The role of competition and state aid policy in financial and monetary law

During the financial crisis, companies and lenders found themselves in distressed situations. Competition authorities across the globe had to deal with controversial issues such as the application of the failing firm defence in merger transactions as well as assessment of emergency aid granted by states. This article considers competition policy in periods of crisis, in particular the failing firm defence in merger control and its state aid policy.

Tax principles, product differentiation and the nature of competition

We analyze the choice between the origin and destination principles of taxation when there is product differentiation and Bertrand competition. If taxes are redistributed to consumers and demand is linear the origin principle dominates the destination principle whatever the degree of product differentiation and extent of economic integration. With nonlinear demand the origin principle dominates if there is sufficient economic integration. When the social value assigned to tax revenue is higher than the private value, the destination principle dominates for intermediate values of product differentiation and economic integration. The same results are also shown to hold with Cournot competition.

The competition–performance relation: a meta-analytic review and test of the opposing processes model of competition and performance

What is the relation between competition and performance? The present research addresses this important multidisciplinary question by conducting a meta-analysis of existing empirical work and by proposing a new conceptual model—the opposing processes model of competition and performance. This model was tested by conducting an additional meta-analysis and 3 new empirical studies. The first meta-analysis revealed that there is no noteworthy relation between competition and performance. The second meta-analysis showed, in accord with the opposing processes model, that the absence of a direct effect is the result of inconsistent mediation via achievement goals: Competition prompts performance-approach goals which, in turn, facilitate performance; and competition also prompts performance-avoidance goals which, in turn, undermine performance. These same direct and mediational findings were also observed in the 3 new empirical studies (using 3 different conceptualizations of competition and attending to numerous control variables). Our findings provide both interpretational clarity regarding past research and conceptual guidance regarding future research on the competition–performance relation.

Effects of competition on sexual and clonal reproduction of a tunicate: the importance of competitor identity

Individual fitness and the structure of marine communities are strongly affected by spatial competition. Among the most common space holders are the colonial ascidians, which have the ability to monopolize large areas of hard substrate, overgrowing most other competitors. The effects of competition on colony growth and on gonad production of the ascidian Didemnum perlucidum were studied in southeastern Brazil by experimentally removing surrounding competitors. Colonies of D, perlucidum competing for space exhibited a growth rate 9 times less than that of colonies that were competitor free. Among the colonies subject to competition, growth rates were unrelated to the percentage of colony border that was free of competitors. However, the identity of the competitor was important in the outcome of border contacts. At the beginning of the experiment, most border encounters of D. perlucidum were with solitary organisms, which in most cases were overgrown. These were progressively replaced by colonial ascidians and bryozoans, resulting mostly in stand-off interactions. Besides reducing asexual growth, spatial competition also affected female gonad production. Colonies free of competitors had a significantly higher proportion of zooids with ovaries. Thus, our findings show that spatial competition reduces both ascidian colony size and gonad production.

Creditor's protection and bank loans: lack of competition hamprers bankruptcy reform's effects

This dissertation investigates how credit institutions’ market power limits the effects of creditor protection rules on the interest rate and the spread of bank loans. We use the Brazilian Bankruptcy Reform of June/2005 (BBR) as a legal event affecting the institutional environment of the Brazilian credit market. The law augments creditor protection and aims to improve the access of firms to the credit market and to reduce the cost of borrowing. Either access to credit or the credit cost are also determined by bank industry competition and the market power of suppliers of credit. We derive a simple economic model to study the effect of market power interacting with cost of lending. Using an accounting and operations dataset from July/2004 to December/2007 provided by the Brazilian Central Bank, we estimate that the lack of competition in the bank lending industry hinders the potential reducing effect of the BBR on the interest rate of corporate loans by approximately 30% and on the spread by approximately 23%. We also find no statistical evidence that the BBR affected the concentration level of the Brazilian credit market. We present a brief report on bankruptcy reforms around the world, the changes in the Brazilian legislation and on some recent related articles in our introductory chapter. The second chapter presents the economic model and the testable hypothesis on how the lack of competition in the lending market limits the effects of improved creditor protection. In this chapter, we introduce our empirical strategy using a differences-in-differences model and we estimate the limiting effect of market power on the BBR’s potential to reduce interest rates and on the spread of bank loans. We use the BBR as an exogenous event that affects collateralized corporate loans (treatment group) but that does not affect clean consumer loans (control group) to identify these effects, using different concentration measures. In Chapter 3, we propose a two-stage empirical strategy to handle the H–Statistics proposed by Panzar and Rosse as a measure of market competition. We estimate the limiting effects of the lack of competition in replacing the concentration statistics by the H–Statistics. Chapter 4 presents a structural break test of the concentration index and checks if the BBR affects the dynamic evolution of the concentration index.

A model of competition and interbank network formation

This work aims to understand the interaction between competition and network formation in the banking market. Combining Matutes and Padilla (1994) and Matutes and Vives (2000), we build a model of imperfect bank competition for deposits in which an interbank relationship network is a key strategic decision: it affects banks’ profit and risk position. The competition level exerts influence in the banking network structure since it affects the network outcomes. As result, we have that different competition levels imply different network topologies. Specifically, greater competition imply denser networks. Finally, when we allow for the possibility of collusion, the denser network can come out in the least competitive environment.

Models of privatization and development of competition in telecommunications in Central America and Mexico

Incluye Bibliografía

The effectiveness of technical assistance, socio-economic development and the absorptive capacity of competition authorities

Includes bibliography

Best practices in defence of competition in Argentina and Brazil: useful aspects for Central America

Includes bibliography

MERCOSUR: its challenges to small and medium-sized industrial enterprises in terms of competition

Includes bibliography

Indices of competition and bio-agroeconomic efficiency of lettuce and tomato intercrops in greenhouses

Intercropping is a cropping system for the production of greenhouse vegetables. It uses space more efficiently, thus reducing the cost of production. Intercropping tomato and lettuce has not been studied, but knowledge of the competitive and agroeconomic indices of these vegetables can help in the management of the intercropping system. The objectives of this study were to assess, through biological and agroeconomic indices, the competition between species and the profitability of intercropping tomato and lettuce at different times of transplantation over two growing seasons (autumn-winter and summer-winter) in greenhouse conditions. In autumn-winter, two experiments were conducted with a randomised complete-block design and five replicates. Tomato and lettuce were the main crops in the individual experiments. Treatments were arranged in a factorial of two cropping systems (intercropping and individual crops) with four transplants of the secondary crop (0, 10, 20 and 30 days after) plus an additional treatment (individual main crop). These two experiments were repeated in summer-winter. Tomato was the dominant crop regardless of transplant order. Intercropping systems established with transplants of both species on the same day had higher values of indices of competition and bio-agroeconomic efficiency than systems with longer periods of transplants between main and secondary crops. The intercropping of lettuce and tomato in greenhouses, regardless of transplant time or order, had bio-agroeconomic advantages over individual crops. The transplantation of tomato after lettuce is recommended for greater profitability.