In the recently published Universal/EMI decision, the European Commission developed a novel theory of harm based on the impact of the transaction on the merging parties’ bargaining power. This memo explains the economic reasoning behind the Commission’s bargaining theory and presents a critical view of its application to the recorded music industry. In particular, the memo argues that the theory did not fit the facts of the case, and highlights some of the pitfalls to be avoided when testing such bargaining theories of harm.
Imperfect Price Information, Market Power, and Tax Pass-Through
Pass-through determines how consumers respond to taxes. In a recent working paper, we investigate the impact of imperfect price information on pass-through of...