Bagging bundle benefits in broadband and media mergers: Lessons from Sky/Vodafone for antitrust analysis

The historic precedents in telecommunications antitrust findings have tended towards finding harm to competition when network operators integrate downstream and bundle the provision of applications and services. The reason for this is that market power in network provision is thought to be extended into the applications market(s). More recently however, proposed mergers have been between telecommunications and media distribution firms, both of whom have some degree of market power, already sell their own services in bundles, and who may or may not have been offering combined bundles already via contractual agreements. Examples include Sky/Vodafone in New Zealand, and Time Warner/AT&T in the United States as well as Vodafone/Unitymedia in Germany and Media Capital/Altice in Portugal. These complex proposed arrangements pose challenges to competition authorities, whose legal and procedural rules and precedents, especially those defining the relevant markets affected by the merger or vertical integration activity, have been developed from the analysis of simpler cases. These precedents may not be sufficient to analyse current cases, characterized by multiple products catering to heterogeneous consumer preferences, and consumers are not constrained to buying only one variant of the products in each of the upstream and downstream markets.We illustrate the challenges by way of a case study of the proposed merger between Sky and Vodafone, declined by the New Zealand Commerce Commission in February 2017. Limitations in existing market definition processes and the evaluation of market power where bundling already occurs risk overlooking complex demand-side interactions that influence the profitability and efficiency of various structural and contractual strategic choices. We propose that classic merger and antitrust analysis based on econometric cost-benefit analysis can be augmented by using simulation and numerical analysis of a range of bundle offers expected to be relevant in decision-making. We develop a simple model and use it to illustrate how it may be used to inform broadband and content mergers, and other complex antitrust cases, such the assessment of the effects of two-sided markets and firm pricing decisions.     

Buyer Alliances as Countervailing Power in WIC Infant-Formula Auctions

State agencies in infant-formula procurement auctions receive lower bids when they are in buyer alliances than when they are unallied. The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) uses an auction to procure infant formula. Manufacturers bid on the right to be an agency’s sole supplier by offering a rebate on formula sold through WIC. Agencies frequently join together in buyer alliances. An empirical estimation shows that bids are lower to alliances and that lower prices result because alliances are heterogeneous. Results suggest that when heterogeneity is not controlled, bids decline with alliance size, which has policy implications because Congress recently limited alliance size.     

THE USE OF SOCIAL MEDIA IN THE SUPPLY CHAIN: SURVEY AND EXTENSIONS

This paper investigates the capabilities of social media, such as Facebook, Twitter, Delicious, Digg and others, for their current and potential impact on the supply chain. In particular, this paper examines the use of social media to capture the impact on supply‐chain events and develop a context for those events. This paper also analyses the use of social media in the supply chain to build relationships among supply‐chain participants. Further, this paper investigates the of use of user‐supplied tags as a basis of evaluating and extending an ontology for supply chains. In addition, using knowledge discovery from social media, a number of concepts related to the supply chain are examined, including supply‐chain reputation and influence within the supply chain. Prediction markets are analysed for their potential use in supply chains. Finally, this paper investigates the integration of traditional knowledge management along with knowledge generated from social media. Copyright © 2011 John Wiley & Sons, Ltd.     

BUILDING AND EVOLVING DATA WAREHOUSING AND BUSINESS INTELLIGENCE ARTEFACTS: THE CASE OF SYSCO

This paper investigates use of data warehouse and business intelligence capabilities to integrate with customers in the supply chain and improve insights into customer sales. By making internal data warehouse sales information available to customers, additional value to those customers is created, eliminating asymmetries of information in the supply chain. In addition, the evolution of data warehousing into business intelligence is investigated, expanding sales information to include marketing associate performance analysis generated for internal use. Further, a methodology that was used for building a business intelligence system is also examined. Finally, what appears to be a business‐intelligence‐driven focus on enterprise resource planning systems is analyzed. These issues are illustrated using real‐world data warehousing and business intelligence artefacts developed at SYSCO. Copyright © 2012 John Wiley & Sons, Ltd.     

Disagreement and the Cost of Capital

We assess how forms of disagreement among investors affect a firm's cost of capital. Firms experience a lower cost of capital if investors perceive that other investors are ignoring relevant disclosures (perceived errors of omission), but a higher cost of capital if investors perceive that others are responding to irrelevant disclosures (perceived errors of commission). The impact of these two sources of disagreement on the cost of capital is determined by the distribution of opinion and the nature of disclosure. For example, even though aggregated disclosures reveal less to investors, aggregated disclosures may decrease the cost of capital by eliminating disagreement associated with perceived errors of commission. These and additional results arise because the cost of capital is driven not only by investors’ uncertainty about the firm's future earnings performance, but also by investors’ uncertainty about the evolution of beliefs, which partly determines the path of prices.     

When Does Information Asymmetry Affect the Cost of Capital?

This paper examines when information asymmetry among investors affects the cost of capital in excess of standard risk factors. When equity markets are perfectly competitive, information asymmetry has no separate effect on the cost of capital. When markets are imperfect, information asymmetry can have a separate effect on firms’ cost of capital. Consistent with our prediction, we find that information asymmetry has a positive relation with firms’ cost of capital in excess of standard risk factors when markets are imperfect and no relation when markets approximate perfect competition. Overall, our results show that the degree of market competition is an important conditioning variable to consider when examining the relation between information asymmetry and cost of capital.     

Flood Insurance Coverage in the Coastal Zone

We explore determinants of flood insurance demand in the coastal zone using micro‐data for nine Southeastern counties. Overall estimates indicate price inelastic demand, though subsidized policyholders have greater coverage and are more price sensitive. Mortgage borrowers exhibit no greater coverage; only 12 percent in 100‐year flood zone indicate flood insurance was required by their lender. Flood insurance demand is increasing in the levels of flood and erosion risk. We find a positive correlation between household income and coverage, but the effect is not monotonic. Community‐level erosion hazard mitigation projects influence flood insurance coverage, with beach replenishment acting as a complement.     

Asymmetric Information and Countermeasures in Early Twentieth‐Century American Short‐Term Disability Microinsurance

American workers and employers a century ago formed microinsurance funds to provide sick pay to temporarily disabled workers. This article analyzes a 1908 survey of several hundred such microinsurers. Theoretically, a single cross‐section may yield evidence of asymmetric information, but cannot enable the separation of moral hazard and adverse selection effects. However, microinsurance fund managers and outside observers believed they did see separate such effects and so microinsurers created separate countermeasures to mitigate these problems. This article finds prima facie evidence of asymmetric information and suggestive evidence of the separability of informational asymmetries and the effectiveness of such countermeasures.     

Finding the best strategy for service distribution

To determine appropriate levels of care and access, while maximizing quality and capital resources, a service distribution plan fully defines: How the organization will serve the market, How each of the system's operations will relate to other operations, How clinical resources will be organized and deployed, The financial impact of the service distribution plan on the overall organization.     

Non-compliance notifications and taxpayer strategic behavior: evidence from Ecuador

International Tax and Public Finance - This paper examines the effect of enforcement on taxpayer behavior using administrative data from Ecuador. To overcome confounding factors, a regression...