It's never been harder to make a living in the crowded, open-sewered slums of North Jakarta.
Most of the neighborhood's two million residents are poor migrants from other parts of Indonesia who aren't legally employable. So they're forced to scrape by in a vast informal economy — encompassing everything from pushcart restaurants to cheap t-shirt vendors — and pay ever-higher prices for staple foods and other necessities.
Saraswati's husband makes about $4 a day hawking snacks and drinks. The couple and their four children squeeze into a 150-square-foot house with unreliable electricity and no running water. They buy jerry cans full of water for cooking and drinking — water that could be contaminated.
Drinking dirty water is life-threatening. In 2002, more than 3.5 million people died as a result of poor water, sanitation and hygiene, according to the UN.
And the cost of that water alone eats up nearly 10 percent of Saraswati's family income — a heavy burden on a family budget already under siege from skyrocketing food and fuel costs.
"Life is getting harder these days," explains Saraswati, 45. "Everything is expensive now. I spend the money only for our daily meals and monthly regular expenses like electricity, water and gasoline for cooking. The only way to survive is sacrificing the children's education. We can't afford it, so they only went until high school."
You can help families increase their resiliency in a time of uncertainty.
In her neighborhood of Penjaringan, Mercy Corps field teams are building a communal water-supply system. We're working with a private-water company, Palyja, to construct a 900-meter pipeline from a tank that will store filtered water. By mid-December, 60 families will get clean drinking water piped directly into their homes for a monthly fee — cutting water bills by an estimated 40 to 80 percent.
Yet huge challenges remain: including securing better job opportunities, getting garbage service and upgrading rickety and overcrowded housing conditions.Bureau of Economics Reports: Major, published reports, usually containing original research and entailing a substantial commitment of resources, concerning an issue of current policy interest or of long term impact on Federal Trade Commission antitrust or consumer protection missions.
The more recent Economic Reports are offered in Adobe Acrobat PDF format.
If you have trouble accessing one of these reports, please email ReportRequests@ftc.gov.
Consumer Fraud in the United States: The Second FTC Survey, Keith B. Anderson (October 2007)
This study reports the results of the Federal Trade Commission’s second statistical survey of fraud in the United States. The survey found that 30.2 million adults – 13.5 percent of the adult population – were victims of one or more of the frauds included in the survey during the year studied. More people – an estimated 4.8 million U.S. consumers – were victims of fraudulent weight-loss products than any of the other frauds covered by the survey. Fraudulent foreign lottery offers and buyers club memberships tied for second place in the survey, with an estimated 3.2 million people were victims of each of these frauds during the period studied. Fraudulent prize promotions and work-at-home programs ranked fourth and fifth.
Text of the Commission Staff ReportRequest Mailed Copy of ReportNews Release
Credit-Based Insurance Scores: Impacts on Consumers of Automobile Insurance: A Report to Congress By the Federal Trade Commission (July 2007)
This study examines the effect of credit-based insurance scores on the price and availability of automobile insurance and the impact of such scores on racial and ethnic minority groups and on low-income groups. Using a large database of insurance policies, the study shows that scores are effective predictors of risk under automobile policies. At the same time, scores are observed to be distributed differently among racial and ethnic groups, and this difference is likely to have an effect on the insurance premiums that these groups pay, on average. Nonetheless, scores appear to derive a relatively small amount of their predictive power from their correlation with race and ethnicity. Finally, the Commission could not develop an alternative scoring model that would continue to predict risk effectively, yet decrease the differences in scores among racial and ethnic groups.
Text of the Commission Report Statement of Chairman Majoras, Commissioner Kovacic, and Commissioner RoschDissenting Statement of Commissioner HarbourConcurring Statement of Commissioner LeibowitzRequest Mailed Copy of ReportNews Release
Improving Consumer Mortgage Disclosures: An Empirical Assessment of Current and Prototype Disclosure Forms, James M. Lacko and Janis K. Pappalardo (June 2007)
This study presents the results of 36 in-depth interviews with recent mortgage customers, and quantitative consumer testing with over 800 mortgage customers, that examined how consumers search for mortgages, how well consumers understand current mortgage cost disclosures and the terms of their own recently obtained loans, and whether better disclosures could improve consumer understanding of mortgage costs, consumer shopping for mortgage loans, and consumers’ ability to avoid deceptive lending practices. The results of the study show that current mortgage cost disclosures fail to convey key mortgage costs to many consumers, and that prototype disclosures developed for the study significantly improved consumer recognition of mortgage costs, demonstrating that better disclosures are feasible.
