Core References

• Competition Policy for Small Market Economies Cambridge, MA: Harvard University Press, 2003, Chapters 3-4. Gal, Michal S.

  Describes the implications of small economies for competition policy and the regulation of a single dominant firm. Considers the goals of competition policy, how small size limits the effectiveness of structural remedies, the difference between rules that can be applied in large versus small economies, the definition of market dominance, the effects of market dominance in a small economy, and the regulation of market dominance.

• Methods for Increasing Competition in Telecommunications Markets University of Florida, Department of Economics, PURC Working Paper, 2008. Jamison, Mark A.

  Describes numerous barriers to entry, implications of vertical integration, and possible regulatory remedies.

• Economic Analysis of Law Fifth Edition, New York: Aspen Law & Business, 1998, Chapter 10. Posner, Richard A.

  Explains the economics of competition laws. Considers cartels, horizontal restrictions, mergers, market definition, predation, foreclosure, tie-ins, and barriers to entry.

• Economics of Regulation and Antitrust Cambridge, MA: MIT Press. 2000, Chapters 5-6. Viscusi, W. Kip, John M. Vernon, and Joseph E. Harrington, Jr.

  Explains how to define markets, assess market concentration, consider scale economies, examine entry conditions and market contestability, and identify dominant firms and anticompetitive activities such as raising rivals’ costs and predatory pricing. Describes classic U.S. cases of monopolization.

Sectoral References

ELECTRICITY

• Making Competition Work in Electricity New York: Wiley & Sons, 2002, Chapters 4-6. Hunt, Sally

  Explains that market power can be exercised by restricting output. In general, “the best solution to market power is to … hav(e) enough competitors in the first place.” Discusses second best solutions. States that markets must be designed with a mechanism for allowing consumers to ration usage in response to high prices. Explains problems of using the HHI in energy. Describes how studies have tried to measure market power by estimating marginal costs and comparing them to prices, but accurately estimating marginal costs is very difficult.

GAS

• Prospects for Gas Supply and Demand and their Implications with Special Reference to the UK in Competition and Regulation in Utility Markets, edited by Colin Robinson, Cheltenham, UK: Edward Elgar, 2003, pp. 91-120. Kemp, Alexander, G., and Linda Stephen

  Provides a case study of analyzing the U.K. gas markets. Considers location of production and consumption, imports, infrastructure, and gas contracts.

TELECOMMUNICATIONS

• Analyzing Telecommunications Market Competition: Foundations for Best Practices University of Florida, Department of Economics, PURC Working Paper, 2009. Hauge, Janice and Mark Jamison

  Explains how to identify market boundaries and measure the intensity of competition, with particular attention to telecommunications in developing countries.

• ICT Regulation Toolkit Washington, D.C.: infoDev and the International Telecommunications Union, 2007, Module 2.

  Explains general principles for competition policy and how to define the market, identify barriers to entry, define market power and market dominance, and identify essential facilities. Explains remedies for anticompetitive conduct, such as abuse of dominance, restricting access to essential facilities, and engaging in cross-subsidization, predatory pricing, and price squeezes. Also describes how to assess mergers and joint ventures.

• Competition in the Provision of Fixed Telephony Services Director General of Telecommunications, Office of Telecommunications, London, U.K., 2001. Oftel

  Describes how the U.K. telecommunications regulator assesses competition by defining relevant markets; assessing existing levels of competition in each relevant market using comparisons with similar countries, consumer satisfaction surveys and complaints, the extent to which prices reflect underlying costs, the extent to which consumers are knowledgeable about different market opportunities and/or face barriers to switching, the absence of inefficient suppliers, the absence of anticompetitive behavior and entry barriers, and the extent to which market structure has changed over time, and active price, quality, and innovation competition.

• Rules for Conducting Market Analysis and Identifying the Significant Market Power December 12, 2002. Romania National Regulatory Authority for Communications

  Details how the Romanian telecommunications regulator determines significant market power under European Union guidelines. Describes how the relevant market is defined in terms of product and geography, and the criteria used to assess competition, including market share and its stability, vertical integration, number of competitors, users’ countervailing power, price evolution and profit level, and control over a network or infrastructure that is difficult to duplicate.

TRANSPORTATION

• Natural monopoly privatisation under different regulatory regimes: A comparison of New Zealand and Australian airports International Journal of Public Sector Management. Vol: 18 No.3 (2005), 274 – 292. Domney, Mark D., Heather I.M. Wilson, Er Chen

  Compares the profitability and technical efficiency of firms in a monopoly industry, airports, operating with different degrees of market power and under differing regulatory regimes, minimalist in New Zealand and interventionist in Australia. The technical efficiency of privatised airports is assessed, and this independent measure is used in regression analyses to determine whether efficiency, regulation or privatisation is related to airport profitability. For firms with monopolistic characteristics operating under minimalist regulation, profitability is related to market power, not efficiency improvements. For firms operating in a regulated environment, profitability is related to regulation, which constrains market power but does not impede efficiency.

Key Words

Competition, Market power, Anti-competitive, Entry, Barriers to Entry