Papers by Serdar A . K . A . İ S M A İ L S E R D A R Dalkir

A Quantitative Evaluation of Effectiveness and Efficacy of Competition Policies Across Countries
Social Science Research Network, 2015
DESCRIPTION This paper proposes a quantitative, cross-sectional, framework for ex-post evaluation... more DESCRIPTION This paper proposes a quantitative, cross-sectional, framework for ex-post evaluation of competition policies from relevance, effectiveness and efficacy perspectives. The paper evaluates competition policy output effectiveness and outcome efficacy in the sample countries. The evaluation has two levels that focus on an intermediate output and a final outcome, respectively. The intermediate output is defined as “competition policy implementation, advocacy and enforcement effectiveness.” A positive link from the legal framework and resource use to competition policy implementation, advocacy and enforcement indicates an effective intermediate output. The final outcome is defined as “national competitiveness to attract foreign direct investment (FDI).” A positive link from a country’s intermediate output effectiveness to the country’s competitiveness to attract FDI is interpreted as an efficacious final outcome. These two links are quantitatively estimated through numerical indicators. Statistical results obtained are consistent with the existence of measurable implementation gaps (1) between the developing and the developed countries, and (2) between the recent European Union members or candidate(s) and the more senior E.U. members, controlling for the level of resources used in competition implementation, advocacy and enforcement. These gaps cannot be bridged merely by increasing the size of the competition agencies’ budgets. Reorganizing agencies’ spending priorities as well as developing extra-agency initiatives can be complementary means to bridge these gaps. Statistical evidence is also consistent with a positive association between competition effectiveness and policy efficacy. Efficacy may also be a function of binary variables (for example, E.U. membership); if so, efficacy can partially be increased through a binary transformation in a country’s status. Conversely, an efficacy gap may persist as long as economic and other types of conditions preclude a binary transformation.

Yoğunlaşmaların Kontrolünde Esnek Hukuk ve İktisat Yaklaşımları: ABD’deki Yeni Yatay Birleşmeler Rehberi Hakkında Görüşler (Flexible Legal and Economic Approaches on the Control of Concentrations: Opinions on the New U.S. Horizontal Merger Guidelines)
<b>Turkish Abstract:</b> Dünya çapındaki birçok rekabet hukuku rejimini ciddi şekilde... more <b>Turkish Abstract:</b> Dünya çapındaki birçok rekabet hukuku rejimini ciddi şekilde etkileme potansiyeline sahip ABD Yatay Birleşmeler Rehberi, 19 Ağustos 2010 tarihi itibariyle ABD ’de yürürlüğe girmiştir. 1992 yılından günümüze kadar olan ABD yoğunlaşma rejimi uygulamasında karşılaşılan zorluklar ve yenilikleri yansıtan bu yeni rehber, eski rehbere oranla birçok alanda ciddi değişikliklere gitmektedir. Yeni rehberin tamamına bakıldığında, iktisadi analizin yoğunlaşma değerlendirmelerinde daha da önemli bir rol oynayacağına yönelik olarak açık sinyaller gözlemlenmektedir. Yoğunlaşma kontrolü bakımından bazı ciddi yenilikler getiren söz konusu rehberin incelenmesinin, Rekabet Kurumu ’nun gelecekte karşılaşabileceği birtakım hususlar bakımından aydınlatıcı nitelikte olduğu düşünülmektedir. Kaleme alınan bu çalışma, önce eski rehberin özet bir fotoğrafını çekmeye, daha sonra da yeni rehber ile getirilen hukuki ve iktisadi yaklaşımları masaya yatırmaya yönelik değerlendirmeler içermektedir. Eski rehber ile yeni rehber arasındaki bu karşılaştırmanın amacı, getirilen yeni değişikliklerin yoğunlaşma rejimi açısından yeni bir dönemin başlangıcı olup olmayacağı hususuna ışık tutmak ve Türk rekabet hukuku rejimi bakımından da önem taşıyabilecek olan bu hususu tartışmaya açmaktır.<br><br><b>English Abstract:</b> US Horizontal Merger Guidelines, which have the potential to significantly affect many competition law regimes across the world, came into force on August 19,2010. This recent guidelines, which reflect the difficulties met and developments occurred with respect to the implementation of the US concentration regime since 1992, contain significant changes compared to the old guidelines. Considering the new guidelines as a whole, there are clear signals that economic analyses will play a bigger role during merger evaluation. We believe that an evaluation over the new guidelines that contain important changes in terms of merger control will be highly informative on certain issues that the Competition Authority might come across in the future. This study contains evaluations that initially aim to outline in brief the old guidelines and then analyze in detail the legal and economic approaches set forth by the new guidelines. The purpose of this comparison between the old and the new guidelines is to shed a light on whether the new changes will be interpreted as a new era in terms of concentration regime as well as to open to discussion this issue that is important in terms of the Turkish competition law regime.

