The Role of Economics in Competition Law & Policy
The objective of this course, organised by the Jevons
Institute for Competition Law and Economics at UCL, is to introduce the
economic theories that underlie competition law and the methods that
are used to assess whether business practices are nefarious, benign, or
The course consists of two parts. The first part involves a rigorous introduction to microeconomics and industrial organization theory. It provides a basic introduction to the economics of markets including the theory of the firm including profit-maximising pricing, perfect competition, monopoly, oligopoly, product differentiation, vertical relationships, and multi-sided markets. The second part involves the rigorous application of economics to competition policy. It includes the analysis of market power, market definition, cartels and other coordinated behaviour, unilateral conduct including predatory and exclusionary practices, horizontal and vertical mergers, and antitrust and intellectual property.
The course is designed to provide students with a deep understanding of how economics is applied to competition policy.
Economics of Competition Policy
Dimensions of competition—price, quality, innovation. Types of competition—static vs. dynamic. Economic objectives of competition law. Demand and supply. The role of economics in competition policy. The error-cost framework.
Firms and Profit Maximiation
Demand; costs; profit maximisation; monopoly and the measurement of market power; the Lerner index
Demand, Supply and Static Competition
Supply and demand and the notion of equilibirum. Comparison with monopoly. Comparative statics
Market Power and Welfare
Consumer and social welfare; static welfare and market power; sources of static market power; dynamic market power
Cartels and Other Coordinated Practices
Replicating monopoly outcome; incentives and ability to cheat; facilitating factors; detecting and discouraging cartels; tacit collusion
Product Differentiation and New Products
Horizontal and vertical differentiation; economic models of product differentiation; automobile industry
Market Definition and the Analysis of Market Power
Background on case law and economics; standard methods; hypothetical monopolist test; factors that enhance market power; dominant firm with competitive fringe model
Oligopoly and Game Theory
Role of oligopolies in economy; introduction to game theory; Cournot and Bertrand models of oligopoly; dynamic games
Legal and economic framework; unilateral effects; coordinated effects; efficiencies
Pricing Strategies and Abuses
Price discrimination; limit pricing; predatory pricing; loyalty rebates
Economics of Vertical Relationships and Integration
Supply chains and ecosystems; types of business organizations; double marginalization; principal agent issues; vertical restraints; product design and tying
Vertical Foreclosure and Mergers
Anticompetitive tying; vertical foreclosure incentives and single-monopoly profit theorem; ability to engage in vertical foreclosure; vertical mergers
Economics of two-sided markets; business strategies; market definition; anti competitive strategies
About the teacher: Professor David Evans (LECG)
David Evans is an economist who holds academic positions at the University of Chicago Law School, where he is a Lecturer, and at the University College London where he is Executive Director of the Jevons Institute for Competition Law and Economics and Visiting Professor. He is a specialist on competition policy in the US and European Union, a topic on which he has written and lectured extensively. He is also an authority on the economics of high-technology businesses and two-sided markets, particularly as it relates to competition policy and intellectual property. He is the author or editor of seven books, most recently, Trustbusters: Competition Policy Authorities Speak Out (edited with Frederic Jenny), and more than 100 articles or book chapters. His works have appeared in the American Economic Review, Antitrust Law Journal, Foreign Affairs, and The University of Chicago Law Review among other places. His many opinion pieces have appeared in newspapers around the world including the Washington Post, Wall St. Journal, Financial Times, Les Echos, and El Pais.
Professor Evans is also the Editor-in-Chief of Competition Policy International, a peer-reviewed, academic journal that covers antitrust law, economics; the Chairman of the Editorial Board for Global Competition Policy, an online magazine written for and by members of the global competition policy community; and the Editor-in-Chief at FinReg21, an online media entity developed for, and by, those involved in or affected by financial services regulation which publishes Lombard Street, a professional journal on financial regulation.
Dr. Evans has a Ph.D.in Economics from the University of Chicago.
Some of the classes will be taught by guest lecturers who will include current or ex-officials of competition authorities.
11 x 2 hours tuition
October 2009 - March 2010
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