Economics at the FTC: Hospital Mergers,Authorized Generic Drugs,and Consumer Credit Markets

Economists at the Federal Trade Commission pursue the agency’s competition and consumer protection missions. In this year’s essay, in antitrust, we discuss various aspects of our hospital merger analyses as well as the effects of authorized generic drugs on consumers and competition. In consumer protection, we describe two ongoing studies on the use of credit-based insurance scores to price homeowners insurance, and the accuracy of consumers’ credit reports that are provided by credit bureaus.     

Economics at the FTC: Data Intensive Mergers and Policy R&D

Economics at the Federal Trade Commission (FTC) supports both the competition and consumer protection missions of the agency. In this year’s essay we discuss a range of activities focusing on data-intensive antitrust cases in the hospital and consumer products industries. We also discuss our most recent work on gasoline pricing. Policy-focused research and competition advocacy takes center stage as we discuss some health care advocacy work in the administration of pharmaceutical insurance benefits and efforts to understand the real estate business more completely. Finally, we describe our efforts to quantify the extent of “identity theft”.     

Economics at the FTC: Drug and PBM Mergers and Drip Pricing

Economists at the Federal Trade Commission pursue the agency??s competition and consumer protection missions. In this year??s essay, in antitrust, we discuss two recent mergers that involved Rx drugs: First, we describe key elements of the inquiry into the Express Scripts/Medco transaction in the pharmacy benefit management industry. Next, we analyze a merger that involved drugs that are used to treat patent ductus arteriosus: a condition that affects premature babies. On the consumer protection side, we discuss a pricing strategy??drip pricing??that involves the release of price information about a multi-part product over time as the consumer goes through the purchase process.     

Economics at the FTC: Quantitative Analyses of Two Chemical Manufacturing Mergers

Review of Industrial Organization - Economists at the Federal Trade Commission support the agency’s competition and consumer protection missions in numerous ways. In this article, we discuss...     

Economic Analyses of Mergers at the FTC: The Cruise Ships Mergers Investigation

This paper provides an overview of how economists atthe Federal Trade Commission assess the potentialcompetitive effects of mergers, with a focus on thetypes of quantitative analyses frequently employed.The paper first outlines the general approach employedat the Federal Trade Commission to review mergers.The paper then describes analyses done in theinvestigation of proposed mergers in the cruiseline industry as a specific example. Of particularinterest in this example are the analyses used toassess the potential for coordinated interaction asa result of the merger.     

Economics Research at the FTC: Information,Retrospectives, and Retailing

Individual Federal Trade Commission (FTC) cases invariably raise broad questions about consumers, markets, and effective enforcement policy. Recent consumer protection cases raise questions about information regulation. Horizontal merger enforcement has recently focused on retrospective analysis of mergers and the role of the retail sector in predicting the effects of manufacturer mergers. In this paper, we describe research by the FTCs Bureau of Economics that addresses these three areas. We argue that such research is well worth the agencys relatively small resource investment because it demonstrably contributes to more thoughtful policy analysis and better policy outcomes.     

Economics at the FTC: Pharmaceutical Patent Dispute Settlements and Behavioral Economics

Economics at the Federal Trade Commission (FTC) supports both the competition and consumer protection missions of the agency. In this year’s essay we discuss two issues, one from each of the agency’s missions. First, we focus on intellectual property issues in pharmaceuticals. Specifically, we discuss the principal rationale for antitrust concerns about certain patent dispute settlements in the ethical drug industry. Then, we discuss consumer economics, our recent behavioral economics conference, and how behavioral economics influences our thinking about consumer policy.     

Economics at the FTC: Deceptive Claims,Market Definition,and Patent Assertion Entities

In 2015, the Federal Communications Commission (FCC) imposed common carriage regulation—so-called Title II requirements—on previously unregulated broadband Internet service providers. The regime shift was premised on the FCC’s findings that such rules had demonstrably yielded economic gains. This paper evaluates the FCC’s empirical arguments and finds them uncompelling. Adjustments for inflation or general economic trends eliminate the effects cited by the FCC. Moreover, contrary to the Commission’s assessment, mobile services and broadband markets have shown notable growth in response to deregulatory events that reduce Title II requirements.     

Economics at the FTC: Multi-level Marketing and a Coal Joint Venture

Review of Industrial Organization - Economists in the Federal Trade Commission’s Bureau of Economics support the Commission’s dual missions of protecting consumers and maintaining...     

