PRICE DISCRIMINATION IN A FORM OF DISCOUNTS: CATEGORIZATION AND IMPACT ON COMPETITION

This paper is aimed to clarify the definition and categorization of discounts as well as pro- and anticompetitive effects of discounts. The author applied qualitative methods to the research. The modern literature review unfolds the gap of proper discounts definition, which is proposed to be covered by five-dimensions approach to discounts categorization. Based on such aspects of discount scheme as time, product, threshold, distribution level and customer, the approach provides comprehensive and uniform characteristics of discount. It allows assessing effects of competition, which are classified in two groups. Pro-competitive effects include stimulation of demand, decreasing cost due to economy of scale, solving coordination problems within a supply chain. Anti-competitive effects encompass predation scheme, raising rival’s cost, exclusive dealing, leverage and exclusionary bundling. The importance of correct assessment of the discounts by antitrust authorities is high as an overenforcement in this sphere may lead to adverse effect on total welfare.

SIMULASI KEBIJAKAN PADA IMPLEMENTASI PERJANJIAN KOMPREHENSIF INDONESIA-AUSTRALIA (IA-CEPA) TERHADAP PASAR DAGING SAPI DOMESTIK

Abstrak Beberapa tahun terakhir, pemenuhan permintaan daging sapi di Indonesia masih bergantung pada impor khususnya dari Australia. Impor daging sapi dapat menstabilkan harga daging sapi domestik, tetapi di lain sisi dapat menekan pendapatan peternak lokal. Implementasi dari IA-CEPA adalah penghapusan tarif impor dan TRQ (Tariff Rate Quota) untuk komoditas sapi hidup. Penghapusan tarif menyebabkan harga sapi yang masuk ke Indonesia menjadi lebih murah dan memperbesar peluang peningkatan volume impor sapi hidup. Penelitian ini bertujuan untuk menganalisis skenario terbaik untuk meningkatkan kesejahteraan pelaku ekonomi dengan menggunakan model persamaan simultan 2SLS (two stage least square). Simulasi dilakukan untuk tiga skenario yaitu skenario penghapusan tarif, penetapan kuota, dan TRQ. Hasilnya menunjukkan bahwa skenario penghapusan tarif memberikan total peningkatan kesejahteraan pelaku ekonomi terbesar yaitu 115 miliar dengan rincian defisit 736 miliar bagi produsen, surplus 936 miliar bagi konsumen, dan defisit 85 miliar untuk penerimaan pemerintah. Oleh karena itu, skenario yang direkomendasikan adalah skenario penghapusan tarif pada impor sapi dari Australia. Kata Kunci: 2SLS, IA-CEPA, Pasar Daging Sapi Abstract Recently, demand fulfillment of beef in Indonesia depended on imports, especially from Australia. import can stabilize the domestic price of beef, but the other hand can suppress the income of local farmers. Implementation of IA-CEPA policies is the elimination of import tariff and TRQ (tariff rate quota) for live cattle commodities. Elimination of import tariff causes the price of cattle to enter Indonesia to be cheaper and increases the opportunity to increase the import volume of live cattle. The study aims to investigate the best scenario that can improve the welfare of economic actors using simultaneous equation model 2SLS (two-stage least squares). Three scenarios that simulated are eliminating tariff, setting quota, and TRQ. The result shows that eliminating tariffs gives the largest total welfare increase of economic actors that is 115 billion, with a 736 billion deficit for producers, 936 billion surplus for consumers, and 85 billion deficit for government revenue. Therefore, the policy recommendation is the scenario of eliminating tariffs on cattle imports from Australia. Keywords: 2SLS, IA-CEPA, Beef Market JEL Classification: C53, F12, F13

