all of our 12 MICROECONOMICS CONFERENCE 12 conferences, is an attempt to combine, you know, 13 13 cutting-edge academic research with discussions of 14 DAY 1 14 real-world policy problems, and I think if you look at 15 15 the agenda, I think, you know, it promises to do that 16 16 this year like it has in the past. 17 Thursday, November 2, 2017 17 Before the first panel gets started, just a few 18 9:00 a.m. 18 announcements and a few acknowledgments. First of 19 19 all, I want to express our gratitude to Northwestern 20 20 University and the Searle Center for their continued 21 Federal Trade Commission 21 cosponsorship of this conference. 22 Washington, D.C. 22 Let me also acknowledge, you know, some of the 23 23 work of the FTC people who -- first of all, the 24 24 Scientific Committee that helped us put this together. 25 25 That's Steve Berry from Yale, Jonathan Zinman from 2 4 1 FEDERAL TRADE COMMISSION 1 Dartmouth, and Igal Hendel from Northwestern. Thanks. 2 2 You know, as usual, really great work in selecting a 3 Welcome/Opening Remarks 3 3 great selection of papers to be presented. 4 4 Just a few words about us, I mean, and some of 5 Paper Session 9 5 the people in the group -- in the audience might not 6 6 be overly familiar with the FTC and what we do here. 7 Keynote Address 108 7 We're an independent agency that, along with the 8 8 Department of Justice, enforces the antitrust laws, 9 Panel Discussion 133 9 but we also have -- unlike Justice, we also have an 10 10 additional enforcement mission, which is consumer 11 Paper Session 180 11 protection law. 12 12 So these enforcement missions are supported by 13 Keynote Address 298 13 the FTC Bureau of Economics, which is about 80 Ph.D. 14 14 economists, and so it makes it one of the largest 15 15 applied microeconomics groups in the Federal 16 16 Government. We think -- you know, those of us at the 17 17 FTC think that these twin enforcement missions 18 18 reinforce and complement each other. Competition is 19 19 most effective when consumers are making well-informed 20 20 decisions and free choices, and consumer protection 21 21 works best when consumers have real alternatives. 22 22 So the purpose of today's conference, like its 23 23 predecessors, is to help ensure that the FTC's actions 24 24 are informed and guided by the best possible economic 25 25 analysis. So in addition to the normal papers, you 1 (Pages 1 to 4) For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 Day 1 10th Annual FTC Microeconomics Conference 11/2/2017 5 7 1 know, the paper sessions -- which one will be starting 1 also on the FTC's main website, on the homepage. 2 in just a few minutes -- we also have two panel 2 Second, Economic Inquiry has just announced a 3 discussions that focus more on policy issues. The 3 symposium on the economics of consumer protection. 4 panel discussion today is antitrust-focused. It's on 4 The goal of the symposium is to create a unique 5 cross market hospital and healthcare provider mergers. 5 reference on consumer protection economics that would 6 Tomorrow, there will be a panel discussion on privacy 6 synthesize what we know about the current state of 7 and data security. So, you know, both of -- you know, 7 economic analysis, of consumer protection law, and 8 those each addressing the two -- the twin enforcement 8 enforcement policy, identify what consumer policy 9 missions of the FTC. 9 questions are in need of more analysis, and advance 10 So I thanked our scientific panel, and let me 10 the application of economics to consumer protection 11 also thank the FTC economists who, you know, helped 11 policy analysis and law enforcement. 12 organize this, Ted Rosenbaum and Nathan Wilson, and 12 The symposium -- which there will actually be a 13 Peter Nguon of the Bureau of Economics, one of our RAs 13 symposium next year, next December here at the FTC -- 14 who really did great work in helping put this 14 celebrates the 40th anniversary of the 1978 founding 15 together. And also our admin team which works -- does 15 of the Division of Consumer Protection in the Bureau 16 incredibly hard work behind the scenes to make sure 16 of Economics. So up until 1978, the Bureau of 17 that this comes off. So Maria Villaflor, Kevin 17 Economics really only was directly involved in the 18 Richardson, Neal Reed, Constance Harrison, Priscilla 18 antitrust enforcement mission. By the time the late 19 Thompson, Tammy John, and Chrystal Meadows. 19 seventies rolled around and the enforcement mission 20 Before I turn this over to the -- to Jonathan 20 was picking up steam, it was realized, you know, that 21 Zinman and the first panel, let me call your attention 21 there needed to be a role for economics there, too. 22 to two calls for research that recently were issued by 22 So next year is the 40th anniversary. 23 the FTC just in the last couple of days. The first is 23 So I think there will be a special issue of the 24 a request for empirical research and public comments 24 journal where selected papers are -- you know, are 25 on the effects of certificates of public advantage and 25 published and then the symposium in December. The 6 8 1 other kinds of state-based regulatory approaches 1 editors of the symposium are Wesley Wilson, he's one 2 intended to control healthcare prices and quality. 2 of the editors -- I guess he is the lead editor of 3 COPAs have turned out to be pretty important 3 Economic Inquiry -- and Jan Pappalardo, who's our 4 for the FTC, especially our hospital merger 4 Assistant Director for Consumer Protection here at the 5 enforcement mission. Basically, if two hospitals that 5 FTC. And, again, that call for papers, a copy of it's 6 are -- you know, that are close rivals propose to 6 out at the desk, but I think it will be also posted on 7 merge and it would ordinarily attract the attention of 7 our website. 8 possibly an enforcement action with the FTC, that can 8 Okay, I think that's all the things I wanted to 9 be avoided by obtaining something called a COPA 9 announce. Oh, just, you know, I am supposed to make 10 from -- it's awarded by the individual state, and that 10 announcements about exits and things like that. So if 11 can immunize the transaction from antitrust scrutiny, 11 there is a fire or something, follow the exit sign. 12 and that's come up in a couple of recent cases. So 12 You guys are all Ph.D.s. I'm sure you can figure that 13 it's an important issue for us, and we would like to 13 out. There's a cafeteria over here -- there is going 14 know more about you know, how these things work and 14 to be lunch, but there's a cafeteria over here if you 15 what their effects are. 15 want to get something to eat this morning, you know, 16 So if you go to the FTC's website and also, you 16 you can go over there, and we also have coffee and 17 know, out on the table where the papers are, you'll 17 other refreshments back there. And I think that is 18 see the actual call for research. There's going to be 18 it. 19 a public workshop in 2018 where -- you know, where 19 So, Jonathan I think is running the first 20 researchers can, you know, present the results of 20 session. Is that -- is that right? Okay, you want to 21 their findings, and we can, you know, help maybe, you 21 do the -- okay, so I will hand it over to Nathan 22 know, guide further policy actions by the FTC. So, 22 Wilson. Thanks. 23 again, you can find a discussion of that -- you know, 23 24 the call for papers is out, and there's a copy of it 24 25 up on the table out there with the papers, but it's 25 2 (Pages 5 to 8) For The Record, Inc.
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