Post on 02-Mar-2018
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Market Size and Scale Effects
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LEONTIEF PARADOX
THE LEONTIEF PARADOX: US EXPORTS ARE LESS
!APITAL"INTENSI#E THAN US IMPORTS!
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Several reasons
!$%ntin& t'e La($%r $f t'e i)*$rts as if it +as *r$d%cedin t'e US,
Pr$d%cti-it.
Different c$)(inati$ns $f fact$rs
Ot'er E/*lanati$ns
Nat%ral Res$%rces
H%)an !a*ital Li)itati$ns in t'e anal.sis 0Lea)er1
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From the Neo-classic to the New trade Theor
Evidence that did not it the "OS model# Le$ntief Parad$/2
M$st trade Fl$+s +ere 3et+een De-el$*ed !$%ntries
+it' Si)ilar fact$r end$+)ents2 Redistri(%ti$n Effects did n$t f$ll$+ed t'e St$l*er"
Sa)%els$n *redicti$ns 0%ntil t'e 45678s12
Ad9%st)ent !$sts +ere l$+er t'an e/*ected
Si)%ltane$%s e/c'an&es $f &$$ds $f t'e sa)e sect$r
Intra"ind%str. trade,
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Te$rias alternati-as
Linder M$del$ (asead$ na *r$c%ra re*resentati-a
M$del$s tecn$l;&ic$s l$caliza?@$ da *r$d%?@$ e es*ecializa?@$
Ec$n$)ias de Escala> diferencia?@$ d$ *r$d%t$ e c$)=rci$ intra"
ind%strial
M$del$s *eriferia centr$
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Tec'n$l$&ical
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Tec'n$l$&ical (. s$)e fir)s in t'e i)*$rtin& c$%ntr.> as a
likel. c$)*etit$r f$r t'eir *r$d%cts, domestic reaction lag,+'ic' is t'e ti)e reC%ired f$r all
fir)s in t'e i)*$rtin& c$%ntr. t$ (ec$)e a+are $f t'e
c$)*etiti$n fr$) t'e ne+ &$$d,
learning period,+'ic' is t'e ti)e reC%ired f$r t'ei)*$rtin& c$%ntr.s fir)s t$ learn t$ *r$d%ce t'e ne+
&$$d> and act%all. *r$d%ce and (e&in sellin& it $n t'e
d$)estic )arket,
Acc$rdin& t$ P$sner> t$ &et t'e t$tal net la&> $ne s'$%lds%(tract fr$) t'e i)itati$n la& a demand lag> t'at is> t'e
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Tec'n$l$&ical t$ &et t'e t$tal net la&> $ne s'$%ld
s%(tract fr$) t'e i)itati$n la& a demand lag> t'at is> t'eti)e ela*sin& (et+een t'e intr$d%cti$n $f t'e ne+ &$$d in
t'e inn$-atin& c$%ntr. and t'e a**earance $f a de)and f$r
it in $t'er c$%ntries 0s$)e ti)e ela*ses (ef$re t'e $t'er
c$%ntries c$ns%)ers c$)e t$ kn$+ $f t'e ne+ &$$d andacC%ire a taste f$r it1,
I)*$rts $f t'e ne+ &$$d +ill t'eref$re take *lace $nl. in
t'e *eri$d $f ti)e res%ltin& fr$) t'e difference (et+een
t'e i)itati$n la& and t'e de)and la&,
Ot'er iss%es *r$tecti$n $f tec'n$l$&.> *atents> ind%strial
secrec.2
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PRODU!T LIFE !!LE THEOR
T'is t'e$r. +as de-el$*ed in 45B7s (. Ra.)$nd #ern$n
$f t'e Har-ard 3%siness Sc'$$l, Acc$rdin& t$ 'i)> L$cati$n $f t'e *r$d%cti$n s'ifts as
*r$d%cts )$-e t'r$%&' t'eir life c.cle,
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PRODU!T LIFE !!LE THEOR
T'ere are sta&es in Pr$d%ct Life c.cle:"
Intr$d%ct$r. Sta&e
Mat%rin& Sta&e
Standardized *r$d%ct Sta&e
Declinin& Sta&e
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PRODU!T LIFE !!LE THEOR
INTRODU!TOR STA
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PRODU!T LIFE !!LE THEOR
MATURIN< STA
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PRODU!T LIFE !!LE THEOR
STANDARDIGED PRODU!T STA
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"
Pr$d%ct life"c.cle T'e$r.R,#ern$n 045BB1
2 trade t'e$r. '$ldin& t'at a c$)*an. +ill (e&in
(. e/*$rtin& its *r$d%ct and later %ndertake
f$rei&n direct in-est)ent as t'e *r$d%ct )$-es
t'r$%&' its lifec.cle As *r$d%cts )at%re> ($t' l$cati$n $f sales and
$*ti)al *r$d%cti$n c'an&es
Affects t'e directi$n and fl$+ $f i)*$rts ande/*$rts
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"
Pr$d%ct life c.cle t'e$r.
