Dr. Sean Ennis
Selected Research Summaries
SUMMARY: This paper explores the impact of hospital overcapacity on determining optimal costs and prices, focusing on the case of Medicare and Medicaid. The study develops a novel methodology for incorporating excess capacity into the estimation of hospital cost functions, notably distinguishing between short-run and long-run marginal costs. The empirical results suggest that accounting for overcapacity significantly influences the assessment of reimbursement adequacy, highlighting the need for rigorous cost specification to inform hospital reimbursement policies.
KEY WORDS: Excess hospital capacity, marginal costs for hospitals, translog cost function, short-run marginal costs, long-run marginal costs
State Aid and Privatisation
SUMMARY: This paper examines the application of state aid rules in the specific context of privatizations. It explores how to determine whether a privatization constitutes unlawful aid, with a focus on the market economy investor principle. The paper also details the crucial aspects to consider before and during the privatization process to ensure legal complianceand avoid potential risks for both the buyer and the seller, emphasizing the importance of an open and transparentprocess.
KEY WORDS:
State aid, Subsidy regimes, Privatizations context, MEVP Principle, Previous investments, Privatization
Rationales for International Cooperation in Merger Enforcement
SUMMARY: This paper explores the growing need for international cooperation in competition law in the face of globalized markets and the proliferation of antitrust authorities. It highlights the challenges and costs of disagreements between jurisdictions, particularly in the context of cross-border mergers and the fight against international cartels. The paper also traces the evolution of such cooperation , highlighting the role of the OECD and other organizations, and suggests ways to improve the effectiveness of competition law enforcement worldwide.
KEY WORDS:
International cooperation, Competition law, Cross-border mergers, International cartels, Law enforcement, International Cooperation and Competition Law
Personalised Pricing and Disclosure
SUMMARY: This UK research paper takes an in-depth look at personalized pricing, where prices vary for the same product across buyers, without cost justification. It explores the ambiguous theoretical consequences for consumer welfare, highlighting both the potential benefits of expanded market access and the drawbacks related to behavioral bias and fairness. The report also considers the role of price transparency and disclosure requirements as possible policy responses, noting that while they can increase consumer awareness, they also carry risks of collusion and price standardization. Finally, it discusses various policy options, ranging from no regulation to prohibition, emphasizing the complexity of the issue and the need for solid empirical evidence before any intervention.
KEY WORDS:
Personalized prices, Price discrimination, Price transparency, Consumer welfare, Policy options
Mergers in Network Industries
SUMMARY: This paper analyzes the economics of network interconnection , focusing on point-to-point networks . The author explores how the relative size of networks and how users value the addition of new members (the value function ) influence the incentives to interconnect and the determination of interconnection fees, even in the absence of regulation. In addition, the paper examines the impact of network mergers on the value of interconnection for both merged entities and third-party networks, highlighting the crucial role of increasing or diminishing marginal returns in understanding these dynamics. The goal is to decipher the fundamental economic forces at work in interconnected network industries.
KEY WORDS:
Network interconnection value, Unregulated interconnection charges, Impact of mergers on payments, Network value function, Marginal returns, Mergers and Interconnection in Network Industries
SUMMARY: This research paper examines the impact of market power on wealth and income inequality in eight OECD countries. By developing a new economic model and analyzing empirical data, the authors suggest that a lack of competition tends to increase the wealth of the wealthy and decrease the income of the poorest. The approach suggests that the top 10% may derive 10-21% of their wealth from market power. The study quantifies this redistributive effect and explores the implications for competition policy, highlighting that consumer welfare norms may have fairer distributive consequences than total welfare norms. The findings indicate that illegitimate market power may be a significant driver of economic disparities, warranting increased policy attention. The proportion of effect that comes from market power that is legitimate (like patents) as opposed to illegitimate (like cartels) remains unknown.
KEY WORDS: Wealth inequality, Income inequality, Market power, Monopoly , Competition
SUMMARY: This study examines whether increased concentration in the retail gasoline market affects areas of different income levels differently . By analyzing price data in Australia over a long period, the authors found that low-income areas experience larger price increases when competing gas stations close , while the arrival of new competitors does not bring them proportionally greater benefits than wealthier areas. This research suggests that market concentration can have significant distributional effects , impacting low-income consumers more severely and highlighting the importance of considering this heterogeneity in competition policies.
KEY WORDS: Market concentration, Effects on income, Oil market, Entrance and exit, Consumer engagement, Australian gasoline station concentration
SUMMARY: The study explores how physicians' contracting models and desire for time off may influence the decision and timing of cesarean sections. Analyzing 1995 birth and financial data from California, the authors examined whether the likelihood of cesarean delivery varied by time of day and patient insurance type, focusing on diagnoses of fetal distress and prolonged labor. The study found that patients insured by group-type HMOs, such as Kaiser, had a more stable likelihood of cesarean delivery throughout the day, suggesting that this organizational and compensation model may better align physician incentives, unlike other insurance types where an increase in evening cesareans was observed. In sum, this research highlights the impact of care structures and incentives on obstetric practices.
KEY WORDS: Financial incentives for doctors, Timing of Cesarean sections, C-section timing, Type of patient insurance, Group-type HMO, Labor and fetal distress, Incentives, Cesareans, and Timing: California Study
SUMMARY: This paper analyzes the relationship between competition and international long distance calling prices from the United States between 1994 and 1998. Increased competition is on average associated with lower rates for consumers, even after considering the role of lower telecommunications costs. Both low-priced flagship rate plans and higher-priced basic plans are considered. Surprisingly, the study finds that competition impacts each differently and is associated with higher price dispersion, with basic plan prices increasing while flagship plan prices decrease.