Journal of competition law & economics, Feb 21, 2014
Developed economies have historically been a model for emerging market economies, particularly in... more Developed economies have historically been a model for emerging market economies, particularly in the development and enforcement of competition laws. Modifications to competition law rules in developed economies, however, may not always be practical for emerging market economies to adopt. Insufficient knowledge, experience, and power of competition law authorities in emerging markets require a structure with greater legal certainty rather than one that provides a wide berth for interpretation. This article provides an overview of some of the significant developments in the 2010 U.S. Horizontal Merger Guidelines from an emerging market perspective. While taking into consideration the general characteristics of emerging market countries, the treatment of four specific topics under the new Guidelines will be scrutinized from a law and economics perspective: market definition, market shares and market concentration, market entry, and coordinated effects. This article also delves into discussions of Turkish competition law matters, as an example of emerging merger regime models, with respect to each of the four areas of discussion.

CUTS-CIRC 7th Biennial Conference , 2021
In 1984, as a result of an antitrust lawsuit by the U.S. Department of Justice (USDOJ), the priva... more In 1984, as a result of an antitrust lawsuit by the U.S. Department of Justice (USDOJ), the private U.S. telecommunications monopoly AT&T agreed to split itself into eight components: a long-distance-and-manufacturing company, plus seven local monopolies or Regional Bell Operating Companies (RBOCs). It has been argued that the splitting up of the local service from long distance ended the subsidization of local service through excessive pricing of the long- distance service. It has also been thought that it should have been possible to solve the subsidization problem through a lump-sum surcharge on the local service: each user of telephone service within a local area could be charged a surcharge regardless of his or her usage of the local service. The amount of the surcharge could be set so as to eliminate the cross-subsidization of the local service through excessive pricing of the long-distance service. As a result, the price of long distance could have approached the competitive level, while the per-unit price of local service not being any higher given the lump-sum nature of the surcharge. This could have solved the subsidy problem without splitting the company into eight components. Moreover, it has been claimed that the U.S. national and regional regulators of telecommunication services had been aware of that solution. Surely, negotiating such a surcharge scheme within the antitrust settlement must have been possible. Yet this is not what happened. Why? The relation between long distance and local service is one of vertical input supply. Basic economics predicts that vertical integration of suppliers is usually benign; in that it eliminates what is known as the “successive monopolies” problem. Two monopolies in a vertical supply relationship to one another would create a too high price for the consumer; the price the consumers pay would be even higher than the monopoly price if the two monopolies were vertically integrated into a single firm. Each of the two successive monopolies chooses a price that maximizes its profit. Since the two firms are not allowed to coordinate, the resulting consumer price and quantity demanded are suboptimal for the two firms collectively. This outcome also reduces consumer welfare as well as total welfare even relative to an integrated monopoly. It would appear that by separating long distance from local service, USDOJ was promoting a suboptimal outcome. The question is, “why?” A possible explanation is that USDOJ was concerned that AT&T was “too big.” This sounds like a political standard more than an economics standard. However, there may be an economic rationale for it. An integrated monopoly is more willing to “buy” rigidity of demand – for a fixed expenditure – than two successive monopolies. A more rigid demand enables it to set a higher price to the consumer without losing as many sales as it would before the investment. That way, the firm can increase profit. The reason for an integrated monopoly being more willing to invest in a rigid demand than two monopolies is that when one of the two monopolies plans to invest, it predicts that its “sister monopoly” would rationally raise its price as well. This can be thought of as a “free ridership” problem. In a vertical relationship, the sister monopoly would increase its supply price to the downstream monopoly which has undertaken the investment. The profitability of investment decreases somewhat because of free riding by the sister monopoly. On the other hand, a single integrated monopoly would not have to worry about this problem, thus making it more willing to invest in demand rigidity and raise price to the consumer. The paper concludes by discussing implications for regulated firms and the social media.
Emerging Markets and U.S. Horizontal Merger Guidelines: A Turkish Competition Law Perspective
Journal of Competition Law and Economics, 2014
Predicting potential welfare effects of actual and hypothetical merger proposals in the Turkish privatization program
METU Studies in Development, 2006
Antitrust economists routinely use simulation models to predict the price effect of a transaction... more Antitrust economists routinely use simulation models to predict the price effect of a transaction or agreement that involves collective pricing and/or collective profit maximization, such as a merger. Proportionality-Calibrated Almost Ideal Demand System ( ...