Fi& ,
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"
3 Explicaes para a teoria do ciclo do produto
Tecnol&$ica
Linder
Neo-cl'ssica (")O)S*Pri)eira fase intensi-a e) ca*ital '%)an$Se&%nda fase ca*ital intensi-a !$) tecn$l$&ia dif%ndida fact$r
deter)inante> e) al&%ns cas$s *assa a sera*enas $ c%st$ da )@$ de $(ra (ai/$ssalri$s
"
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"
The Product Cycle and Trade
Implications
Increased em%hasis on technolo$+sim%act on %rod,ct cost
E%lained international investment
LimitationsM$st a**r$*riate f$r tec'n$l$&."(ased
*r$d%ctsS$)e *r$d%cts n$t easil. c'aracterized (.
sta&es $f )at%rit.M$st rele-ant t$ *r$d%cts *r$d%ced t'r$%&'
)ass *r$d%cti$n
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!$)=rci$ c$) ec$n$)ias de Escala
Ec$n$)ias de Escala e c$ncentra?@$ da Pr$d%?@$
M$del$ de c$nc$rrKncia M$n$*$lista
3E"!OMP dia&ra)
M$del$s
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Plan $f Talk
EU inte&rati$n and ind%strial restr%ct%rin&: O-er-ie+
T'e$retical t$$ls: t'e 3E"!OMP dia&ra)
EU inte&rati$n and ind%strial restr%ct%rin& Fir) size> efficienc.> n%)(er $f fir)s and *rice"c$st )ar&ins
elfare effects 0s'$rt r%n> l$n& r%n1
EU *$licies Effects $f antic$)*etiti-e (e'a-i$%r and state aid
EU c$)*etiti$n *$lic. 0state aid and antic$)*etiti-e (e'a-i$%r1
S$)e e)*irical facts $n EU )arket inte&rati$n and
ind%strial restr%ct%rin&
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EU Inte&rati$n and Ind%strial Restr%ct%rin&
Market size *ercei-ed t$ (e i)*$rtant since t'e (e&innin&
$f E%r$*ean inte&rati$n T'e c$%ntries $f E%r$*e are t$$ s)all t$ &i-e t'eir *e$*les t'e
*r$s*erit. t'at is n$+ attaina(le and t'eref$re necessar., T'e.
