News

Bruno Pellegrino introduces a novel model developed with Enrico Spolaore and Romain Wacziarg that explains the lack of international investment in some countries despite their promise of higher returns. The study finds that removing certain barriers to international capital flows could boost global GDP by 7% and significantly reduce cross-country inequality.

Alessia D’Amico and Inge Graef discuss Mario Draghi’s proposal for a New Competition Tool to revamp competition in the European Union. They write the European Commission must think hard about its design to achieve the right balance.

Lulu Wang writes that the Department of Justice’s lawsuit against Visa for maintaining a monopoly in the debit card market will, if victorious, only impact a fraction of the transaction fees that burden merchants. And if the lawsuit opens up the market to more competition, there are reasons to believe a more fractured card network could end up hurting consumers and merchants.

Jonathan B. Baker and Fiona Scott Morton challenge the interpretations of two new papers from Carl Shapiro & Ali Yurukoglu and Nathan Miller, which question economy-wide trends toward a rise in market power and, if any such trend has occurred, that it is due to lax antitrust enforcement.

In his recent article, John Kwoka accepts the antitrust community’s general opinion that Procter & Gamble requires courts and the antitrust agencies to weigh plaintiff rebuttals that a merger can produce extraordinary efficiencies even if it reduces competition. Jerry Cayford argues that this is an inaccurate reading of the Supreme Court’s decision, and it has hampered enforcement for decades.

Should we pay regulators according to their performance? In a new paper, Jason Chen, Jakub Hajda, and Joseph Kalmenovitz show that a pay-for-performance system has a surprising effect: it increases regulatory effort but also motivates regulators, especially the productive ones, to quit and join the private sector.

The following is an excerpt from Marietje Schaake's new book,"The Tech Coup: How To Save Democracy from Silicon Valley," now out at Princeton University Press.

Mario Draghi’s report on raising European competitiveness contains two insights about competition policy. First, competition policy has a small but significant role to play in closing the “innovation gap” between the European Union, the United States and China. Second, increasing European productivity demands “revamping” competition through the introduction of technical-legal reforms.  

Roslyn Layton writes that proxy advisors, which provide voting services for shareholder meetings, can influence how publicly traded firms conduct their business. Two proxy firms–Glass Lewis and Institutional Shareholder Services (ISS)–have 97 percent of the market and have allowed some minority shareholders to exercise outsized influence.

Steven C. Salop writes that only Google’s full divestiture of its Android operating system can avoid incentives on the part of Android and Google to preference Google’s apps, including its search engine, and stifle competition.