Executive Summary of the ReportText of the ReportSample Prototype Disclosure FormSample Current Disclosure FormsRequest Mailed Copy of ReportNews Release
Children's Exposure to Television Advertising in 1977 and 2004: Information for the Obesity Debate, Debra J. Holt, Pauline M. Ippolito, Debra M. Desrochers, and Christopher R. Kelley (June 2007)
This study provides a comprehensive assessment of the amount and type of television advertising seen by children in 2004 and compares these results to similar studies conducted for the Federal Trade Commission's 1978 Children's Advertising Rulemaking. This study finds that children in 2004 are exposed to more television ads, fewer paid ads, and fewer food ads compared to 30 years ago. Over half of children's exposure to food advertising comes from children's shows in 2004 compared to about 25 percent in 1977. Sixty-one percent of children's ad exposure and 72 percent of their food ad exposure is from cable programming, but nearly 30 percent comes from primetime broadcast programming. This report also provides a baseline against which to measure future changes in children's exposure to television advertising as parents, firms and children react to obesity concerns.
Text (color version) of the ReportText (black and white version) of the ReportRequest Mailed Copy of ReportNews Release
Supplementary MaterialsAn Analysis of Exposure to Non-Network Television Advertising, Prepared for the Children's Advertising Proceeding by J. Howard Beales, III, Economist, Federal Trade Commission (November 21, 1978)
Network and Non-Network Sources of Programming and Advertising for Children, Prepared for the Children's Advertising Rulemaking Proceeding by John D. Abel, Associate Professor, Department of Telecommunication, Michigan State University (November 24, 1978), As Supplemented By Letter Dated April 16, 1979
Consumer Fraud in the United States: An FTC Survey, Keith B. Anderson, (August 2004)
This survey will help the FTC better serve fraud victims through law enforcement and education. The survey was designed, in part, to assist that agency in determining whether information in the FTC’s Consumer Sentinel database of fraud complaints is representative of consumers’ actual experiences with fraud in the marketplace. The survey provides the agency with a broader snapshot of fraud in America which, in addition to helping target law enforcement actions, will allow the FTC to target education campaigns more precisely towards particular consumer groups who are at risk of falling victim to fraud but who may not complain to the FTC about their experiences.
Text of Report Request Mailed Copy of ReportNews Release
The Petroleum Industry: Mergers, Structural Change, And Antitrust Enforcement: A Report of the Staff of the Federal Trade Commission Bureau of Economics (August 2004)
This report updates two earlier FTC studies on mergers and structural change in the U.S. petroleum industry. Reviewing industry developments since the 1980s, this report finds, among other things, that concentration in crude oil at the country or company level has remained relatively low and that mergers among private oil companies have not significantly affected crude oil concentration.. There have been some increases in industry concentration at other vertical levels in the domestic industry such as refining and gasoline marketing, but industry concentration for most levels of the industry has remained low to moderate. Economies of scale have become increasingly important in shaping the industry, although the incentives for firms to be vertically integrated throughout all or most levels of production and distribution have diminished. The report also describes in detail the FTC’s antitrust merger enforcement policy in the petroleum industry since the1980s.
Text of the Bureau of Economics ReportStatement of the Commission Appendix: Commission Testimony Concerning Market Forces, Anticompetitive Activity, and Gasoline Prices (July 15, 2004) Statement of Commissioner ThompsonStatement of Commissioner Harbour
Earlier ReportsMergers In the U.S. Petroleum Industry 1971-1984: An Updated Comparative Analysis (May 1989)Mergers In the Petroleum Industry (September 1982)
News Release
To receive a paper copy of this report, please email ReportRequests@ftc.gov.
The Effect of Mortgage Broker Compensation Disclosures on Consumers and Competition: A Controlled Experiment, James M. Lacko and Janis K. Pappalardo (February 2004).