International Conference on Policy Modeling, 2003
Antitrust economists routinely utilize simulation models to predict the price effect of a transac... more Antitrust economists routinely utilize simulation models to predict the price effect of a transaction or agreement that involves collective pricing and/or collective profit maximization, such as a merger. Proportionality-Calibrated Almost Ideal Demand System (PCAIDS) model is a variant of the Almost Ideal Demand System (AIDS) model used to locally approximate a demand system for a differentiated-product market where the competitors are engaged in Bertrand conduct. PCAIDS model exploits the independence of irrelevant alternatives (IIA) assumption to simulate firms' (collective or unilateral) pricing conduct even where only a few pieces of market-level and firm-level information are available. We apply this model to actual and hypothetical proposed merger cases in Turkey, both as a market test and to predict the unilateral price increase effect of each transaction. We also calculate the minimum level of marginal cost savings that the merging firms would need, in order to maintain post-merger prices at pre-merger levels.

ERN: Regulation (IO) (Topic), 2018
On September 4, 1996, the two largest office superstore chains in the United States, Office Depot... more On September 4, 1996, the two largest office superstore chains in the United States, Office Depot and Staples, announced their agreement to merge. Seven months later, the Federal Trade Commission voted 4 to 1 to oppose the merger on the grounds that it was likely to harm competition and lead to higher prices in “the market for the sale of consumable office supplies sold through office superstores.” The merging parties chose to contest the FTC’s actions in court. On June 30, 1997, after a seven-day trial, Judge Thomas F. Hogan of the U.S. District Court for the District of Columbia agreed with the FTC and granted a preliminary injunction, effectively dooming the merger. Staples broke new ground in terms of both the economic theory and the type of evidence presented at trial in an antitrust case. The antitrust enforcement agencies had traditionally focused on the increased probability of collusion following a merger as the primary theoretical underpinning for merger policy. In contras...
Mergers in currently or formerly regulated industries are usually scrutinized by overseeing agenc... more Mergers in currently or formerly regulated industries are usually scrutinized by overseeing agencies. The relative spread between the merging parties' stock prices generally indicates the financial market's estimate of the probability that the merger will be completed successfully. Movements in the stock market prices of their competitors in reaction to changes in this probability may provide predictions of the direction and magnitude of the potential competitive effects; but there may be alternative explanations. We discuss typical scenarios and analyze the merger attempt between WorldCom and Sprint, two of the largest U.S. long-distance telephone carriers, as an example.
Competition and efficiency in the U.S. managed healthcare industry /
N. A. , 1995
Thesis (Ph. D.)--Cornell University, May, 1995. Includes bibliographical references (leaves 136-1... more Thesis (Ph. D.)--Cornell University, May, 1995. Includes bibliographical references (leaves 136-139).

DESCRIPTION In recent years the Antitrust authorities in the U.S. and EU have been addressing the... more DESCRIPTION In recent years the Antitrust authorities in the U.S. and EU have been addressing the issues involving non-horizontal mergers, which include vertical and conglomerate mergers, including complementary products mergers. The EU commissioned two reports on the economic knowledge about these mergers, totaling over 500 pages. This work has not recognized what we analyze here. Complementary products mergers are guided by the intuition behind Cournot’s complementary monopoly merger analysis. Pre merger there is “double marginalization”; merger leads to lower prices. We show how tenuous this intuition is if applied to oligopolists. We start with Merger Guidelines and three statements from antitrust authorities. We formalize these as theoretical propositions about such mergers. The propositions are: 1) Cournot effects will lower prices; 2) Complementary products mergers will never lead to higher prices (barring specific perverse effects); 3) if these mergers lead to mixed bundling...
Frederick R. Warren-Boulton served as an expert witness for the FTC in this case. Serdar Dalkir c... more Frederick R. Warren-Boulton served as an expert witness for the FTC in this case. Serdar Dalkir contributed to the economic analysis and the preparation of the expert testimony. Thanks are also due to Stephen Silberman, Robert Levinson, Melvin Orlans, James Fishlein, and Daniel Hoskin for helpful comments on earlier drafts.

