NEWS

On the Enforcement of Trade Embargoes by the Merchant Guilds by Nils-Henrik von der Fehr and David Harbord, 25 April 2018.

Abstract: Compensation from rulers of trading centres to merchants whose property rights had been violated was a notable feature of early European international trade. We demonstrate in a repeated-game model that demands for compensation made threats by merchant guilds to impose trade boycotts self-enforcing for individual merchants, thus removing incentives for embargo breaking that could otherwise have rendered guilds powerless. Long-distance merchants were thus protected from predation by medieval city rulers, possibly providing a foundation for the trade expansion of the `Commercial Revolution’. We also address the frequently neglected issue of whether the guilds and cities would have agreed on the level of trade which they wished to support..

A report written for the Colombian Comision de Regulacion de Energía y Gas (CREG), November 2016.

Abstract: The Colombian Comision de Regulacion de Energia y Gas (CREG) convened a panel of international experts to consider various proposals for electricity market reform on four topics: (1) the scarcity price, reliability charge and methods for the expansion of system capacity; (2) a forward market for energy contracts (MOR); (3) spot market reform and the creation of day-ahead and intra-day markets; and (4) mechanisms to elicit investment in nonconventional renewable energy (FNCERs) in Colombia. This report contains my analysis and recommendations on these topics.

Comment on Ghang and Nowak’s “Indirect reciprocity with optional interactions” by David Harbord and Nils-Henrik von der Fehr, 24 July 2016.

Abstract: We point out some simple mathematical errors in the article “Indirect reciprocity with optional interactions” (Journal of Theoretical Biology 365 (2015) 1–11) by Whan Ghang and Martin Nowak, which invalidate many of their results and conclusions. We note various ways that these errors could be fixed, but all require fundamental revisions of their model and lead to counterintuitive conclusions. We also discuss their use of a Nash equilibrium (as opposed to an evolutionary stability) approach in deriving conditions for the evolution of cooperation with indirect reciprocity, and mention some precedents for their model which have appeared in the biology and economics literature.

An article published in openDemocracy “Bargaining post-Brexit trade deals: worse even than project fear”  by David Harbord & Tim Lord, 14 June 2016.

Abstract: Brexiteers hope to convince us that Britain will, after exit, be able to retain its status as a global trading nation with special deals with its largest trading partners in the EU and elsewhere. Remain has painted a bleak picture of what will happen to the economy if Britain exits. Applying some elementary game theory to post-Brexit negotiations suggests that things might be worse for an EU trade deal than even Remain’s so-called “project fear” is arguing.

“Welfare Analysis of Regulating Mobile Termination Rates in the UK“ by David Harbord and Steffen Hoernig. Published in The Journal of Industrial Economics, 63: 673–703, 31 December 2015.

Abstract: We develop a calibrated simulation model of the UK mobile telephony market and use it to analyze the e¤ects of reducing mobile termination rates (MTRs) as recommended by the European Commission. We fi…nd that reducing MTRs is likely to increase both consumer surplus and networks’’ profi…ts. Depending on the strength of call externalities (i.e. benefi…ts to the recipient of a call), social welfare may increase by as much as £ 1 billion to £ 4.6 billion per year. We also use the model to estimate the welfare effects of the 2010 merger between Orange and T-Mobile and …find that the merger led to a substantial reduction in consumer surplus.

Visit Journal of Industrial Economics articles website

“What’s in a Game?“ by David Harbord, 17 March 2015.  A short comment on applying game theory to the Greek debt restructuring negotiations, published in openDemocracy.

“The Law and Economics of Vertical Restraints: An Overview“  by Nils-Henrik von der Fehr and David Harbord, 10 November 2014.

Summary: This article provides a brief overview of vertical restraints. discusses the treatment of vertical distribution arrangements in US and European competition law, and selectively surveys and explains the modern economics literature on exclusive dealing arrangements.

“Subastas de capacidad eléctrica en el Reino Unido: Lecciones en Colombia y Nueva Inglaterra“ por David Harbord and Marco Pagnozzi, REVISTA ANDESCO N° 28, Junio de 2014.

Abstract:  Aún no hay un acuerdo entre los economistas sobre la necesidad de los mercados de capacidad en la generación de electricidad. Sin embargo, cuando se introducen nuevos mercados de capacidad es importante que estén bien diseñados y que tengan en cuenta la experiencia existente y las fallas en diseños anteriores.  La experiencia tanto en Colombia como en Nueva  Inglaterra provee una advertencia fuerte sobre los peligros de poner las subastas de reloj descendente como elemento central en el diseño de los mercados de capacidad eléctricos. Entre las alternativas de diseño, una subasta de sobre sellada parece ser una mejor opción.

“Britain’s Electricity Capacity Auctions: Lessons from Colombia and New England“ by David Harbord and Marco Pagnozzi, The Electricity Journal, June 2014, Vol. 27, Issue 5.

The article discusses the new British electricity capacity auction in light of recent experience in Colombia and New England, and argues that the proposed descending clock auction design will result in high prices and inefficient allocations due to the exercise of market power. Some alternative auction design options are considered, and a sealed-bid auction is recommended as a better choice.