Competition Policy Center
Richard Gilbert, Chair
Berkeley faculty are prominent in the analysis and application of competition policy. The Center aims to help Berkeley faculty in their academic research relating to competition policy and antitrust; to help disseminate the results of that research; and to help everyone (at Berkeley and outside) to learn about those results.
Please visit the CPC website to view the newest working papers: http://cpc.berkeley.edu/
Discussions of competition in restructured electricity markets have revealed many misunderstandings about the definition, diagnosis, and implications of market power. In this paper, I attempt to clarify the meaning of market power and show how it can be distinguished from competitive pricing in markets with significant short-run supply constraints. I also address two common myths about market power: (a) that it is present in all markets and (b) that it must be present in order for firms to remain profitable in markets with significant fixed costs. I conclude by arguing that, while a finding of market power in an industry does not necessarily indicate that government intervention is warranted, such analysis is an important part of creating sound public policy.
Modularity, Vertical Integration, and Open Access Policies: Towards a Convergence of Antitrust and Regulation in the Age of the Internet
This article aims to help regulators and commentators incorporate both Chicago School and post-Chicago School arguments in assessing whether regulation should mandate open access to information platforms. The authors outline three alternative models that the FCC could adopt to guide its regulation of information platforms in the future and facilitate a true convergence between antitrust and regulatory policy.
Vertical Relationships and Competition in Retail Gasoline Markets: An Empirical Evidence from Contract Changes in Southern California
This study examines how much, if any, of the differences in retail gasoline prices between markets is attributable to differences in the composition of vertical contract types at gasoline stations in each market. The purchase of the independent retail gasoline chain, Thrifty, by ARCO provides a unique opportunity to examine the effects of changes in different vertical contract types on local retail prices. This event caused sharp changes in the market share of i) fully vertically integrated stations, and ii) independent stations; differentially affecting local markets in the Los Angeles and San Diego Metropolitan areas. Using unique and detailed station-level data, this study examines how these sharp changes affected local retail prices. The detailed data and the research design based on the Thrifty station conversions allow for credible estimation of the effects of the market share of independent retailers and vertically integrated retailers on local market prices, controlling for any omitted factors at the station level, and the city level over time. Results for the Los Angeles and San Diego metropolitan areas indicate that a decrease in the market share of independent stations has a significant positive impact on local retail price. However, a change in the market share of refiner owned and operated branded stations does not have a significant impact on local market price. These results have important implications as policy makers consider the regulation of vertical contracts as a means to increase competition in gasoline markets. The research design and detailed data also allow for inference on the underlying nature of retail gasoline competition.