ECO410H1F: Mergers and Competition Policy: NOT OFFERED FOR 2022/23

Prof. Murdock

Syllabus (Fall 2017)

Schedule: Topics, readings, assignments, etc. (Fall 2017)

U of T Writing Advice and A&S Writing Centres

Last updated: April 20, 2022


Announcements:

Alternatives to ECO410HThe Economics Department offers a host of excellent 400-level courses. (While most do not have syllabi posted during the summer, you can check out the 2021/22 syllabi.) Of particular interest is a course in competition policy offered since 2019/20 with Professor Soboleva ECO422H1F Special Topics in Economics: Competition Policy. [posted April 20, 2022]

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FALL 2017 SChedule:

Days and Dates

Event

Topic; Required reading (RR) to be completed before class; Supplemental reading (SR) reinforce topics as needed; Ungraded practice questions (PQ) to be completed after class

Thursday, Sept. 7

Class 1

Overview of ECO410H and Introduction to Horizontal Merger Assessment

“With Competition in Tatters, the Rip of Inequality Widens” NYT, July 2016

Episode 438: Mavericks, Monopolies And Beer

RR: (1) Contents, Introduction and “The Economic and Legal Context” in The Antitrust Revolution, Sixth Edition pp. vii - ix, 1 – 33; (2) Introduction and Chapter 1 “Economic Evidence in Antitrust: Defining Markets and Measuring Market Power” in the Handbook of Antitrust Economics pp. ix – xxii, 1 – 42; (3) “The Lerner Index of Monopoly Power: Origins and Uses” Elzinga and Mills (2011) pp. 558 – 564

SR: (1) “Merger Analysis at the Federal Trade Commission: Two Recent Retail Cases” Thompson (2007) pp. 1 – 7; (2) “Teaching Strategies for Reading Comprehension” Freedman (2012) pp. 1 – 4 paying particular attention to 1, 9, 11 – 18

Tuesday, Sept. 12

TA Tutorial 1

(See portal for slides)

Microeconomic Theory Review

SR: (1) Your ECO200Y/ECO204Y/ECO206Y textbook and notes; (2) Chapter 2 “The Welfare Economics of Market Power” in Industrial Organization: A Strategic Approach pp. 19 – 47 (especially Sections 2.4 and 2.5)

PQ: Practice Questions 1 (Solutions)

Thursday, Sept. 14

Class 2

Classic Oligopoly Models: Bertrand and Cournot

SR: (1) Chapter 7 “Game Theory I” in Industrial Organization: A Strategic Approach pp. 211 – 230; (2) Chapter 8 “Classic Models of Oligopoly” in Industrial Organization: A Strategic Approach pp. 231 – 279; (3) “Unilateral Competitive Effects of Horizontal Mergers I: Basic Concepts and Models” Werden (2008) pp. 1319 – 1341

PQ: Practice Questions 2 (Solutions)

Tuesday, Sept. 19

Workshop 1

Merger Simulation: Cournot with Linear Demand

Handout

Linear Cournot Merger Simulation Spreadsheet (quantities observed) Compatibility check: here

Linear Cournot Merger Simulation Spreadsheet (marginal costs observed) Compatibility check: here

Note: Everyone with a laptop with Excel, please bring it to this workshop

assignment #1 GIVEN

Thursday, Sept. 21

Class 3

Antitrust Markets: Hypothetical Monopolist Test

RR: (1) Chapter 19 “The Theory of the Market” in Industrial Organization: A Strategic Approach pp. 599 – 620;  (2) Sections 1 – 4 (pp. 1 – 15) of U.S. Horizontal Merger Guidelines

SR: (1) pp. 5 – 16 of “Commentary on the Horizontal Merger Guidelines” DOJ and FTC (2006): section entitled “Market Definition and Concentration”; (2) “Economic Analyses of Mergers at the FTC: The Cruise Ships Mergers Investigation” Coleman et al (2003) pp. 121 – 155

PQ: Practice Questions 3 (Solutions)

Tuesday, Sept. 26

Workshop 2

Merger Simulation: Bertrand with Linear Demand

Handout

Linear Bertrand Merger Simulation Spreadsheet (prices observed) Compatibility check: here

