Merger simulations with observed diversion ratios

One approach to merger simulations used in antitrust cases is to calibrate demand from market shares and a few additional parameters. When the products involved in the merger case are differentiated along several dimensions, actual diversion ratios may be very different from those calculated from market shares. This again may affect the predicted post-merger price effects. This article shows how merger simulation can be performed using observed diversion ratios. To illustrate the potential effects of this approach we use diversion ratios from a local grocery market in Norway. In this case diversions from the acquired to the acquiring stores were considerably smaller than suggested by market shares, and the predicted average price increase from the acquisition was 40% lower using this model rather than a model based upon market shares. This analysis also suggests that even a subset of observed diversion ratios may significantly change the prediction from a merger simulation based upon market shares.     

The Strategic Nature of Compliance: An Empirical Evaluation of Law Implementation in the Central Monitoring System of the European Union

This compliance study models correct and timely implementation of policies in a multilevel system as a strategic game between a central monitoring agency and multiple implementers and evaluates statistically the empirical implications of this model. We test whether compliance is determined by the anticipated enforcement decision of the monitoring agency and whether this agency is responsive to the probability of enforcement success and the potential sanctioning costs produced by noncomplying implementers. Compared to other monitoring systems, the centralized monitoring system of the European Union (EU) is praised for exemplary effectiveness, but our findings reveal that the monitoring agency refrains from enforcing compliance when the probability of success is low, and the sanctioning costs are high. This results in a compliance deficit, even though the selective enforcement activities of the monitoring agency are almost always successful before court.     

The leap of faith from disease treatment to lifestyle prevention: the genealogy of a policy idea

Since the 1970s public health policy has attempted to counter the rise of chronic diseases by getting individuals to make healthy choices about smoking, alcohol, diet, and physical exercise. Inspired by the so-called new perspective of the 1974 Lalonde report, this shift from disease treatment to prevention has been a key focus of public health policy to this day. Every generation of public health reports presents prevention as the answer to past failures, but the continuous experience of failure is strangely coexistent with a fundamental belief in the ability of lifestyle prevention to produce large health improvements. The article tracks the genealogy of lifestyle prevention as policy idea across three generations of U.S. and Danish public health reports and finds a systematic interpretation of lifestyle prevention as being more successful and promising than acute medical treatment.     

International Trust and Public Opinion About World Affairs

This study argues that citizens base their opinions about world affairs in part on generalized beliefs about how much their nation can trust other nations. Using original data from a two-wave panel survey and a cross-sectional survey, we show that Americans hold stable, internally consistent, and largely pessimistic generalized beliefs about whether the United States can trust other nations. We find that social trust, political trust, partisanship, and age influence this form of trust, which we call international trust. We then demonstrate that international trust shapes whether Americans prefer internationalism to isolationism, perceive specific foreign nations as unfriendly and threatening, and favor military action against Iraq. The role of international trust in shaping opinion may be consistent with theories of low-information rationality, but competing interpretations are also plausible.