Economics of Markets and Competition Policy
Economics of Markets and Competition Policy: A Rise of Market Power and its Causes
Rising market power is one of the hot policy issues worldwide. Excessive market power in the hands of a few would not only harm consumers but also stifle innovation and economic growth, threatens economic liberties and even democratic accountability.
The objective of this course is for students to introduce variety of issues related with market power. In the academic year of 2021, we will stress more on economics of markets, rather than on competition policy and antitrust law, while we will cover important topics of the latter. This course focuses primarily on empirical issues of the important public policy debates on the basis of academic papers. Several guest speakers are invited on important public policy issues.
In the class we will discuss from the viewpoint of industrial organization (IO); however, since a recent rise of market power involve other neighboring fields of economics, including macroeconomics, labor, transportation and economic history, we will look into those literatures and discuss what IO could learn from other adjacent fields.
We could think of multiples of reasons why market power rises in recent years; A group of dominant firms might foreclose the markets, abusing power of superior bargaining positions, along with network effects with low marginal costs, could bring forth a winner-takes-all effect in various markets. It might also be the case where market power has been mis-measured and overstated.
In this course, students will learn some theoretical foundations underlying a rise of market power, and discuss where the academic literatures stand, and what empirical questions need to be addressed in the literatures. Key concepts are (i) competition policy enforcement, (ii) intangibles and innovation, (iii) infrastructure, and (Iv) firm-to-firm transactions. Many policy issues are taken from Japanese experience, in particular, on competition policy.