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Reforming executive pay: taking the long view

Executive compensation is an issue that all companies need to take seriously. The ‘extortionate’ levels of executive pay, seemingly disconnected from performance, have led to public distrust of business. Indeed, Donald Trump’s victory in the USA and the UK’s Brexit vote were, in part, protests by ordinary people against an out-of-touch elite. Alex Edmans, Professor of Finance at London Business School and Oxera Associate, considers how companies might redesign their compensation strategies not only to increase public trust, but also to create long-term value for shareholders


Mergers and innovation: fewer players, more ideas?

Is market consolidation detrimental to innovation? Conversely, do mergers create benefits to society by increasing innovation that brings better outcomes for consumers? While merger assessment has historically focused on static price and cost effects, regulators are increasingly being asked to consider whether a transaction will create the right incentives for product development and innovation over a longer time horizon. The Oxera Economics Council met to discuss this topic in November 2016


Assessing state aid in the beautiful game

Until 2013, there had been few state aid investigations into football clubs, but the landscape then changed significantly, with in-depth investigations being launched in Spain and the Netherlands. Following European Commission Decisions on these cases in 2016, we look at the challenges of applying the standard state aid framework to football clubs. Whether the number of football-related state aid cases will continue to increase remains to be seen, but these investigations highlight the importance of ensuring compliance with state aid rules


The costs and benefits of measuring the costs and benefits of competition policy

Competition authorities around the world place great emphasis on measuring the effects of competition enforcement. In part, this is to justify to the public, and policymakers, that competition policy is desirable from a social welfare perspective. But are there costs as well as benefits to trying to measure the costs and benefits of competition policy interventions?


The future of merger control: hard Brexit, difficult questions?

The UK’s withdrawal from the EU raises complex issues of policy in many areas of public life. Merger review is no exception, with both EU and UK merger policy being affected. How should the UK’s competition authorities respond to increased demands on their resources in the short-to-medium term? What would be the long-term consequences of applying non-competition considerations in merger review?


To be fair: what does economic justice look like?

What is meant by economic (or distributive) justice has far-reaching implications for economic policies and their outcomes. However, in policymaking the interpretation is often implicit, with limited awareness and discussion of alternative concepts or their merits and drawbacks. What are these key concepts of economic justice, and what is their role in competition policy, regulation and regional state aid?


How systemically important are insurers? Empirical evidence and policy implications

Due to concerns about insurance companies posing systemic risk during financial crises, some of the largest global insurers have been classified as systemically important, alongside the banking sector, and are subject to additional prudential regulation. But how systemically important are they, and what is the appropriate regulatory approach? Professor Dr Christoph Kaserer, Technische Universität München and Oxera Associate, and Christian Klein, Technische Universität München, have explored these issues and identified important policy implications for the insurance sector


Energy scarcity: arrivederci?

Italy is expected to introduce a capacity market, given its increasing risk of retirement of flexible generation capacity and a consequent reduction in security of supply. Simona Benedettini, Regulatory and Competition Specialist, and Giordano Colarullo, General Manager, both at Utilitalia, the Italian utilities federation, look at the Italian electricity capacity mechanism and whether capacity markets are compatible with the European single market


Summoning the energy: consumers and competition

If energy consumers say they are happy, and there are several suppliers in the market, then the market is functioning well—right? Not necessarily. Identifying the existence and scope of behavioural biases allows for a better understanding of the drivers of competitive market indicators. How can behavioural economics influence competition in retail energy markets, and how can hypothesised biases be tested? We consider the topic with Australian markets as a case study


Efficient, abusive, or both? Ways to evaluate unilateral conduct

Efficiency arguments play a role in abuse of dominance investigations, but often only implicitly and at the end of the process. Established quantitative techniques can help to make efficiency analysis more integral in abuse cases. Such techniques are often considered by regulators when concluding regulatory settlements. Can competition authorities use them too?

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