The recent merger between US Airways and American Airlines was approved by federal and state anti... more The recent merger between US Airways and American Airlines was approved by federal and state antitrust authorities, after the merging parties agreed to divest slots and gates at certain “constrained” airports to low cost carriers. By analyzing the stock-market returns of rival airlines, we find some evidence that stock market investors anticipated anticompetitive effects from this merger. The economics literature offers many reasons why such stock-market event studies should not be used to infer competitive effects from mergers. For example, abnormal returns for rivals might arise for reasons unrelated to competitive harms, such as when a merger changes expectations that one or more rivals will be “in play” (i.e., a potential future acquisition target). However, we argue that, for certain cases and conditions, event studies can inform a competition analysis, and that the US Airways – American merger might well be one such case.

Efforts that come close to discovering a cartel but stop short of a positive identification may i... more Efforts that come close to discovering a cartel but stop short of a positive identification may in fact reinforce a cartel rather than break it. Once discovered, cartels must be punished with utmost severity. Half-hearted punishments and “mere talk” against cartel activity may also end up strengthening a cartel. When a cartel member is unable to verify with certainty whether the other members are colluding, it may employ a decision rule that depends on its prior belief that the other firms are cheating. Briefly stated, prior mistrust raises the likelihood of a cartel breakdown. When the competition agency
initiates investigation about cartel activity, it will increase the firms’ level of certainty that there is little or no cheating. This effect can only be counterbalanced with sufficiently high fines. A positive identification of cartel activity not followed by a
sufficiently large punishment will only act as an external reinforcement mechanism for the cartel. In fact, the cartel itself would find it difficult to create an equally efficient
reinforcement mechanism. This kind of a competition policy reduces the competition authority into an agency whose only function is to ensure cartel formation and sustainability, as well as effective, efficient and costless maintenance of collusion. The
Turkish cement cartel is discussed as a real-life example of these theoretical points. It is argued that enabling and encouraging harmed purchasers or sellers to collect damages
from the cartel participants through private legal action can strengthen the deterrent effect of the Competition Authority’s anti-cartel enforcement actions.

Başta Türk rekabet hukuku olmak üzere, dünya çapında birçok rekabet hukuku rejimini ciddi şekilde... more Başta Türk rekabet hukuku olmak üzere, dünya çapında birçok rekabet hukuku rejimini ciddi şekilde etkileme potansiyeline sahip ABD Yatay Birleşmeler Rehberi, 19 Ağustos 2010 tarihi itibariyle ABD’de yürürlüğe girmiştir. 1992 yılından günümüze kadar olan ABD yoğunlaşma rejimi uygulamasında karşılaşılan zorluklar ve yenilikleri yansıtan bu yeni rehber, eski rehbere oranla birçok alanda ciddi değişikliklere gitmektedir. Yeni rehberin tamamına bakıldığında, iktisadi analizin birleşme değerlendirmelerinde daha da önemli bir rol oynayacağına yönelik olarak açık sinyaller gözlemlenmektedir. Yoğunlaşma kontrolü bakımından bazı ciddi yenilikler getiren söz konusu rehberin incelenmesinin, Rekabet Kurumu’nun gelecekte karşılaşabileceği birtakım hususlar bakımından aydınlatıcı nitelikte olduğu düşünülmektedir. Kaleme alınan bu çalışma, önce eski rehberin özet bir fotoğrafını çekmeye, daha sonra da yeni rehber ile getirilen yeni iktisadi yaklaşımı masaya yatırmaya yöneli değerlendirmeler içermektedir. Eski rehber ile yeni rehber arasındaki bu karşılaştırmanın amacı, getirilen yeni değişikliklerin yoğunlaşma rejimi açısından yeni bir dönemin başlangıcı olup olmayacağı hususuna ışık tutmak ve Türk rekabet hukuku rejimi bakımından da önem taşıyabilecek olan bu hususu tartışmaya açmaktır.
US Horizontal Merger Guidelines, which have the potential to significantly affect – particularly-Turkish competition law as well as many competition law regimes across the world, came into force as of August 19, 2010. This recent guidelines, which reflect the difficulties met and developments occurred with respect to the US concentration regime implementation since 1992, contain significant changes compared to the old guideline. Considering the new guidelines as a whole, clear signals are given that economic analyses will play a bigger role during merger evaluation. We believe that the analysis conducted on the new guidelines that contain important changes in terms of merger control will be highly informative on certain issues that the Competition Authority might come across in the future. This study contains evaluations that initially aim to outline in brief the old guidelines and than analyze in detail the new economic approach set forth by the new guideline. The purpose of this comparison between the old and the new guidelines is to shed a light on whether the new changes will be interpreted as a new era in terms of concentration regime as well as to open to discussion this issue that is important in terms of Turkish competition law regime.