Ad Blocking

In recent years, ad blocking has become a significant threat to advertising-supported content. Adblockers typically negotiate with publishers, allowing some ads to go through in return for a payment, a practice called (partial) whitelisting in the industry. Ad blocking has a direct positive effect on consumers by reducing advertising intensity. On the other hand, the practice clearly hurts publishers and reduces their incentives to invest in content quality. Lower content quality, in turn has an indirect negative effect on consumers. This paper builds an analytic model to explore the net impact of ad blocking on consumers, how it depends on various market characteristics, and how uniformly it affects consumers. The results show that under a broad set of market conditions, total consumer surplus and even total welfare decline under ad blocking. Whereas some consumers are always better off with an ad blocker, for the average consumer, the impact of quality decline is larger than that of ad reduction. The analysis highlights the detrimental role of ad blockers’ current revenue model—in which value is created for the consumers but it is captured from publishers—in decreasing quality, consumer surplus, and total welfare. Analyzing the impact of varying levels of negotiation power between the ad blocker and publisher reveals that full negotiation power is not preferred by the ad blocker. A lower negotiation power allows the ad blocker to commit to less value extraction from the publisher, thereby leading to higher content quality. Additional model extensions show that the main results are robust. In the case of multiple publishers with different levels of competition between them, the strong negative effect of ad blocking on quality holds. This paper was accepted by Juanjuan Zhang, marketing.

Animal Welfare Assessment in Antibiotic-Free and Conventional Broiler Chicken

The poultry sector is moving towards antibiotic-free production, both to challenge the increasing spread of the antibiotic resistance phenomenon and to meet market demands. This could negatively impact the health and welfare of the animals. In this study, the welfare of 14 batches of 41–47-day-old broilers raised by the same integrated company with and without antibiotics was assessed using the Welfare Quality® protocol. The total welfare score did not significantly differ between the two systems: the good-feeding principle was, on average, higher in the conventional batches, with statistical significance (t = −2.45; p = 0.024), while the other welfare principles (good housing, good health and appropriate behaviour) were slightly better in the antibiotic-free batches. Despite stocking densities averagely higher in the antibiotic-free batches, the absence of antibiotics did not seem to impact the good-health principle; in particular, hock burns, foot pad dermatitis and lameness were significantly less severe in the antibiotic-free batches (p < 0.0001, p = 0.018, p < 0.0001, respectively), which showed also a lower death rate (2.34% vs. 2.50%). Better management of antibiotic-free batches was reported, particularly concerning litter conditions. Further studies would be required to identify and standardise a set of managerial methodologies in order to improve the health of broilers raised without antibiotics.

Unilateral Phase-Out of Coal to Power in an Emissions Trading Scheme

We investigate the displacement effects of unilateral phase-out-of-coal policies in a stylized two-country model with coal- and gas-fired electricity generation in an international emissions trading scheme. In the basic policy scenario, electricity markets are national and one country bans coal while the emissions cap remains unchanged. The allocative displacement effects are strongly asymmetric: the coal-banning country suffers a welfare loss, the other country is better off, and aggregate welfare declines. Furthermore, the permit price decreases, while the electricity price rises in the unilaterally acting country and declines in the other country. If all countries would phase out coal, the effects would be symmetric and all countries would lose. We then extend the analysis to the cases (i) when the unilateral coal ban is combined with a moderate cut of the emissions cap (as recently suggested in an EU Directive) and (ii) when we allow for international trade in electricity. Compared to the basic unilateral policy, in these cases, the total welfare costs tend to be smaller and some tend to be shifted from the unilaterally acting country to the other one.

Blockchain or Not? Optimal Decisions for Food Retailers Considering Consumer Expertise

This paper studies the benefit of the blockchain food traceability system (BFTS). Based on game theory and the willingness-to-pay model, pricing models are formulated considering important factors like the proportion of consumer with high expertise in traceability, risk attitude to doubtful traceability information and perceived convenience of traceability information checking. By compared the optimal total welfare under the BFTS and that under the traditional food traceability system in valuation analysis, conditions where applying the BFTS is more valuable than applying the TFTS are figured out. Finally, insightful management implications are given.

Equity-efficiency implications of a European tax and transfer system

This study simulates three income tax scenarios in a Mirrleesian setting for 24 EU countries using data from the 2014 Structure of Earnings Survey. In scenario 1, each country individually maximizes its own welfare (benchmark). In scenarios 2 and 3, total welfare in the EU is maximized over a common budget constraint. Unlike scenario 2, the social planner of scenario 3 differentiates taxes by country of residence. If a common tax and transfer system were implemented in the EU, countries with a relatively higher mean wage rate—particularly those in Western and some of the Northern European countries—would transfer resources to the others. Scenario 2 implies increased labor distortions for almost all countries and, hence, leads to a contraction in total output. Scenario 3 produces higher (lower) marginal taxes for high- (low-) mean countries compared to the benchmark. The change in total output depends on the income effects on labor supply. Overall, total welfare is higher for the scenarios involving a European tax and transfer system despite more than two thirds of all the agents becoming worse off relative to the benchmark. A politically more feasible integrated tax system improves the well-being of almost half of all the EU but considerably reduces the aggregate welfare benefits.