Linear Bertrand Merger Simulation Spreadsheet (marginal costs observed) Compatibility check: here

Note: Everyone with a laptop with Excel, please bring it to this workshop

assignment #1 DUE BY 11:10am (sharp)

assignment #2 GIVEN

Thursday, Sept. 28

Class 4

Assessing Horizontal Mergers

Handout: Outline of Prof. Murphy’s expert economic report for the Whole Food and Wild Oats merger; The original report is publically available here

Note: Everyone with a laptop with Excel, please bring it to this class to access the original expert report of Professor Murphy

RR: (1) Chapter 23 “Horizontal Mergers” in Industrial Organization: A Strategic Approach pp. 715 – 743; (2) Sections 5 – 13 of U.S. Horizontal Merger Guidelines (pp. 15 – 34); (3) “Mergers with Differentiated Products” Shapiro (1996) pp. 23 – 30; (4) “A Robust Test for Consumer Welfare Enhancing Mergers Among Sellers of Differentiated Products” Werden (1996) pp. 409 – 413

SR: (1) pp. 17 – 59 of “Commentary on the Horizontal Merger Guidelines” DOJ and FTC (2006): sections entitled “The Potential Adverse Competitive Effects of Mergers,” “Entry Analysis,” and “Efficiencies”; (2) “Choosing Among Tools for Assessing Unilateral Merger Effects” Werden and Froeb (2011) pp. 1 – 28;

OR: (1) “Merger Simulation in Competition Policy: A Survey” Budzinski and Ruhmer (2009) pp. 277 – 319; (2) “From Research on Mergers to Merger Policy” Sørgard (2014) pp. 37 – 42; (3) “Hart-Scott-Rodino Annual Report: Fiscal Year 2013” US FTC and US DOJ (2013) pp. 1 – 49; (4) “Unilateral Competitive Effects of Horizontal MergersWerden and Froeb (2008) in Handbook of Antitrust Economics pp.43 – 104

PQ: Practice Questions 4 (Solutions)

Presentation preference survey opens: Replies DUE by Friday, Sept. 29, 4:00pm (see portal announcement)

Tuesday, Oct. 3

Workshop 3 (no slides)

Research Session with Library (90 minutes) and Preparation for Team Presentations (20 minutes)

Note: We will meet in a computer lab in Robarts Library, room 4033; Session will be run Public Services Librarian Holly Inglis (holly.inglis@rotman.utoronto.ca) and me.

Presentation schedule resolved in workshop and then posted on the portal

General Presentation Skills Rubric (use when practicing your presentation and giving feedback to your teammates)

Guide for Giving Effective Feedback to Presenters (use when practicing your presentation and giving feedback to your teammates)

Team Presentation Outline and Checklist Template (.docx and .pdf) (completed hardcopy required before BOTH dry-run and class presentation)

Guiding Marking Rubrics for Dry-Run and Class Presentations (to help you understand how your presentations will be marked)

Marking Rubric for Class Participation (to help you understand how your class participation during team presentation weeks will be marked)

assignment #2 DUE BY 11:10am (sharp)

Thursday, Oct. 5

Class 5

Econometric Analysis and Endogeneity

RR: (1) Chapter 4 “Guide to Merger Analysis Using Difference in Differences” in Mergers, Merger Control, and Remedies pp. 57 – 70

SR: (1) Logarithms in Regression Analysis (an ECO220Y1Y textbook supplement) (2) Your ECO220Y/ECO227Y textbook and notes: especially on multiple regression analysis

OR: (1) “The Effect of Mergers on Consumer Prices: Evidence from Five Mergers on the Enforcement Margin” Ashenfelter and Hoskin (2010) pp. 417 – 466; (2)  “The Effect of Mergers on Consumer Prices: Evidence from Five Selected Case Studies” Ashenfelter and Hoskin (2008) pp. 1 – 58 (working paper version of first optional reading)

