TILEC Conference on "Innovation, Intellectual Property and Competition Policy"

On 18 December 2009, Friday, TILEC will host an exciting half-day workshop on "Innovation, Intellectual Property and Competition Policy" (IIPC). Speakers of the conference include TILEC member Jens Prüfer, George Norman (Tufts University), Elisabeth Muller (ZEW Centre for European Economic Research), TILEC director
Eric van Damme, and James Prieger (Pepperdine University). Opening and closing remarks will be given by TILEC member Damien Geradin. This workshop is particularly special for TILEC, because the winners of 2008 TILEC IIPC grant will present their first research findings. The details for the 2009-2010 IIPC grant competition will be announced on the TILEC website later in the year and communicated via the TILEC Newsletter. Attendance to the workshop is free, however, for organisational purposes attendees are kindly requested to register before 14 December.

CoPECL Conference on the Economics of European private law

On 27 November 2009, Friday, the results of the work of the Economic Impact Group (EIG) led by TILEC will be presented in a one-day conference at the Fondation Universitaire / Universitaire Stichting of Brussels. The EIG was part of CoPECL (Joint Network of Excellence on European Private Law) and funded by the EU under the 6th RTD Framework Programme. The task of the EIG was to study and assess the Draft Common Frame of Reference (DCFR), which sets out a proposed European private law, from an economic perspective. The EIG produced a collection of papers on the main elements of the DCFR, which will be presented at the conference and will appear in an edited book. All academics, practitioners and policymakers who are interested in the Europeanization of private law are invited to attend. Presenters of the conference include Hans Schulte-Nölke (Osnabruck University), Urs Schweizer (Bonn University), Fernando Gomez (Pompeu Fabra University), Hans-Bernd Schaefer and Patrick C. Leyens (Hamburg University) and TILEC director Pierre Larouche. The closing address will be given by Alain Brun from the European Commission. Attendance to the conference is free, however, for organisational purposes attendees are kindly requested to register through the TILEC website before 16 November 2009.

Procuring efficiently

On 21 October 2009, TILEC, in cooperation with the Dutch Ministry of Economic Affairs and the Netherlands Bureau of Economic Policy Analysis (CPB), organized a workshop in The Hague about the procurement of public services. The workshop was the most recent one in a series of semi-annual meetings on competition issues that has been running for years. Steven Tadelis from the University of California, Berkeley stressed the importance of the trade-off between achieving productive efficiency and reducing adaptation costs. Neoclassical models neglect the latter and frequently conclude that open procurement is the best option. Once transaction cost and the risk of hold-up are taken into account, such as with custom-made products, alternatives may actually be preferable. The two other presentations focused on some Dutch policy issues. Bjorn Volkering (Ecorys) discussed procurement of high school books, which has become compulsory, now that schools are under the obligation to provide books for free. TILEC director Eric van Damme focused on procurement of home care by local authorities. From the event, the lesson emerged that decision-makers have to pay extreme attention to the procurement rules, whose design is not merely a technical exercise.

Disciplining proxy proposals

Would banks' management teams have avoided excessive risk-taking if they had been thoroughly monitored by shareholders? Is shareholder activism a good thing in general? In a recent TILEC discussion paper TILEC member Luc Renneboog and TILEC extramural fellow Peter G. Szilagyi (Judge Business School, Cambridge) provide evidence on the corporate governance role of shareholder-initiated proxy proposals. Previous studies debate over whether activists use proposals about corporate decisions to discipline firms or to simply advance their self-serving agendas, and whether such proposals are effective at all in addressing governance concerns. Using the largest sample yet examined as well as extensive controls for governance quality, the authors find that activists use the proxy process as a disciplinary mechanism, and as such are valuable monitoring agents. Moreover, proposal announcements in the proxy statements have positive stock price effects, and both the market and the voting shareholders respond as much to the target firm´s governance quality as to the proposal´s objective and sponsoring shareholder. The authors conclude that shareholder proposals have nontrivial control benefits, countering arguments that they should be restricted by regulatory authorities.

Saving lives and saving costs

On 26 October 2009, TILEC, TRANZO and the Dutch Ministry for Health, Welfare and Sport organized a major conference at Tilburg University on "effective managed competition". Both the US and the Netherlands have health care systems that combine managed competition with managed care. Hence, one aim of the conference was to achieve some mutual learning. Leading economists from Harvard University (Chernew, Cutler, and Rosenthal) discussed the strengths and weaknesses of the US system and the challenges of achieving universal coverage, while reducing cost and increasing quality. Martin Gaynor (Carnegie Mellon University) detailed the strong aspects of the Dutch system. A policy discussion featuring Dutch minister Ab Klink and Donald Moulds, acting head of the in-house think-tank of the US Department of Health, closed the day. Several
lessons emerged, such as the importance of a good ex ante risk equalization scheme, the need to move from fee-for-service to pay-for-performance, and the necessity of some form of competition. The conference attracted high attendance and interest from the media. It was organized by TILEC member Marcel Canoy, with strong support of the TILEC office, and the secretariats of the Department of Economics and Netspar.