need +ider )arkets, 0ean M$nnet> 451
T'e ec$n$)ic l$&ic Man. ind%stries c'aracterised (. increasin& ret%rns t$ scale
S)all '$)e )arkets +ill $nl. s%stain a fe+ %nc$)*etiti-e fir)s
Market inte&rati$n +ill raise )arket size> increase c$)*etiti$n and
f$rce fir)s t$ &r$+ (i&&er and )$re efficient: Li(eralisati$n
de"fra&)entati$n *r$"c$)*etiti-e effect ind%strialrestr%ct%rin& 0-ia MA> (ankr%*tc. etc,1
Res%lt: fe+er> (i&&er> )$re efficient 0)an%fact%rin&1 fir)s facin&
)$re effecti-e c$)*etiti$n fr$) eac' $t'er
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Intra-ind,str trade
Several .odels#
Reci*r$cal D%)*in& 03rander1 H$)$&ene$%s
*r$d%cts,
M$n$*$listic !$)*etiti$n 0Qr%&)an> Lancaster1
Hel*)an and Qr%&)an,
#ertical Differentiati$n 0Fal-e.1
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T'e$retical T$$ls: T'e 3E"!OMP
Dia&ra)
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Preli)inaries
Recall fr$) intr$d%ct$r. ec$n$)ics
M$n$*$lies c'ar&e 'i&'er *rices> *r$d%ce less $%t*%t and )ake'i&'er *r$fits t'an *erfectl. c$)*etiti-e )arkets
As t'e n%)(er $f fir)s increases 0d%$*$l.> $li&$*$l.1> *rices
and *r$fits decrease and $%t*%t increases
I)*$rtant c'aracteristic: *rice"c$st )ar&ins )ark"%*s Mark"%* *rice )ar&inal c$st
Hi&'est %nder )$n$*$l.> zer$ +it' *erfect c$)*etiti$n
Man. ind%stries $*erate %nder fi/ed c$sts and increasin&
ret%rns t$ scale 0IRS1 Fir)s need t$ )ake initial in-est)ent 0F1
Means t'at a-era&e c$sts decline as +e *r$d%ce )$re 0initial
in-est)ent s*read $-er )$re %nits1IRS
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IRS 0+it' c$nstant M!1
A!
M! c
AC, MC
/ /
A
B
A! F/ c
A! F/ c
T$tal -s, a-era&e c$sts:
T! F /Vc
A! T!/ F/ c
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T'e 3E"!OMP Dia&ra)
All$+s %s t$ find t'e eC%ili(ri%) n%)(er $f fir)s> )ark"
%*s> *rices and $%t*%t *er fir) in a &i-en )arket !an (e %sed t$ anal.se +'at 'a**ens t$ t'ese -aria(les as
+e increase )arket size and c$)*etiti$n
Ele)ents
T'e c$)*etiti$n c%r-e 0!OMP1 T'e (reak"e-en c%r-e 03E1
De)and and c$st dia&ra)s
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T'e !OMP !%r-e
Market (ec$)es )$re
c$)*etiti-e as n%)(er$f fir)s increase
Fir)s c'ar&e l$+er
)ark"%*s 0W1 as
c$)*etiti$n &ets
t$%&'er
!OMP"c%r-e
d$+n+ard sl$*in&
Mark-up ()
!OMPc%r-e
n
)$n$
d%$
n4 nNumber
of firms
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T'e 3E"!%r-e
Fir)s 'a-e t$ c$-er fi/ed
c$st F Earn W *"M! f$r e-er.
%nit s$ld 0ass%)e M!
c$nstant1
T'e fe+er fir)s> t'e )$re
eac' $ne can sell f$r &i-en
)ark"%*
T'e 'i&'er t'e )ark %*
t'e (i&&er t'e n%)(er $f
fir)s t'at can e/ist in a)arket
3E"c%r-e %*+ard
sl$*in&
Mark-up
(i.e., p-MC)
$
3E
n$
B A
n n
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T'e 3E"!%r-e: Details
Sales
per firm
A!
price
Total
sales!$
De)and c%r-e
Mark-up
(i.e., p-MC)
$
/$!$n$
M!
MC, AC
3E
n$
A!Y*$
A!Z*$
*$=$M!