PQ: Practice Questions 5 (Solutions); Collins and Preston (1966) data

Tuesday, Oct. 10

TA Tutorial 2

Econometrics Review

Thursday, Oct. 12

Class 6

Econometric Analysis: Hausman and Leonard (2002) and Hosken et al (2011)

RR: (1) “The Competitive Effects of a New Product Introduction: A Case Study” Hausman and Leonard (2002) pp. 237 – 263 and appendix; (2) “Does Concentration Matter? Measurement of Petroleum Merger Price Effects” Hosken et al (2011) pp. 45 – 50

PQ: Practice Questions 6 (Solutions)

assignment #3 GIVEN

Tuesday, Oct. 17

Dry-Run Presentations

Team 1 only: rest of class does NOT attend

Thursday, Oct. 19

Team 1 Presentation with Q&A

Proposed Merger of Staples and Office Depot in 1997 (Office Supply Superstores)

Reading Guide

RR: (1) “Prices, Market Definition, and the Effects of a Merger: Staples-Office Depot (1997)” pp. 52 – 72 in The Antitrust Revolution, Fourth Edition; (2) “Economic Analysis of Retail Mergers at the Competition Bureau” Competition Bureau (2014) pp. 1 – 8

SR: (1) “Empirical Methods in Merger Analysis: Econometric Analysis of Pricing in FTC v. Staples” Ashenfelter et al (2006) pp. 265 – 279; (2)Documents versus Econometrics in Staples” Hausman and Leonard (1997) pp. 1 – 16

OR: (1) “Prices and Endogenous Market Structure in Office Supply Superstores” Manuszak and Moul (2008) pp. 94 – 112;

Tuesday, Oct. 24

Dry-Run Presentations

Team 2 only: rest of class does NOT attend

Thursday, Oct. 26

Team 2 Presentation with Q&A

Office Supply Superstore Mergers in 1997, 2013, 2016 (Office Supply Superstores)

Reading Guide

RR: (1) “Prices, Market Definition, and the Effects of a Merger: Staples-Office Depot (1997)” pp. 166 – 193 in The Antitrust Revolution, Sixth Edition (Note: Emphasize pp. 186 – 193, which are new since last week’s RR);  (2) “The Role of Economists and Economic Evidence in Merger Analysis” The Merger Working Group (2013), specifically Section 3.4.3.8 “Upward Pricing Pressure Measures” on p. 30 and the glossary entry “Upward pricing pressure (UPP)” on pp. 58 – 59; (3) Statement of the Federal Trade Commission Concerning the Proposed Merger of Office Depot, Inc. and OfficeMax, Inc.” FTC (2013) pp. 1 – 3; (4) In “FTC v. Staples/Office Depot” case filings 2015 – 16 see “Proposed Findings of Fact and Conclusions of Law of Plaintiffs”, specifically the “Table of Contents” on pp. i – iii 

SR: (1) “Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition” Farrell and Shapiro (2010); (2) “Competition Bureau challenges a merger between Canada’s two largest office supply companies” Competition Bureau (2015)  pp. 1 – 3

OR: (1) In “FTC v. Staples/Office Depot” case filings 2015 – 16 see “Proposed Findings of Fact and Conclusions of Law of Plaintiffs” pp. 1 – 108; (2) “The Commissioner of Competition v. Staples, Inc. Staples AMS, Inc. and Office Depot Inc.” case filings at the Competition Tribunal 2015-16, see “Notice of Application,” “Response of Staples,” “Response of Office Depot,” and “Reply of the Commissioner of Competition”; (3) In “In the Matter of Staples/Office Depot” case filings at the FTC 2015-16, see “Administrative Complaint,” “Answer and Defenses of Respondent Office Depot,” and “Respondent Staples, Inc’s Answer and Affirmative Defenses To Complaint”; (4) Ruling of District Court Judge in FTC v. Staples and Office Depot 2016, pp. 1 – 75

Tuesday, Oct. 31

TA Office Hours

11:10 – 1:00, LA 211

assignment #3 DUE BY 4:00pm (sharp)

