Two-sided market definition: some common misunderstandings

The European Commission is consulting on updating its 1997 Market Definition Notice, which provides important guidance on identifying relevant markets in competition cases. One hotly debated topic is defining markets for two-sided platforms. We discuss some common misunderstandings on this topic, including on how to apply the hypothetical monopolist test to digital platform markets

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A formula for success: reviewing the social discount rate

The social discount rate (SDR) is a crucial component of the UK government’s approach to project and policy appraisal. Government guidance has stipulated the same SDR (3.5%) since 2003. In the first of two Agenda in focus articles, we show that recent research can reasonably support an SDR of under 2.5%; and that this SDR declines considerably more slowly as the appraisal period is extended than the one that is currently used

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Catchment if you can: a practical guide to local competition analysis

Many markets involve local or regional competition between firms. Retailers, hospitals, airports, and even funeral directors compete for their customers locally. Empirical techniques for analysing competition in local markets have developed and become more sophisticated over time. But which techniques provide the most accurate assessment? We discuss and compare a range of practical methods that have been used in recent competition cases

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Labour markets: a blind spot for merger control?

Recent months have seen increased discussion of merger control in Europe. One central question is whether the impact on labour markets should be examined directly, or indirectly in terms of product market concentration. We shed light on the main arguments in this debate, and discuss some of the challenges that would be faced by competition authorities if they were to consider labour markets concentration in their merger assessments

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How do non-poaching agreements distort competition?

Agreements between firms not to hire each other’s workers have recently come under the radar of competition authorities, particularly in the USA. However, there is a question about whether labour markets come within the remit of competition authorities, and whether it is their role to intervene. If it is, how can tools developed in competition economics help in such cases?

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Will tech giants take over payments?

The Chinese payments industry has recently experienced significant disruptions from technology companies Alipay and WeChat. Although consumer preferences and the regulatory environment have played an important part in the success of Alipay and WeChat Pay in China, many factors are also applicable in the European context. With technology companies now evaluating opportunities in the European payments market (most recently, Facebook’s Libra), what can the Chinese example tell us about its likely evolution?

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Gas markets, regulation and politics: implications of the energy transition

Until recently, gas was seen in Europe as a complement to renewable energy—i.e. a cleaner (albeit costlier) alternative to coal. Since 2017, opinions have been changing, primarily as a result of stronger evidence on the pace of climate change. Nonetheless, as Sir Philip Lowe, Oxera Senior Adviser, explains, gas will continue to have an important role—albeit this is contingent on future innovation and the roll-out of gas investment, both of which in turn depend on politics and market regulation

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Stock-ing up: the design of equity trading markets in Europe

Equity markets, where investors buy and sell shares, are crucial to the European economy. Regulatory change has opened up competition, leading to more choice and lower trading fees, but also fragmentation and risks to price formation. There is an ongoing debate about the provision of market data services that often overlooks the links between market data services, trading and price formation. How is equity trading functioning from a market design and an end-investor perspective?

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Competition between airports in Europe soars… but where next for regulation?

Where airports do not face effective competition, it may be necessary to introduce economic regulation to protect passengers’ interests. Regulation can help to ensure fair prices, sufficient investment, high-quality service, and efficient costs. At the same time, it is important that regulatory interventions are targeted at areas where competition will not deliver the desired outcomes. With increasing competition between airports, what tools are available to help policymakers decide whether regulation is required?

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Quid pro quo? What factors influence IPO allocations to investors?

Investment banks face potential conflicts of interest when conducting initial public offerings (IPOs) of shares, as they provide services for both issuing firms and buy-side investors. Tim Jenkinson and Howard Jones of the Saïd Business School, University of Oxford, and Felix Suntheim of the UK Financial Conduct Authority (FCA), use data gathered as part of the FCA’s market study into investment and corporate banking to shed light on the extent to which conflicts of interest drive allocation decisions

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Parity agreements and theories of harm in the hotel booking sector: a ‘no-show’?

On 6 April 2017, the European Commission and ten national competition authorities published a joint report on the online hotel booking sector. The report’s primary focus was the impact on prices and commission rates of the removal of parity or ‘most-favoured-nation’ (MFN) clauses in European countries. The results were not as conclusive as some economists and lawyers expected. Why might this be, and what’s next for MFN clauses?

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Behavioural economics: making choices at the individual and firm level

The interdisciplinary field of behavioural economics studies the impact of psychological factors on economic decision-making. It contributes significantly to our understanding of how real people make choices, and shows us that there is a difference between choices made by individuals and those made by the ‘homo economicus’. Annemieke Tuinstra-Karel at the Netherlands Authority for Consumers and Markets (ACM) discusses latest developments in the field, and looks at the results of recent studies by ACM and Oxera

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