Developed economies have historically been a model for emerging market economies, particularly in... more Developed economies have historically been a model for emerging market economies, particularly in the development and enforcement of competition laws. Modifications to competition law rules in developed economies, however, may not always be practical for emerging market economies to adopt. Insufficient knowledge, experience, and power of competition law authorities in emerging markets require a structure with greater legal certainty rather than one that provides a wide berth for interpretation. This article provides an overview of some of the significant developments in the 2010 U.S. Horizontal Merger Guidelines from an emerging market perspective. While taking into consideration the general characteristics of emerging market countries, the treatment of four specific topics under the new Guidelines will be scrutinized from a law and economics perspective: market definition, market shares and market concentration, market entry, and coordinated effects. This article also delves into discussions of Turkish competition law matters, as an example of emerging merger regime models, with respect to each of the four areas of discussion.

United States antitrust analysis of mergers has recently focused on simulating the “unilateral” (... more United States antitrust analysis of mergers has recently focused on simulating the “unilateral” (e.g., noncooperative Nash) effects of mergers. We develop a model to simulate the unilateral price increase from a merger in an auction market. We illustrate our results in the context of hospital mergers in the U.S. We argue that these mergers will typically be of the type in which unilateral action (not collusion) is most likely and calibrate our simulations to some known parameters from these markets. We simulate the price increases in the model and then compare them to those suggested by analytically simpler models that do not fully account for the change in the cost distributions resulting from a merger. The simulation results suggest that the unilateral price increases predicted by our model are modest in general even for three and four firm markets. The price effects predicted by our model, moreover, are only a fraction of those suggested by analytically simpler symmetric auction models. We also simulate the efficiency effects of such mergers in the absence of technological efficiency gains. It is shown that mergers can lead either to more asymmetry, with some efficiency costs due to changes in strategic interactions, or to more symmetry with efficiency gains. These costs and gains are demonstrated to be “small,” and all results suggest that moderate technological gains from merger would outweigh the unilateral strategic effects of these mergers.

Antitrust economists routinely utilize simulation models to predict the price effect of a transac... more Antitrust economists routinely utilize simulation models to predict the price effect of a transaction or agreement that involves collective pricing and/or collective profit maximization, such as a merger. Proportionality-Calibrated Almost Ideal Demand System (PCAIDS) model is a variant of the Almost Ideal Demand System (AIDS) model used to locally approximate a demand system for a differentiated-product market where the competitors are engaged in Bertrand conduct. PCAIDS model exploits the independence of irrelevant alternatives (IIA) assumption to simulate firms’ (collective or unilateral) pricing conduct even where only a few pieces of market-level and firm-level information are available. We apply this model to actual and hypothetical proposed merger cases in Turkey, both as a market test and to predict the unilateral price increase effect of each transaction. We also calculate the minimum level of marginal cost savings that the merging firms would need, in order to maintain post-merger prices at pre-merger levels.
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Papers by Serdar A . K . A . İ S M A İ L S E R D A R Dalkir
initiates investigation about cartel activity, it will increase the firms’ level of certainty that there is little or no cheating. This effect can only be counterbalanced with sufficiently high fines. A positive identification of cartel activity not followed by a
sufficiently large punishment will only act as an external reinforcement mechanism for the cartel. In fact, the cartel itself would find it difficult to create an equally efficient
reinforcement mechanism. This kind of a competition policy reduces the competition authority into an agency whose only function is to ensure cartel formation and sustainability, as well as effective, efficient and costless maintenance of collusion. The
Turkish cement cartel is discussed as a real-life example of these theoretical points. It is argued that enabling and encouraging harmed purchasers or sellers to collect damages
from the cartel participants through private legal action can strengthen the deterrent effect of the Competition Authority’s anti-cartel enforcement actions.
US Horizontal Merger Guidelines, which have the potential to significantly affect – particularly-Turkish competition law as well as many competition law regimes across the world, came into force as of August 19, 2010. This recent guidelines, which reflect the difficulties met and developments occurred with respect to the US concentration regime implementation since 1992, contain significant changes compared to the old guideline. Considering the new guidelines as a whole, clear signals are given that economic analyses will play a bigger role during merger evaluation. We believe that the analysis conducted on the new guidelines that contain important changes in terms of merger control will be highly informative on certain issues that the Competition Authority might come across in the future. This study contains evaluations that initially aim to outline in brief the old guidelines and than analyze in detail the new economic approach set forth by the new guideline. The purpose of this comparison between the old and the new guidelines is to shed a light on whether the new changes will be interpreted as a new era in terms of concentration regime as well as to open to discussion this issue that is important in terms of Turkish competition law regime.