Economics at the FTC: Non-price Merger Effects and Deceptive Automobile Ads

Economists at the Federal Trade Commission analyze a wide range of activities, practices, and policies in support of the agency’s consumer protection and competition missions as demonstrated by the two economic analyses discussed in this article. The first section of this article describes the economic analysis of a proposed merger’s impact on non-price dimensions of competition in the daily fantasy sports market. The second section builds an economic model to quantify the harm to consumers from deceptive advertising in automobile markets.     

Economics at the FTC: Physician Acquisitions, Standard Essential Patents, and Accuracy of Credit Reporting

Economists at the Federal Trade Commission pursue the agency’s competition and consumer protection missions. In this year’s essay, with respect to antitrust we discuss the analysis that is used in two areas where the Commission has recently been active: physician combinations and standard essential patents. In consumer protection, we discuss the FTC’s recently released national study of the accuracy of consumer credit reports.     

The Revival of Economics at the FTC in the 1960s

This paper examines the declining role of economists at the Federal Trade Commission between 1914 and 1960 and the subsequent growth in their role in the 1960s, including the unique role accorded the Chief Economist as advisor to the Commission and individual Commissioners. It discusses in detail five major contributions of the Bureau of Economics in the 1960s:(1) origins and evolution of a Line-of-Business Reporting Program; (2) contributions to a National Commission on Food Marketing; (3) report on Corporate Mergers; (4) affirmative Disclosure of the Octane Ratings of Gasoline; and (5) FTC Premerger Notification Programs.     

Economics at the FTC: Retrospective Merger Analysis with a Focus on Hospitals

Economists at the Federal Trade Commission (FTC) support the agency’s competition and consumer protection missions. In this year’s essay we discuss efforts at the FTC and elsewhere to examine empirically the competitive effects of mergers. This work has ranged from subjective interview-based reports on post-merger behavior to more objective analyses of post-merger performance based on rigorous empirical analysis of prices. In this essay we discuss the merger retrospective literature generally, and focus on the FTC staff’s recent empirical analyses of consummated hospital mergers.     

Economics at the FTC: The Google-DoubleClick Merger,Resale Price Maintenance,Mortgage Disclosures,and Credit Scoring in Auto Insurance

Economics at the Federal Trade Commission (FTC) supports both the competition and consumer protection missions of the agency. In this year’s essay we discuss competition activity with a summary of our work on the Google-DoubleClick merger and recent activity on resale price maintenance, an area in which FTC economists had done significant prior research. On the consumer policy front, we discuss our study of ways to improve mortgage disclosures to facilitate consumer shopping and competition. Finally, we discuss our study of the effects of credit scoring on prices paid for auto insurance with a focus on the effects of scores on different racial and ethnic groups.     

Economics at the FTC: Office Supply Retailers Redux,Healthcare Quality Efficiencies Analysis,and Litigation of an Alleged Get-Rich-Quick Scheme

We discuss in this essay three of the matters on which economists in the Bureau of Economics (BE) at the Federal Trade Commission have worked this past year. BE revisited familiar ground in the first matter, a proposed merger of office supply retailers. The second part of the essay considers efficiency claims in health care mergers, with focus on the acquisition of a physician group by a health care system in Idaho. The final part of the essay discusses empirical work that was undertaken by the Bureau to investigate claims made by marketers of an alleged get-rich-quick scheme.     

Current Economic Issues at the FTC

This paper provides a summary of recent economic issues ofparticular interest in the Bureau of Economics (``BE') of the FTC. Further developmentof empirical analyses suitable for antitrust investigations is currently of particularinterest to BE. This paper outlines several areas where BE has focused in the past yearincluding: (1) Unilateral effects; (2) coordinated interaction; (3) mergerretrospectives; (4) natural experiments; (5) price discrimination; (6) intellectual property; (7) healthcare;and (8) energy. For each area, we discuss the issues under consideration, the work thatis being done, and what additional research would be useful.     

Win/Loss Data and Consumer Switching Costs: Measuring Diversion Ratios and the Impact of Mergers*

We propose an identification strategy for diversion based on win/loss data. First, we show that win/loss data from the merging firms and market shares in two periods for all firms are sufficient to identify the diversion ratios between the merging partners. Second, we show that win/loss data from the merging firms alone are sufficient for partial identification, and we construct a lower bound that provides a good approximation to the diversion ratio when switching costs are high. We demonstrate the performance of our method with numerical simulations and with an application to the Anthem/Cigna merger.