/!$n /!$n
A
B
B A*$
A!$*$
n n
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3E !OMP !%r-es T$&et'er
S'$+s eC%ili(ri%)
n and W Fir)s ne-er $ff t'e
!OMP"c%r-e
0s%($*ti)al *r$fits1
!an (e $ff t'e 3E"c%r-e in t'e s'$rt"
r%n 0(%t )akin&
l$sses[1
Mark-up ()
!OMP
c%r-e
3E 0(reak"e-en1 c%r-e
n Number
of firms
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T'e F%ll 3E"!OMP Dia&ra)
Sales
per firm
A!
rice
Total
sales
De)and c%r-e
Number
of firms
Mark-upAC, MC
/ !n
!OMP
3E
n
!
!"*!" !"
*
M!
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EU Inte&rati$n Ind%strial
Restr%ct%rin&
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Effects $f EU Inte&rati$n
F$r si)*licit.> ass%)e
M$-e fr$) n$"trade sit%ati$n 0a%tark.1 t$ f%ll inte&rati$n T+$ s.))etric c$%ntries
Effects identical f$r ($t' c$%ntries 0in effect $nl. $ne )arket[1
T+$ effects
Market size d$%(les 0t+ice as )%c' de)and1 N%)(er $f c$)*etit$rs als$ d$%(les
In 3E"!OMP dia&ra): 3E c%r-e s'ifts $%t+ards
i ' i
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3E !OMP !%r-e +it' Inte&rati$n
Number
of firms
Mark-up
!OMP
3EFT
3E
nnn
!"
A
4
!#
A
At initial )ark"%*> )arket c$%ld
s%stain n fir)s 0*$int 41 3%t )ark"%*s decrease
i))ediatel. d%e t$ t$%&'erc$)*etiti$n
Initiall. at *$int A> fir)s )akel$sses
In t'e l$n&"r%n +ill )$-e al$n&!OMP t$ *$int E 0restr%ct%rin&-ia MA> (ankr%*tc. etc,1
T$tal n%)(er $f fir)s d$+n> )ark"%*s sli&'tl. %* a&ain
Mark"%*s l$+er t'an (ef$re (%t*r$fita(ilit. rest$red 0re)ainin&fir)s lar&er> )$re efficient1
E/cl%si-e Territ$ries
State Aid I State Aid II
ff i l d
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Effects $n *rices> sales and a-era&e $%t*%t
Sales
per firm
A!
price
Total
sales
De)and c%r-e
Number
of firms
Mark-up (p-c)AC, MC
/
!OMP
3EFT
3E
/
nn
!"
!#
! !
!"
!#
M!
*
*
*
*
!#
!"
lf ff 0 1
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elfare Effects 0L$n&"R%n1
Sales
per firm
A!
price
Total
sales
De)and c%r-e
Number
of firms
Mark-upAC, MC
/
!OMP
3EFT
3E
/
nn
!"
!#
! !
!"
!#
M!
*
*
*
*
!#
!"
C
E-idence
E i Eff f I i S
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Ec$n$)ic Effects $f Inte&rati$n: S%))ar.
Ec$n$)ic inte&rati$n tri&&ers ind%strial restr%ct%rin&
+'ic' leads t$ fe+er (%t (i&&er and )$re efficient fir)s Ec$n$)ic l$&ic
Inte&rati$n increases )arket size (%t als$ c$)*etiti$n
SC%eezes *rice"c$st )ar&ins> *rices and *r$fits
T'e *r$fit sC%eeze tri&&ers e/it $f fir)s 0ind%strial restr%ct%rin&1 Pr$fita(ilit. rest$red t'r$%&' 0*artial1 rec$-er. $f )ark"%*s and
increase in efficienc. 0lar&er fir)s IRS1
L$n&"r%n +elfare &ains (%t s'$rt"r%n ad9%st)ent can (e
c$stl. 09$( l$sses> rel$cati$n $f +$rkers 21
E i Eff f I i S
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Ec$n$)ic Effects $f Inte&rati$n: S%))ar.
