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• Economic Principles of Predatory (Exclusionary) Pricing in the US and in the EU their (mis)Application in Some Recent Competition Law Cases of the European Community Commission and the Court of First Instance

  26-45

  Zoltán Bara

  Views:

  157

  Predatory pricing is one of the most debated issue among the many possibly abusive behaviors of a dominant firm. The general prohibition of the abuse of a dominant power in the competition law is meant
  to render more difficult to use that power but not to disable them to compete. The borderline between a rough but lawful competitive behavior of a dominant firm and the illegal abuse of the market power could sometimes be very narrow. One of that narrow line is associated with the so called predatory pricing or exclusionary pricing. One of the necessary preconditions for predatory pricing is that the firm is required to set the price below costs. But could it be a sufficient condition as well? Before the AKZO-case lawyers and economists seemed to agree that predatory pricing requires a second phase, after the dominant firm successfully got its prey in the first phase, the recoupment phase during which the dominant firm is able the regain all of his former losses occurred in the first phase. Since the AKZO-case, the Commission succeeded to convince Courts of the EU that it would be enough to make probable but not certain that there had to be a recoupment phase but we don’t have to wait until it really happens. Most of the economists still think that predatory pricing is meaningless without recoupment, and what is more important, it would be beneficial to the consumers during the first phase unless there is no certainty of a second phase.

  Journal of Economic Literature (JEL) classifications: K21, L12, L41

• Are business relationships institutions?

  Tibor Mandjak

  Views:

  126

  The question is simple; the answer could be quite complicated. Inter-organisational marketing researchers define business relationships as interactive exchanges between two organisations. Does this mean anything for institutional economists? A business relationship is created by weaving actor bonds, resource ties and activity links. Business relationships exist and change through time. The establishment, development, maintenance, as well as termination of a business relationship all require investments from the participating parties. A business relationship does not exist in an isolated manner, but other market and non-market actors can equally influence it. In reality, numerous other relationships and actors affect business relationships. As a result, these actors indirectly influence business relationships through the change in behaviour of one of the parties within the business relationship. These directly and indirectly affected relationships create a business network. For an organisation business relationships have different functions. External resources needed
  for operation and value creation are fed by them. Value creation for the customer and value sharing with the customer take place in business relationships. They are forms of an organisation’s interdependence. A business relationship is a special form of governance of the partners’ mutual efforts. A business relationship has its own value for each organisation. Each organisation has several business relationships, each with different value. In business markets,
  where buyers are always organisations, the business relationship portfolio is the market itself. Inter-organisational marketing researchers use very different theoretical foundations to study business relationships. Modern contract law based research distinguishes about a dozen norms of behaviour in business relationships. Institutional economic-rooted studies argue that we should use the plural-forms approach (price, authority and trust must be employed together) to explain these very complex phenomena. Research using communication theory concluded that multiple periods of business negotiations were required to develop even primitive norms. The paper concludes with some elements of a possible answer to the title question.

• Possible solutions of the purchasing power parity puzzle, improvements of the theoretical model

  61-78.

  Andrea Szabó

  Views:

  150

  Purchasing power parity (PPP) is one of the most fundamental theories in international economics. However, its empirical validity is still controversial, an issue referred to in the literature as the purchasing power parity puzzle. This paper summarizes the different explanations for the empirical failures of the PPP, and proposes steps for improvements in the theory by focusing on the importance of using appropriate empirical methodology when confirming or rejecting the PPP hypothesis.

  Journal of Economic Literature (JEL) codes: F31, F41