Phelps Centre for the Study of Government & Business

Activities

Activities

Conferences, Seminars, Discussion Groups

  • This annual conference, which began in 1987, invites a small number of leading scholars in the field of industrial organization to UBC to present their research in a workshop-like environment.  In recent years, the conference has focused on current work in competition policy and regulation.  
    Past conference programs:  2019, 2018, 2017, 2016
    A list of past speakers at the Summer Conference can be found here
     

  • The Roundtable is a group of Vancouver-based competition economists and lawyers, some academic and some practitioners, who meet to discuss issues related to competition policy in Canada and elsewhere. The Phelps Centre coordinates the Roundtable, which has frequently welcomed the Commissioner and other senior officials of the Canadian Competition Bureau as guests.

  • Each year, the Phelps Centre works with other Canadian research centres (CIRANO in Montreal, the Rotman Institute for International Business at the University of Toronto and the John Deutsch Institute at Queen’s University) to jointly organize sessions focusing on competition policy and regulation. Information about the CEA Annual Conference can be found here.

  • This annual summer school and conference has been operating since 2006. The summer school offers a number of advanced programs on competition policy and regulation aimed at graduate students, early stage academic and consulting economists, competition authority economists and competition law professionals. The conference is among the leading events of its kind globally, bringing together top competition/regulation economics and law professionals to discuss current research and important policy challenges. The Phelps Centre cooperates with the CRESSE team to facilitate participation by Canadians in these important events. More about CRESSE can be found here.

Supported teaching initiatives

  • This is a graduate level course offered by the Vancouver School of Economics at the University of British Columbia. In certain years, this course focuses on competition policy and regulation with support from the Phelps Centre.

  • This is an MBA course offered by the Sauder School of Business that focuses on the use of public-private partnerships to provide public services (e.g. infrastructure). The course examines the costs and benefits of the P3 approach with a teaching team that includes research faculty from business and engineering, as well as industry professionals. The course draws support from the UBC P3 Project of the Phelps Centre.

  • This course, developed and delivered by Centre Director Tom Ross, is designed as a compressed graduate level course in competition economics. It is offered in partnership with the Strathmore Institute for Public Policy and Governance at Strathmore University Business School in Nairobi, Kenya. The intended audience is university faculty members and graduate students, with training in microeconomic theory and industrial organization, who are interested in learning about competition economics and becoming themselves part of the “training team” developing courses and curricula to prepare students for work in public and private sector organizations focused on competition policy. It is also hoped that faculty members will become engaged in research and advising on competition policy in Kenya as well – as a further part of the development of a competition policy ecosystem in Kenya.

    The course was last offered in 2018 (brochure available here) and is expected to be offered again in 2020.

Sauder School of Business Prediction Markets

The Sauder School of Business Prediction Markets research project generates valuable data that provides insights into market and trader behaviour. In our prediction markets, the ultimate values of the contracts being traded are based on the outcome of political events in Canada such as provincial or federal elections, as well as other select economic or political events. Participants invest their own funds, buy and sell listed contracts, earn profits and bear the risk of losing money. 

Our prediction markets are operated as a not-for-profit venture. Participation in our prediction markets is open to all Canadian residents who are at least 19 years of age. Investments are limited to $1,000 per investor. The method of issuing contracts and making final payoffs on these contracts ensures that we do not realize financial profits or suffer losses. We do not charge any transaction fees. 

Participants learn first-hand about the operation of a financial futures market and, because they have an added incentive to do so, learn more about the political or economic events associated with the contracts.

Visit the Sauder School of Business Prediction Markets website

Simple Merger Simulation Tool

The Merger Simulation is a simple simulation program for teaching, research and policy purposes.

In an attempt to better-predict the effects of proposed mergers in concentrated industries, antitrust authorities and other analysts are showing increasing interest in simulation models. 

These models combine certain assumptions about the nature of competition in the market with some premerger market data to predict the impact of the merger on important variables such as price, consumers' surplus and total welfare.

In an attempt to better-predict the effects of proposed mergers in concentrated industries, competition authorities and other analysts are showing increasing interest in simulation models.  These models combine certain assumptions about the nature of competition in the market with some premerger market data to predict the impact of the merger on important variables such as price, consumers' surplus and total welfare.

We are pleased to make available this simple simulation program for teaching, research and policy purposes.  The program has been developed by Professor Werner Antweiler.  