Thursday, Nov. 2

Workshop 4

Writing and Revising Your Final Paper, Part 1

RR: (1) All four topics under “Using Sources” on the “University of Toronto: Writing Advice” website including “How Not to Plagiarize,” “Standard Documentation Formats” (please focus on APA, which is what we use), “Using Quotations,” and “Paraphrase and Summary”

FINAL PAPER TOPIC ASSIGNED (with MARKIng rubric)

Nov. 6 – Nov. 10

READING WEEK

No classes and no tutorials, but office hours continue as usual

Tuesday, Nov. 14

Dry-Run Presentations

Team 3 only: rest of class does NOT attend

Thursday, Nov. 16

Team 3 Presentation with Q&A

Merger Retrospective: Waterstone’s and Ottakar’s (Booksellers in U.K. and Quebec)

Reading Guide

RR: (1) Ex Post Merger Evaluation in the U.K. Retail Market for Books” Aguzzoni et al (2016) pp. 170 – 200; (2) “Competition Bureau statement regarding the acquisition by Renaud-Bray of Archambault retail stores” Competition Bureau (2015) pp. 1 – 5.

SR: (1) “Supplemental Materials for Aguzzoni et al (2016)” pp. 1 – 40; (2) “Inconvenient Truths and Constructive Suggestions on Merger Retrospective Studies” Werden (2013) pp. 1 – 8

EIGHT aNNOTATED SOURCES for final paper – HARDCOPY – dUE BY 11:10AM (sharp)

Tuesday, Nov. 21

Dry-Run Presentations

Team 4 only: rest of class does NOT attend

Thursday, Nov. 23

Team 4 Presentation with Q&A

Merger Retrospective: Miller and Coors Merger (Beer)

Reading Guide

RR: (1) “Efficiencies Brewed: Pricing and Consolidation in the U.S. Beer Industry” Ashenfelter et al (2015) pp. 328 – 361

SR: (1) US DOJ 2013 Complaint against Anheuser-Busch InBev and Grupo Modelo pp. 1 – 27; (2) US DOJ 2008 Complaint against Anheuser-Busch and InBev pp. 1 – 10

OR: (1) US DOJ 2008  press release closing investigation of Miller and Coors; (2) “Antitrust Guidelines for Collaborations Among Competitors” US DOJ and FTC (2000) Section 3.1 pp. 4 – 5 ONLY; (3) “Roundtable on Impact Evaluation of Merger Decisions: Note by the United States” (2011) pp.1 – 8; (4) “The Year in Review: Economics at the Antitrust Division, 2008–2009” Heyer et al (2009) pp. 3 – 4  ONLY; (5) “Difference-in-Difference Analysis in Antitrust: A Cautionary Note” Simpson and Schmidt (2008) pp. 623 – 635; (6) “Efficiencies Brewed: Pricing and Consolidation in the U.S. Beer Industry” Ashenfelter et al (2013) pp. 1 – 42 (working paper version of required reading)

Tuesday, Nov. 28

Dry-Run Presentations

Team 5 only: rest of class does NOT attend

Thursday, Nov. 30

Team 5 Presentation with Q&A

Proposed Merger of Echostar and DirecTV (Satellite TV)

Reading Guide

RR: (1) “Sky Wars: The Attempted Merger of EchoStar and DirecTV (2002)” pp. 115 – 139 in The Antitrust Revolution, Fifth Edition

SR: (1) Declaration of Dr. Robert D. Willig” (2001) p. 1 – 28; (2) US DOJ 2002 Complaint against Echostar and Hughes (DirecTV) pp. 1 – 33; (3) “Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition” Farrell and Shapiro (2010); (4) “The Consumer Gains from Direct Broadcast Satellites and the Competition with Cable TV” Goolsbee and Petrin (2004) pp. 351 – 381

Tuesday, Dec. 5

Workshop 5 (no slides)

Writing and Revising your Final Paper, Part 2

SIXTEEN aNNOTATED SOURCES for final paper – HARDCOPY – dUE BY 11:10AM (sharp)

Thursday, Dec. 7

(no class meeting)

FINAL PAPER – ELECTRONIC AND HARDCOPY – Due BY 4:00pM (SHARP)

Course is Complete (there is no final examination)

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