ECO410H1F: Mergers and Competition Policy, Fall 2017

Tuesdays 11:10 – 1:00 & Thursdays 11:10 – 1:00, LA 211

Prof. Murdock

Syllabus

Portal

Schedule: Topics, readings, assignments, etc.

Office Hours with Prof. Murdock: Thursdays 4-5pm, GE 312, Sept 7 – Nov 30 (Any schedule changes posted on this site)

Piazza

U of T Writing Advice and A&S Writing Centres

TA Resources

 

Last updated: October 16, 2017


Announcements:

thursDAY CLASSES: Remember that the structure of our Thursday classes for the rest of the term is as given in the syllabus. Each class will allocate about:

·        45 minutes for the presenting team

·        5 minutes for a break

·        30 minutes for a Q&A period (questions and answers)

·        5 minutes for any announcements

·        25 minutes for in-class writing

Make sure to arrive on time: the team presentation will start at 11:10am and it is distracting if people are arriving late. Remember that the in-class writing during the five team presentation weeks forms the vast majority of your participation mark. Make sure to complete the required readings, be attentive during the presentation, and to ask questions during the Q&A period. Remember, you will need to briefly document (in writing) your participation in the Q&A period. Please bring pencils and erasers for the in-class writing to allow you to revise your answers as needed. You can expect a set of challenging questions that assess your understanding of crucial economic aspects of the week’s case study and readings. Everyone is responsible for the in-class writing, including the presenting team. [posted October 16]

Assignment #3Assignment #3, distributed on October 12, is due by 4pm (sharp) on Tuesday, October 31. Note: Because this assignment is due outside of class time you should submit it to the Economics Reception Desk, 150 St. George Street, main floor, by the deadline. (If you wish to turn it in early, i.e. before October 31, slide it under my office door, as explained in the syllabus.) During tutorial time on Tuesday, October 31 (i.e. from 11am – 1pm) our TA Victor will hold office hours in our usual classroom (LA 211). Also, please manage your time and do not leave Assignment #3 to the last minute when you may be busy with your other courses. [posted October 11]

Assignments #1 and #2Just a reminder that you should have received e-mails (to your utoronto.ca address) from Crowdmark with your results for Assignment #1 (around 1:45pm on October 3) and Assignment #2 (around 4pm on October 12). [posted October 16]

team assignments and reading guidesThe teams are posted on portal (as an announcement). You can see the reading guide for your team in the schedule below. Also, the rubrics and other information about the team presentations are posted below. [posted October 4]

ta tutorialJust a reminder that Tuesday, 11:10am – 1pm in LA 211 is an important TA tutorial. Victor will help you with the econometrics needed for our course (most team presentations and Assignment #3). [posted October 6]

piazzaTake a moment to sign-up for Piazza: piazza.com/utoronto.ca/fall2017/eco410h1f. That is where you can post questions about the course and course content. [posted September 11]

graduate studies fairThe Economic Students’ Association is hosting the annual Graduate Studies Fair on Thursday, Oct. 5, noon – 3:00pm, Kruger Hall (119 St George Street). This is a great opportunity to learn about how you could continue your studies after graduating. [posted October 2]

Assignment #2Assignment #2, distributed on September 26, is due by 11:10am (sharp) on Tuesday, October 3. Remember that we will be in Robarts, Room 4033 on Tuesday. Please see me in class on Thursday (September 28) if you did not get your copy. If you misplace your copy before the due date, please e-mail our course TA Victor Dee. [posted September 26]

Workshop 3On Tuesday, October 3, we will meet in a computer lab in Robarts Library, room 4033. This session will be run Public Services Librarian Holly Inglis (holly.inglis@rotman.utoronto.ca) and me. Remember, the workshop finishes with your team assignments. [updated October 2]

Class 4Please bring your laptop, if you have one, to Class 4. You can download this file ahead of time, which you’ll be working with a bit at the end of class. [posted September 26]

team presentation weeksYou may start to review the topics, readings, and reading guides for each of the five team presentation weeks. You will have a chance to express your preferences via an online survey that opens at 4pm on Thursday, September 28 and closes on Friday, September 29 at 4pm. The link to be posted on portal. [posted September 26]

Assignment #1Assignment #1 has been distributed and is due by 11:10am (sharp) on Tuesday, September 26. Please see me in class on Thursday (September 21) if you did not get your copy. If you misplace your copy before the due date, please e-mail our course TA Victor Dee. [posted September 19]

workshop 2Our second workshop is on Tuesday, September 26. Would everyone with a laptop with Excel, please bring it to this workshop. The first bit will be me reviewing the Bertrand model (slides are posted) and in the second part you will work through a handout using the simulation spreadsheets. See the Fall 2017 Schedule, where you can download the spreadsheets (and slides) ahead of Workshop 2. At the end of Workshop 2, I will distribute your second assignment: Assignment #2. [posted September 11]

workshop 1Our first workshop, which is on Tuesday, September 19, is important. Would everyone with a laptop with Excel, please bring it to this workshop. The first bit will be me reviewing the Cournot model (slides are posted) and in the second part you will work through a handout using the simulation spreadsheets. See the Fall 2017 Schedule, where you can download the spreadsheets (and slides) ahead of Workshop 1. At the end of Workshop 1, I will distribute your first assignment: Assignment #1. [posted September 11]

Office hours change, thursday, september 14For Thursday, September 14, I will have office hours from 2:00 – 4:00 (which is joint with ECO220Y) in the usual location (GE 312). My office hours return to the normal time (Thursdays 4 – 5pm) on September 21. [posted September 12]

did you miss the first class?: If you missed our first class meeting, which was on Thursday, September 7, you missed an important first class. Make sure to carefully review the posted slides for Class 1 and to consult with a classmate who did attend. Of course, you should also carefully review the syllabus. [posted September 11]

third class meetingSlides for our third class meeting, which is on Thursday, September 14, are posted. See the Fall 2017 Schedule. [posted September 11]

WELCOMEWelcome to the course site for ECO410H1F: Mergers and Competition Policy. This course is intense but we have had a great learning experience the last few years fueled by a diverse and motivated group of students. Note that we meet TWO times per week: Tuesday 11:10 – 1 and Thursday 11:10 – 1. You may review the syllabus but please do not print it out: copies will be distributed in our first class on Thursday, September 7. See the Fall 2017 Schedule. [posted August 16]

WAIT LIST: There is a waiting list for our course. If you are currently registered, I hope you’ll decide to take this course. However, if you realize it is not what you were expecting (and/or too much work), those on the waitlist would benefit if you would be prompt in dropping it in ACORN. There is a great selection of 400-level ECO courses to choose from. Otherwise, I look forward to meeting you. Also, if you are near the top of the waitlist on Sept. 7 -- top ten on the waitlist -- please plan to attend the first class on Thursday, September 7. Last year nearly everyone on the waitlist (who still wanted a spot) did get a spot. [posted August 16]

second class meeting is a TA tutorialOur second class meeting, which is on Tuesday, September 12, is a TA tutorial with our TA Victor Dee. He will be walking the class through a review of micro theory with calculus. He has made slides available on portal. [updated September 12]

LECTURE SLIDES POSTED: The lecture slides for our first class are posted on the Fall 2017 Schedule. You may print the lecture slides (black and white is fine): these include blank space for notes. [posted August 16]

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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 Mergers” Werden 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 StaplesHausman 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): see portal

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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TA RESOURCES:

Our TA is Victor Dee who is an upper-year graduate student in our PhD program. He is an experienced TA with a strong interest and highly relevant experience in the topics we cover. We are fortunate to have him.

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