 

About this simulation program

To simulate a merger, the analyst needs to first make some informed assumptions regarding the

general nature of competition in an industry.  In this program we assume that the products sold by the firms in the market are reasonably homogeneous, so that there is only one price in the market at any one time.  In addition, it is assumed that competition is of the "Cournot" type -- that is, individual firms choose their outputs based upon conjectures regarding the output choices of their rivals, but without believing they can affect those choices.  We assume that the firms find "equilibrium" (i.e. that their conjectures are correct).

An interesting alternative approach, more appropriate for many markets, would be to assume that the products sold are differentiated and that individual firms are free to pick their own prices.  A differentiated-products model, however, requires that the analyst provides more information about the substitutability of every product for every other product in the market.  For a simulation model with these characteristics, please see the reference to more sophisticated simulation models below.   

The Merger Simulation Tool includes some assumptions about the functional forms of demand and costs: it assumes that demand curves are linear and that marginal costs are constant (but not equal across firms).  

 

What data you need to run a simulation?

The analyst interested in simulating a merger with this program needs the following data: 

     (i) the premerger market price (if there are a variety of products in the market a weighted average price might work as a proxy);

     (ii) the number of firms in the market and their market shares -- these shares must sum to 100%.  These must be shares of sales, not capacity.  If there is a fringe of minor firms about which little is known, there are two approaches to consider.  If the sum of their outputs is still a small fraction of total output, they could simply be ignored for the purposes of the simulation.  That is, the market shares are based on output not provided by the fringe and so sum to 100%.  The alternative is to treat the fringe as one firm.

     (iii) total market sales (in dollars, not units)

     (iv) the market elasticity of demand -- if this is not well known, the analyst can experiment with several candidate elasticities.  There is also a feature of the program that allows one to graph the results on price and surplus as a function of different market demand elasticities. One limitation here -- the program will not accept a market elasticity number that is not larger than the largest market share.  For example, if the largest firm in a market had a share of 50%, the program will not accept an elasticity of 0.5 or less.

In addition, this program allows the analyst to incorporate his/her own assumptions about the effects on fixed and marginal costs of the merger.  The analyst is allowed to choose whether the program considers the merged firm to have marginal costs equal to the lowest marginal costs of the merging firms, the highest marginal costs of the merging firms, a weighted (by premerger sales) average of the merging firms' marginal costs, or equal to some number specified by the analyst.  In addition, any anticipated savings in fixed costs can be incorporated.

 

How the program works

Entering the required data is a simple exercise that should take only a couple of minutes.  The program uses the data on market sales and the elasticity of market demand to solve for the market demand function.  Knowing this function and the premerger market shares, the program can infer what individual firms' marginal costs must be, using the first-order conditions from each firm's profit maximization problem.  Once this is done, we have a full model of the market and the program can determine the effect of the merger on price, concentration, consumers' surplus, profits and total surplus.  One caution: the total surplus number does not incorporate any fixed costs, though the change in total surplus does include any allowance for reduced fixed costs provided by the analyst.

For a sample of what the program can do, call up Widgets from the Previous Models file.

To use the Merger Simulation Tool, click here.

 

More sophisticated merger simulation programs can be found at:  

There is an "antitrust" package at CRAN (maintained by US DoJ):

https://cran.r-project.org/web/packages/antitrust/index.html 

with links to the reference manual.  From an R session, using the package is as simple as

R> install.packages("antitrust")

R> library(antitrust)

which automatically downloads the latest version from CRAN and unpacks it.  R itself can be downloaded (at no charge) from CRAN at https://www.r-project.org  and by following the link for your operating system (win/mac/linux).

 

UBC P3 Project

The UBC P3 Project involves the creation of a University of British Columbia entity for the purpose of producing and transferring learning about Public-Private Partnerships (and related procurement modes), in particular as a vehicle for meeting the growing infrastructure needs of Canada and many other countries. The UBC P3 Project is a collaborative, interdisciplinary project undertaken in conjunction with the UBC Department of Civil Engineering.

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  • Contact the Phelps Centre for the Study of Government & Business

  • Get in touch

    +1 604.822.8399 
    jessie.lam@sauder.ubc.ca

    UBC Sauder School of Business 
    Room 449-B, Henry Angus Building 
    2053 Main Mall, Vancouver, BC V6T 1Z2