This report presents the results of a study that uses a controlled experiment with over 500 recent mortgage customers to examine the mortgage broker compensation disclosure proposed by the Department of Housing and Urban Development (HUD) as part of its July 2002 RESPA reform proposal. The focus of the disclosure is on any “yield spread premium” paid by the lender to the broker for loans originated with “above par” interest rates. The study finds that the disclosure is likely to confuse consumers, cause a significant proportion to choose loans that are more expensive than the available alternatives, and create a substantial consumer bias against broker loans, even when the broker loans cost the same or less than direct lender loans. The report concludes that a better way to help consumers obtain less expensive mortgages would be to encourage and facilitate consumer comparison shopping on loan costs.
Full Report [PDF 2.9MB]Executive Summary [PDF 261KB]Text of the Report [PDF 1.1MB]Appendices [PDF 1.14MB] Request Mailed Copy of ReportNews Release
Advertising Nutrition & Health, Evidence from Food Advertising 1977-1997, Pauline M. Ippolito and Janis K. Pappalardo (September 2002)
This report reviews data collected by Commission staff on the types of claims made in 11,647 advertisements taken from a sample of eight leading magazines between 1977 and 1997. The primary focus of the study is on advertising claims related to health and nutrition, but it also examines other types of advertising claims. The report further reviews how nutrition-related claims in advertising changed under the various regulatory policies in place during these years. It is revealed that nutrition-related claims were a major focus of food advertising and an important focus of competition during the two-decade period covered by the report. Moreover, data indicate a sustained movement toward specific nutrient claims, such as "low fat," in place of, or in addition, to more general nutrition claims, such as "nutritious." The study finds that changes in advertising content appear to be associated with changes in regulatory rules and enforcement policies.
Executive Summary [PDF 599KB]Text of Report [PDF 3.25MB] Request Mailed Copy of Report
Competition and Consumer Protection Perspectives on Electric Power Regulatory Reform, joint report of the Bureau of Economics with the Bureau of Consumer Protection, Bureau of Competition, and Policy Planning, (July 2000).
This policy analysis examines various competition and consumer protection issues that arise in restructuring the electric power industry. The topics were addressed by FTC staff in comments to state regulatory commissions and to FERC, and include existing market power in generation services; vertical discrimination in transmission access; affiliate transactions; horizontal mergers; vertical and convergence mergers; retail competition entry conditions; and advertising claims, information disclosures, and deceptive business practices. The report also incorporates information on these topics gathered at the FTC's public workshop on market power and consumer protection issues in this industry.
Survey of Rent-to-Own Customers, James M. Lacko, Signe-Mary McKernan, and Manoj Hastak (April 2000)
This report presents the results of a nationwide survey of rent-to-own customers. The survey found that most rent-to-own merchandise is ultimately purchased by the customer, most customers are satisfied with their rent-to-own transactions, and most customers are treated well if they are late making a payment, although some customers are subject to possibly abusive collection practices. The report recommends that the total cost of purchasing merchandise through a rent-to-own transaction be disclosed on product labels that the consumer can see while shopping, in addition to disclosures in rental agreements and advertisements.
Executive SummaryCopy of Report [PDF 11 MB]Request Mailed Copy of Report
Transformation and Continuity: The U.S. Carbonated Soft Drink Bottling Industry and Antitrust Policy Since 1980, Harold Saltzman, Roy Levy, and John C. Hilke (November 1999)
This report analyzes the U.S. carbonated soft drink ("CSD") industry, with its primary focus on the 1980s and early 1990s, a period of rapid structural change that transformed the industry. In addition to documenting these changes, an empirical model is developed to evaluate the antitrust merger policies that were pursued by the Federal Trade Commission ("FTC") during this period -- the FTC challenged large horizontal acquisitions of Dr Pepper and 7UP franchises by Coca-Cola and Pepsi-Cola bottlers, but did not challenge vertical acquisitions of CSD bottlers by their franchisors or other horizontal bottler acquisitions. The findings tend to support or are consistent with these policies, but also identify areas that seem to warrant further study.
