Bruce Lyons’s research while affiliated with University of East Anglia and other places

Digital firms attract consumers and collect their data by offering service enhancements and data security. These require separate types of investment. In light of the GDPR, data collection now requires explicit consumer consent, i.e. opt-in. This changes the consumer default option and the data provision decision when consumers are loss averse. We examine the consequences for investment. We set out the conditions under which opt-in increases both types of investment and when security comes at the expense of service quality. We further find that most consumer types gain, even when service quality falls.

We analyse the determinants of early settlement between merging parties and the European Commission over remedies that remove concerns of anti-comeptitive e¤ects. This extends the previously narrow range of econometric literature on early settlement. Consistent with the theory of early settlement, our results con…rm the importance of delay costs and of uncertainty, measured by the complexity of the economic analysis required for each merger. We also …nd a non-monotonic e¤ect of agency resourcing, which raises questions about the Commission's e¢ ciency in times of high case load. Econometrically, we select a sample of merger decisions in which the European Commission in-tervened due to concerns of anticompetitive e¤ects, and our selection model provides estimates of the factors determining intervention by the Commission. Conclusions are drawn for public policy. Keywords: settlement, merger remedies, merger regulation, policy decision error JEL: K21, L41

Many important regulatory decisions are taken by professionals employing limited and conflicting evidence. We conduct an experiment in a merger regulation setting, identifying the role of different standards of proof, volumes of evidence, cost of error and professional or lay decision making. The experiment was conducted on current practitioners from 11 different jurisdictions, in addition to student subjects. Legal standards of proof significantly affect decisions. There are specific differences because of professional judgment, including in how error costs and volume of evidence are taken into account. We narrow the range of explanations for why professional decision making matters.

The speed of market penetration (i.e. diffusion) is an important summary measure of how well the market works for potential consumers of a new product. This paper identifies the structural features associated with rapid diffusion of mobile telephony. We use a sample of thirty countries over the 16 years in which average penetration rose from 2% to 97% of the population (earlier studies observed only the initial years of diffusion during which there was typically only one or two networks). We find that both the number of networks and the history of market structures matter for the speed of consumer uptake. The market structure effect does not appear to work exclusively through the level of prices. Digital technology, standardization. privatization and independent regulation are also important positive factors, and we identify the speed and dimensions of catch-up.

We contrast the theory underpinning state aid for failing banks with that for failing firms in the non-financial sector. We argue that there is little justification for measures to ‘compensate’ rivals when the bank has been saved for reasons of systemic stability. The Commission’s approach to bank restructuring aid takes insufficient notice of this. Furthermore, the use of punitive divestitures is not the best way of addressing moral hazard. Worse, such divestitures can impede competition by creating weak rivals. We provide four detailed case studies to illustrate the problems. We conclude that the Commission provided a useful constraint in the midst of a crisis of unprecedented scale and complexity, but its approach could have been improved by more systematic attention to effective competition relative to the appropriate counterfactual.

The theory of incomplete contracts has been much developed over the last few years, but it has failed to generate any empirical work. In part, this is due to the way models have been developed with a view to foundational rigour, and with little effort to draw out the empirical implications. It is also due to the difficulty in gathering relevant data. In this paper, we draw out some of the testable assumptions and predictions of incomplete contract theory with respect to the design of contracts between firms. Drawing on an earlier questionnaire study of UK manufacturing procurement contracts, we are able to cast light on the empirical relevance of some of the distinctive ideas from ICT. The evidence suggests that firms do use contracts with the expectation of legal sanction, and they are willing to renegotiate under conditions assumed by the theory. However, there is no support for the strategic use of contracts to encourage specific investments or to frame renegotiation. We conclude that firms develop alternative modes of governance to achieve this. One implication is that it is misleading to use one-shot classical contracting ICT, as a foundation for the theory of the firm.

The Single European Market Programme was formally instigated with the Single European Act in 1987. It included around 300 measures designed to eliminate non-tariff barriers to trade (e.g. border controls, national standards, public procurement biases and national restrictions on entry). The essence of our approach is that barriers to trade/competition influence the organisation of the market (industrial concentration, multinationality of the operations of firms, and vertical integration). As those barriers are removed, we should observe the emergence of new organisational structures that are more appropriate to an integrated EU market. We identify the theoretical mechanisms through which these changes can be expected to take place, and argue that these differ according to the endogeneity of specific assets. The empirical part of the paper first reviews some of our earlier work on early changes in concentration and multinationality; then a more detailed case study of railway rolling stock brings out some of the inter-relationships between horizontal and vertical integration. This work is currently being extended to include eight further case studies.

We develop a model of remedy offers made to an expert agency which has powers to act before any harm is experienced and is required to decide on the basis of tangible evidence. The model provides a relationship between the factors determining the probability of delay and the type of error in early settlements (i.e. insufficient versus excessive remedy). We apply the model using data from European Commission merger settlements. Our econometric analysis confirms the importance of delay costs and the uncertainty associated with the agency’s findings. Our results are also consistent with the prediction that delay is not systematically related to the inherent competitive harm of the merger proposal. We use our results to identify specific cases of insufficient remedy in early settlements.

The speed of market penetration (i.e. diffusion) is an important summary measure of how well the market works for potential consumers of a new product. This paper identifies the structural features associated with rapid diffusion of mobile telephony. We use a sample of thirty countries over the sixteen years in which average penetration rose from 2% to 97% of the population (earlier studies observed only the initial years of diffusion during which there was typically only one or two networks). We find a non-monotonic effect of market structure, with three firms maximising consumer uptake. Privatization and independent regulation are also important positive factors. Further results show that the market structure effect works only partially through the level of prices.