Extended Producer Responsibility for Pharmaceuticals

Problem definition: We investigate the effectiveness of different extended producer responsibility (EPR) implementation models for pharmaceuticals. In particular, we study two viable and prevalent models: (1) source reduction (SR), where a form of fee on sale is imposed on producers, and (2) end-of-pipe control (EC), where producers are made responsible for the collection of unused pharmaceuticals. Academic/practical relevance: The existing literature on EPR implementation models has focused primarily on nonconsumable products (e.g., electronics), whereas there is limited research on the effectiveness of different EPR implementation models for pharmaceuticals used in practice. We aim to fill this gap in this study. Methodology: We develop a game-theoretic model to characterize the equilibrium strategies of different stakeholders under both the SR and EC models and compare the resulting producer profit, environmental/social impact, and total welfare. Results: In contrast to the nonconsumable contexts where the SR model is shown to maximize total welfare, the EC model leads to a higher total welfare for certain categories of pharmaceuticals because of its effectiveness in eliminating overprescription. Moreover, we characterize conditions under which stakeholder (e.g., producer, environmental/social advocacy groups) preferences toward EPR implementation model choices are (mis-)aligned. We further show that limiting the social planner’s budget surplus under SR can eliminate the preference misalignment but leads to a loss of total welfare. Managerial implications: (1) Policymakers should be cautious about directly applying preferred EPR models from other product categories to the pharmaceutical setting. (2) The EC model maximizes the objectives of all stakeholders for a salient category of pharmaceuticals with high health benefits, high collection costs, and high environmental/social costs. (3) Policymakers should give thought to differentiating EPR implementation models across pharmaceutical categories. (4) It is important to carefully quantify the health impact of the pharmaceuticals and the operational cost parameters to inform policymaking.

Application of a Protocol to Assess Camel Welfare: Scoring System of Collected Measures, Aggregated Assessment Indices, and Criteria to Classify a Pen

This study aimed to apply a protocol for assessing camel welfare, to develop a scoring system for the welfare measures, to produce overall assessment indices, and to classify the animal units (i.e., pens) according to their welfare level. A total of 105 measures were collected at Herd level from 76 pens at a market in Qatar. The pens held 528 camels, 132 of which were evaluated at a deeper level (i.e., Animal level). Out of the 105 measures, 71 were selected, scored, and aggregated to reach a Total Welfare Index (TWI) for each pen. The TWI ranged from 46.2 to 69.8. The Good Feeding index, including measures related to prolonged thirst and prolonged hunger, was the most critical (p < 0.001), while the Good Health index, including measures related to the absence of injuries, disease and pain, was the less problematic (p < 0.001). However, most of the pens were classified as “unsatisfactory” (61.8%) and none as “excellent”. Body Condition Score (BCS), Thirst Index, disease and physical injuries, presence of a shelter, and cleanliness of bedding were the measures which influenced the pens’ classification the most (p < 0.05). The proposed model seems useful in the identification of camel welfare issues. Further applications, as well as the involvement of many scientists and stakeholders, are needed to refine and validate the protocol and its indices.

Economic consequences for lawyers

This article moves from the premise that a bilateral relationship between law and economics requires the contribution of the theory of legal argumentation. The article shows that, to be legally relevant, economic consequences have to be incorporated into interpretive arguments. In this regard, the jurisprudential preface strategy proposed by Craswell goes in the right direction, but begs the question of why the legally relevant consequences have to be assessed in terms of total welfare maximization instead of, in the EU context at least, consumer welfare maximization. After having identified five points of divergence between total and consumer welfare approaches, the article draws from legal inferentialism to propose an analytical tool – the explanatory scorekeeping model – for assessing the explanatory power of these two approaches. The model is then applied to the reasoning in United Brands Company v. Commission.