T+$ i))ediate C%esti$ns:
D$nt fir)s 'a-e incenti-es t$ en&a&e in anti"c$)*etiti-e)eas%res as *r$fits are sC%eezed\
Since ind%strial restr%ct%rin& can (e *$liticall. *ainf%l> isnt t'ere
a dan&er t'at &$-ern)ents +ill tr. t$ kee* )$ne."l$sin& fir)s in
(%siness -ia s%(sidies and $t'er *$licies\
Ans+er t$ ($t' C%esti$ns is ]es
EU re&%lati$ns $n state aid and c$)*etiti$n *$lic. ai)ed
at c$%nter(alancin& t'is
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EU P$licies $n State Aid and
!$)*etiti$n
T' E i f A i ! i i 3 ' i
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T'e Ec$n$)ics $f Anti"!$)*etiti-e 3e'a-i$%r
Ec$n$)ic inte&rati$n decreases *rices and )ark"%*s and
*%ts *ress%re $n fir)s *r$fits Restr%ct%rin& is $ne s$l%ti$n (%t can (e *ainf%l in t'e
s'$rt"r%n
Fir)s te)*ted t$ sta(ilise *rices -ia c$ll%si$n and$t'er f$r)s $f anti"c$)*etiti-e (e'a-i$%r
In t'e 3E"!OMP dia&ra) 0fi&%re1 !$ll%si$n s'$+s as $%t+ard s'ift $f !OMP"c%r-e
Increases )ark"%*s and all$+s lar&er n%)(er $f fir)s t$ sta. int'e )arket 0(%t s)aller and less efficient1
Red%ces +elfare increase d%e t$ )arket inte&rati$n N$te: c$ll%si$n can arise (ef$re (%t )arket inte&rati$n
)a. )ake it )$re likel.
Eff t f ! ll i
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Effects $f !$ll%si$n
price
Total
sales
De)and c%r-e
Numberof firms
Mark-up
!OMP
3EFT
*3
Perfect
c$ll%si$n
Partial
c$ll%si$n
!#
n3
)$n$
B
n4 n
*)$n$
!#*
B
!3
A
F f A ti ! titi 3 ' i
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F$r)s $f Anti"!$)*etiti-e 3e'a-i$%r
E/a)*les $f anti"c$)*etiti-e (e'a-i$%r: cartels> e/cl%si-e
territ$ries !artels
$in %* +it' $t'er fir)s> set )$n$*$l. *rice and s*lit *r$d%cti$n
C%$tas
E/a)*les: OPE!> ]#ita)in !artel
E/cl%si-e territ$ries S*lit %* )arket &e$&ra*'icall.> e,&, d$)estic fir)s $nl. sell at
'$)e> f$rei&n fir)s $nl. in t'eir )arket 03E"!OMP\1
E/a)*le: Nintend$
T' E i f St t Aid
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T'e Ec$n$)ics $f State Aid
An$t'er +a. $f *re-entin& restr%ct%rin& is t'r$%&'
&$-ern)ent s%(sidies f$r l$ss")akin& fir)s In 3E"!OMP dia&ra): re)ain at *$int A
!$)*etiti$n increases
Mark"%*s> *rices and *r$fits d$+n (%t fir)s c$)*ensated f$r
l$sses L$$k at
Size $f reC%ired s%(sid.
elfare i)*act
Si f S ( id
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Size $f S%(sid.
Pre"inte&rati$n: fi/ed c$sts $*eratin& *r$fit area a$b
P$st"inte&rati$n: $*eratin& *r$fit b$c Since n%)(er $f fir)s and fi/ed c$sts *er fir) %nc'an&ed:
3reake-en s%(sid. a("("c a"c
rice
Total
sales
De)and c%r-e
Number
of firms
Mark-up
!OMP
3EFT
n
*
! !A
*A
a
b c
!"
A A
!"
3E
AUT
lf Eff t f S ( id
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elfare Effects $f S%(sid.
