SYNCHRONISING DEREGULATION IN PRODUCT AND LABOUR MARKETS

Deregulation typically comes with redistribution of rents and thus with opposition from the losing interest groups. We show that, by exploiting complementarities, synchronising deregulation across markets makes this opposition lower. Indeed, a particular deregulation may reduce rents for one interest group, but may result in gains for another interest group. Synchronising reforms can therefore offer a way out of the ‘sclerosis’ of especially European markets. For this effect, we build a microeconomic model based on two assumptions: Cournot competition à la Vives in the product markets and firms hiring workers in accordance with an efficiency wage in the labour markets. As being particularly relevant for European economies, we focus on product market regulation that determines the degree of market integration and labour market regulation that determines the degree of employment protection.     

Let’s Not Stick Together: Anticipation of Cartel and Merger Control in The Netherlands

Does enforcement action by the Netherlands Competition Authority (NMa) in the case of cartels and mergers produce an anticipatory effect? We use surveys among firms and their advisers to test whether merger plans that may fail to gain clearance from the NMa are not notified and whether the possibility of detection helps to reduce the number of cartels. Our results indicate that enforcement action by the NMa has a preventive effect. Surveys among companies show that 5 % of the notified mergers were modified before notification to forestall possible objections from the NMa. Moreover, for every 100 notifications of mergers there are 13 proposed mergers that are later on abandoned due to merger control. Companies also take account of the Competition Act when drafting contracts, conducting negotiations and holding meetings. Our survey among lawyers and other advisers shows that for every sanction decision taken by the NMa there are almost 5 cases in which, unbeknown to the NMa, a prohibited act has been terminated or modified in response to advice on competition law.     

Transformational Strategies and Productivity Growth: A Transformational-Activities Perspective on Stagnation in the New-Normal Business Landscape

Declines in productivity growth substantially explain new-normal business stagnation; yet in order to address situations of slack productivity growth, firms can choose from six generic transformational strategies: retirement, renewal, retrenchment, replication, redeployment, and recombination. While the extant literature focuses on specific transformational strategies that particular firms, or industries, take in responding to productivity threats, questions regarding which transformational strategies are commonly employed and commonly successful have been neglected. Answering these broader questions allows factoring how firms might respond to new-normal conditions; and yields normative implications regarding the transformational strategies – and policies – that enhance productivity growth and reverse new-normal stagnation. Using cross-industry panel data, we identify the transformational strategies that are both commonly employed and commonly successful. Our empirical results indicate that firms react to productivity threats via a variety of strategic responses; yet, engaging in renewal and recombination uniquely address such threats.     

Merger Failures

This paper proposes an explanation as to why some mergers fail, based on the interaction between the pre‐ and post‐merger processes. We argue that failure may stem from informational asymmetries arising from the pre‐merger period, and problems of cooperation and coordination within recently merged firms. We show that a partner may optimally agree to merge and abstain from putting forth any post‐merger effort, counting on the other partner to make the necessary efforts. If both follow the same course of action, the merger goes ahead but fails. Our unique equilibrium allows us to make predictions on which mergers are more likely to fail.     

The Pricing Structure of Legal Services: Do Lawyers Offer What Clients Want?

Review of Industrial Organization - We analyze clients’ contract choices in auctions where Dutch law firms compete for standard cases such as labor disputes for individuals and collecting...