KEY WORDS: Price discrimination, telecom competition, international calling, price dispersion
Market Power and Wealth Distribution
SUMMARY: This policy brief explores the link between corporate market power and wealth inequality in eight developed economies. The study examines how firms' ability to set prices above their costs, in the absence of vigorous competition, contributes to a more unequal distribution of wealth. Updating and expanding a 1975 study by Comanor and Smiley, it quantifies the impact of supra-competitive profits on different levels of wealth, revealing that this power tends to favor holders of financial assets at the expense of poorer households who bear higher prices. Finally, the paper suggests that government action targeting illegitimate forms of market power could be one way to reduce wealth inequality.
KEY WORDS:
Market power, Wealth inequality, Distribution of wealth, Super-competitive profits, Market Power and Wealth Inequality
Initiatives in Reforming Rules and Regulations
SUMMARY: This paper focuses on the reform of rules and regulations in various markets. It explores how these reforms crucially impact competition, innovation, and economic welfare. The study examines the rationale for existing regulations, their potential costs and inefficiencies, and different reform strategies, illustrated by concrete case studies in various sectors such as energy, transport, innovation, environment, telecommunications, and finance. Ultimately, the text highlights the need for rigorous evaluation and the adoption of methodological approaches to identify and correct regulations that hinder growth.
KEY WORDS:
Regulatory reform, Impact of regulations, Reform strategies, Case studies, Innovation markets
Competition and Innovation in Digital Markets
SUMMARY: This paper explores the impact of hospital overcapacity on determining optimal costs and prices, focusing on the case of Medicare and Medicaid. The study develops a novel methodology for incorporating excess capacity into the estimation of hospital cost functions, notably distinguishing between short-run and long-run marginal costs. The empirical results suggest that accounting for overcapacity significantly influences the assessment of reimbursement adequacy, highlighting the need for rigorous cost specification to inform hospital reimbursement policies.
KEY WORDS: Excess hospital capacity, marginal costs for hospitals, translog cost function, short-run marginal costs, long-run marginal costs
Price Parity Clauses for Hotel Room Booking: Empirical Evidence from Regulatory Change
SUMMARY: This study examines the impact of price parity clauses (PPCs), which restricted hotels from offering lower rates than online travel agencies (OTAs). These are also a form of Most Favored Nation (MFN) clause. The authors exploit two natural experiments resulting from regulatory changes in vertical contracts between hotels and major digital platforms (online travel agencies - OTAs). First, a European Union (EU)-wide intervention limited the scope of PPC obligations. Second, France and Germany went further by completely banning all PPCs for major OTAs. By examining these regulatory changes in Europe using transaction data from hotel chains, the authors analyze how these interventions affected hotel prices. The study reveals that PPC regulation generally led to more competitive prices in the direct sales channels of midscale and luxury hotels, suggesting that these clauses could hamper competition. The nuanced results by hotel type highlight the complexity of interactions between hotels and online platforms.
KEY WORDS:
Price parity clauses, Most favored nation (MFN), Online travel agencies, Regulatory impact, Hotel distribution channels, Price competition
TThis working paper examines the impact of the 1994 Northridge earthquake on hospital prices in the Los Angeles area, using this natural disaster as a natural experiment. The author studies how the sudden reduction in hospital capacity, due to structural damage at several facilities, affected price competition. The study focuses particularly on Santa Monica Hospital, where a significant decrease in beds was followed by a notable increase in prices, suggesting a link between capacity and hospital pricing power. This analysis highlights the value of exogenous shocks in understanding the dynamics of markets.
KEY WORDS:
Northridge Earthquake, Impact on hospital prices, Capacity reduction, Natural experiment, Local hospital market, Capacity and price, Northridge Earthquake: Impact on Hospital Prices
Global Value Chain Entry and Exit and SMEs’ Environmental Practices: Examining the Role of Trade Facilitation
SUMMARY: This study examines how the participation of small and medium-sized enterprises (SMEs) in global value chains (GVCs) influences their adoption of environmental management practices. It highlights that entry into these chains tends to encourage sustainable practices as firms maintain their environmental option value, while exit often leads to their abandonment. The article also explores the crucial role of trade facilitation at the national level, demonstrating that low or high levels of facilitation can paradoxically incentivize exiting SMEs to maintain their environmental efforts. Ultimately, this research highlights the importance of trade policies for SME sustainability, even in the face of changes in globalization.
KEY WORDS: SMEs and Global Value Chains, Environmental management practices, Environmental Option Value in management strategy, Trade facilitation, Exit from Global Value Chains, SMEs, GVCs and Environmental Practices, Management Practices in SMEs
Business Strategy and Antitrust Compliance
SUMMARY: This paper explores the fundamental tension between corporate strategy, aimed at achieving a near-monopoly position to maximize profits, and competition law, whose objective is to prevent such situations. It highlights the direct relevance of competitive strategy theories to antitrust compliance, arguing that traditional strategies focused on competitive advantage may unintentionally violate the law. The author, Professor Sean F Ennis, emphasizes the need for companies to consider antitrust risks from the design stage of their strategy, particularly in the face of concepts such as abuse of dominance and defensive strategies inspired by influential work such as Michael Porter, some of whose recommendations may need to be reassessed in light of current competition law, particularly in the European Union. Ultimately, the paper advocates integrating antitrust compliance into strategic thinking to avoid potentially serious legal and financial consequences.
KEY WORDS: Business strategy, Antitrust Compliance, Fundamental tension, Unintentional risks, Abuse of dominant position, Corporate Strategy and Antitrust Compliance