!'an&e *r$d%cer s%r*l%s zer$ 0a(n$r)al *r$fit is zer$ *re *$st1,
!'an&e c$ns%)er s%r*l%s ad, S%(sid. c$st a"c,
T$tal i)*act 0ad1 0a"c1 d c
riceDe)and c%r-e
Number of
firms
Mark-up!OMP
3EFT
n
*
! !
A
*Aa
b c
!"
A A
!"
d
S ( idi S
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S%(sidies: S%))ar.
elfare &ains fr$) ]li(eralisin& s%(sidisin&, 3%t:
L$+er t'an fr$) li(eralizati$n and restr%ct%rin& in t'e l$n&"r%n0)$re c$)*etiti$n (%t fir)s d$nt (ec$)e )$re *r$d%cti-e1
Ne&ati-e l$n&"r%n effects as fir)s &et %sed t$ state aid and a-$id
$r *$st*$ne all f$r)s $f restr%ct%rin&
Als$ dan&er $f ]%nfair c$)*etiti$n
it' restr%ct%rin&> t$tal n%)(er $f fir)s ^fr$) n t$ n 0fi&%re1
3%t n$t clear +'$se c$%ntr.s fir)s +ill s%r-i-e
If I s%(sidise l$n& en$%&'> $nl. t'e $t'er c$%ntr.s fir) +ill e/it
In $%r si)*le e/a)*les> t'is is a l$ss")akin& strate&. (%t
D$esnt take int$ acc$%nt s'$rt"r%n l$sses 0resistance fr$)%ni$ns> ind%str. l$((. &r$%*s etc,1
Ec$n$)ics $nl. *art $f t'e *ict%re 0e,&, E%r$*ean Airlines1
EU !$)*etiti$n P$lic
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EU !$)*etiti$n P$lic.
L$$k at EU *$lic. t'at c$nstrains anti"c$)*etiti-e (e'a-i$%r
0
*ri-ate act$rs1 and s%(sidies 0
&$-ern)ents1 EU f$%nders a+are t'at E%r$*ean inte&rati$n +$%ld tri&&er
c$ns$lidati$n and als$ atte)*ts t$ resist it 0see e,&, S*aak
Re*$rt> 45B1
!$ncern t'at s$)e nati$ns )i&'t ]c'eat and t'is +$%ld%nder)ine *$litical s%**$rt f$r inte&rati$n
Treat. $f R$)e De)ands ]instit%ti$n $f a s.ste) ens%rin& t'at c$)*etiti$n in t'e
c$))$n )arket is n$t dist$rted 0Art, f1
P%ts t'e E%r$*ean !$))issi$n in c'ar&e +it' n$ *$ssi(ilit. $f -et$
(. )e)(er states[ 0$nl. E%r$*ean !$%rt can $-err%le1
EU !$)*etiti$n P$lic.
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EU !$)*etiti$n P$lic.
