Agenda

Oxera’s monthly online publication
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Using conjoint analysis in merger cases: a competition practitioner’s perspective

If applied correctly, conjoint analysis can be a powerful tool in merger cases, as it can overcome the artificial nature of hypothetical ‘what-if’ questions. The Netherlands Authority for Consumers and Markets (ACM) has used this survey technique in six merger cases to date. Marinus Imthorn, Ron Kemp and Ivo Nobel of the ACM illustrate how it can be used effectively to estimate customer behaviour, and share some lessons from their experience


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The policy of truth? Deception in markets and in public policy

Political manipulation of voters is nothing new. However, ‘post-truth’ politics arguably takes matters to a new level. Behavioural economics has developed a framework for examining how people can be deceived in markets and whether the market corrects for this. So how might behavioural economics and ‘post-truth’ be regarded as two sides of the same coin? We examine ways in which people can be manipulated through deception—and the potential remedies


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Shrinkflation! A bite missing?

While the price of a Toblerone bar has not changed in recent years, its size has—between 2009 and 2010, a standard bar became 30g lighter (from 200g to 170g), and by 2016 it had shrunk to 150g. What factors lead a firm to pass on a cost shock by changing the size of a product rather than its price? And what effect does this have on consumers and inflation statistics?


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Hard shoulder: using behavioural nudges to reduce congestion

Road congestion is expensive and inconvenient, but measures to alleviate it can be politically unpopular. Behavioural economics can help by proposing congestion mitigation policies that nudge individuals towards socially optimal travel decisions. How does the framing of information and incentives affect travel decisions, and when are interventions most likely to influence long-term behaviour? We look at how policymakers can use nudges to reduce urban congestion


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Time to choose: retail market opening in the water sector

One of the biggest shake-ups in the English water sector will take place on 1 April 2017, when non-domestic customers—including businesses and public sector organisations—will be able to choose their retail supplier. But is the sector prepared? Will market opening be a ‘big bang’ or a slow-burner? And will companies play by the rules?


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Should we be cross about cross-subsidies? Experience from the financial services sector

Cross-subsidies, where one group of consumers pays a higher amount so that the price paid by another group can be reduced, are common in many markets. But the practice may raise concerns about whether firms are exploiting those consumers who pay more, and can lead to calls for competition authorities or regulators to intervene. How might we assess whether cross-subsidies represent a problem? We look at examples from the consumer credit sector


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Return to sender: the General Court’s judgment on UPS/TNT

The EU General Court has annulled the European Commission’s decision to block the UPS/TNT parcels merger. The Court was concerned that the parties were not given access to the final version of the Commission’s econometric model. This case highlights the importance of transparency in relation to economic evidence—not only from the merging parties, but also from the competition authorities


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Small number, big impact: the productivity factor for energy networks in Germany

The German Federal Network Agency (Bundesnetzagentur, BNetzA) is currently determining the general productivity factor (Xgen) for all electricity and gas networks in Germany. This factor is intended to reflect the productivity gains that an efficient network operator would be expected to achieve as a result of technological progress or cheaper inputs. In a project for Germany’s utility association, BDEW, Oxera used advanced methods to calculate a general productivity factor for German energy networks of around 0% 


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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


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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


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