!$))issi$n 'as c$nsidera(le *$+er t$ in-esti&ate
(reac'es $f EU c$)*etiti$n la+ !an f$rce c$)*anies t$ 'and $-er d$c%)ents
!an $rder $n"site ins*ecti$ns +it'$%t *ri$r +arnin& 0]da+n raids1
it' c$%rt $rder> can ins*ect '$)es $f c$)*an. *ers$nnel
!an enf$rce c$)*etiti$n la+ (. i)*$sin& fines $n fir)s Anti"c$)*etiti-e c$nd%ct: %* t$ 47_ $f fir)s +$rld+ide t%rn$-er
!an $rder f%ll re*a.)ent $f s%(sidies dee)ed ille&al
EU La+ $n Anti !$)*etiti-e 3e'a-i$%r
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EU La+ $n Anti"!$)*etiti-e 3e'a-i$%r
Article 64 $f t'e Treat. $f R$)e f$r(ids *ractices t'at
*re-ent> restrict $r dist$rt c$)*etiti$n 0cartels> e/cl%si-eterrit$ries> -ertical a&ree)ents 21
3%t !$))issi$n can &rant e/e)*ti$ns Indi-id%al $r (l$ck e/e)*ti$ns
E/a)*les: Tec'n$l$&. transfers> RD a&ree)ents> )$t$r -e'icles Art, 6 restricts a(%se $f a d$)inant )arket *$siti$n 0e,&,
Micr$s$ft and ind$+s Media Pla.erfine $f `5J
)illi$n1
!$ntr$l $f Mer&ers and Take$-ers N$ s*ecific *r$-isi$ns $n )er&ers in Treat. $f R$)e (%t e/*licit
r%les since t'e late 4567s 0in antici*ati$n $f Sin&le Market1
!$))issi$n +ei&'s anti"c$)*etiti-e effects -s, efficienc. &ains
EU P$licies $n State Aid
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EU P$licies $n State Aid
Treat. $f R$)e (ans state aid t'at *r$-ides fir)s +it' an
%nfair ad-anta&e and dist$rts c$)*etiti$n !$))issi$n is in c'ar&e $f enf$rce)ent> +it' *$+er t$
f$rce re*a.)ent $f ille&al state aid fr$) )e)(er states[
]State aid can take t'e f$r) $f &rants> interest relief> ta/
relief> state &%arantees> state *r$-isi$n $f &$$ds andser-ices $n *referential ter)s 2
N%)er$%s e/ce*ti$ns S$cial *$lic. aid> nat%ral disaster aid> ec$n$)ic de-el$*)ent aid
t$ %nderde-el$*ed areas 2
F%rt'er ](l$ck e/e)*ti$ns f$r aid t$ s)all and )edi%)"sized
entre*rises> aid f$r trainin& and e)*l$.)ent 2
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E)*irical Facts $n EU Market
Inte&rati$n Ind%strial Restr%ct%rin&
Ind%strial Restr%ct%rin& in t'e EU
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Ind%strial Restr%ct%rin& in t'e EU
Str$n& increase in MA transacti$ns in )an%fact%rin& ar$%ndi)*le)entati$n $f Sin&le Market 0fi&%re1
S'are $f f$%r lar&est fir)s in t'e EUs t$tal )arket r$se fr$)7,_ t$ ,6_ in 456J"455 +'ile sa)e )eas%re $fc$ncentrati$n fell at t'e nati$nal le-el 0!$))issi$n> 455B1
Ec$n$)etric e-idence (. Allen et al, 045561 s%&&est SMPred%ced *rice"c$st )ar&ins (. _ $n a-era&e 0lar&e -ariati$n
4_ in $ffice )ac'iner. t$ 7,4_ in (re+in&1 elfare effects n$t clear
b O%t*%t V P 0slide 4J1 EU )an%fact%rin& acc$%nts f$r ca, 7_ $f $%t*%t
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MA Transacti$ns> EU Man%fact%rin&
0
500
1000
1500
1986 1988 1990 1992 1994 1996 1998 2000 2002
Domestic Cross-Border
S%))ar. Learnin& O%tc$)es
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S%))ar. Learnin& O%tc$)es
Ec$n$)ic l$&ic linkin& )arket inte&rati$n +it' ind%strial
restr%ct%rin& 0fir) size> n%)(er> *rices1 T'e$retical t$$ls: t'e 3E"!OMP dia&ra)
Pr$cess $f ind%strial restr%ct%rin& after li(eralizati$n
Inte&rati$n defra&)ents )arkets
Markets (i&&er (%t als$ )$re c$)*etiti$n
Price"c$st )ar&ins> *rices and *r$fits sC%eezed
Pr$fita(ilit. rest$red t'r$%&' fir) e/it and increased efficienc. $f
re)ainin& fir)s
M$ti-ati$n f$r c$ll%si$n and state aid ec$n$)ic c$nseC%ences
EU c$)*etiti$n *$licies 0anti"c$)*etiti-e (e'a-i$%r> state aid1
E)*irical e-idence $n EU inte&rati$n