Executive SummaryText of Report [PDF 500KB]
The Pharmaceutical Industry: A Discussion of Competitive and Antitrust Issues in an Environment of Change, Roy Levy (March 1999)
The report reviews significant informational, institutional, and structural changes that have influenced price and non-price competition strategies of brand-name pharmaceutical companies, particularly during the last 15 years. The study considers the possible antitrust implications of these changes by examining alternative anticompetitive and procompetitive explanations for the pricing, vertical contracting, and vertical and horizontal consolidation strategies that have emerged in this environment of change in the pharmaceutical industry.
Executive SummaryCopy of Report [PDF 19.4MB]
A Generic Copy Test of Food Health Claims in Advertising, Dennis Murphy (principal author), Theodore H. Hoppock and Michelle K. Rusk (contributing authors) (November 1998) [a joint report of the Bureau of Economics and the Bureau of Consumer Protection].
Executive SummaryCopy of Report [PDF 199Kb]
Appendix A [PDF 2MB]
Appendix B [PDF 220KB]
Competition and the Financial Impact of the Proposed Tobacco Industry Settlement, joint report of the Bureau of Economics with the Bureau of Competition and the Bureau of Consumer Protection (September 1997)
The report analyzes the potential impact of the proposed tobacco industry settlement on cigarette prices, industry profits, and government revenues. The main conclusions of the report are that (1) the antitrust exemption may reduce competition in the industry and allow the industry to profit from the settlement by raising prices more than enough to cover the annual payments requires; (2) since the annual payments are essentially equivalent to an excise tax, even if the settlement does not have anti-competitive effects, we can expect that cigarette prices will rise by enough to generate revenues to make the annual payments; and (3) the government revenues will increase due to the settlement.
Executive Summary Copy of Report [PDF 207KB]
Information and Advertising Policy: A Study of Fat and Cholesterol Consumption in the United States, 1977-1990, Pauline M. Ippolito and Alan D. Mathios (September 1996)
The study examines changes in the consumption of fat, saturated fat, and cholesterol from 1977 to 1990, a period when federal policy governing diet-disease claims changed. The study finds that dietary improvements occurred more rapidly in the post-1985 years, when the rules were relaxed. The study also includes a variety of detailed data on differences in consumer knowledge and sources of dietary fats over the period.
Executive SummaryRequest Mailed Copy of Report
The Effectiveness of Collusion Under Antitrust Immunity: The Case of Liner Shipping Conferences, Paul S. Clyde and James D. Reitzes (January 1996) [PDF 162KB]
This study analyzes whether ocean shipping rates are affected by the presence and practices of ocean liner conferences. The study provides some support for the conclusion that some aspects of the conference system may contribute to higher shipping rates, particularly when the conference has a sizable market share.
Disentangling Regulatory Policy: The Effects of State Regulations on Trucking Rates, Timothy P. Daniel and Andrew N. Kleit (November 1995) [PDF 165KB]
This study estimates the relationship between intrastate trucking rates and three different types of state-level regulations: 1) the strictness with which rates are regulated; 2) the requirements placed on motor carriers seeking to enter the market; and 3) whether the state provides antitrust immunity for decisions made by motor carrier rate bureaus.
The Salt Producers Discount Practices Before and After the Robinson- Patman Act and the FTC's Challenge to Them: The Morton and International Salt Cases, John L. Peterman (October 1995)
This study describes the pricing and distribution of salt during the National Industrial Recovery Act period and beyond (1930-1945). Two FTC cases brought to enforce the Robinson-Patman anti- discrimination law during this period are examined in some detail. Also included is a statistical description of industries in which the FTC brought Robinson-Patman Act cases between 1936 and 1980.
Request Mailed Copy of Report
Measurements of Market Power in Long Distance Telecommunications, Michael R. Ward (April 1995) [PDF 504KB]
This study assesses empirically the competitiveness of the long distance telephone market. To do so, it estimates firm-specific long- run demand elasticities for AT&T and its rivals for long distance service marketed to households and small businesses during 1988-91.
Older Economic Reports
To receive a copy of one of these reports, please email (include mailing address) to:ReportRequests@ftc.gov.
1994
1. Resale Price Maintenance: An Economic Study of the FTC's Case Against Corning Glass Works, Pauline M. Ippolito and Thomas R. Overstreet, Jr., January 1994.
The study is intended to help increase understanding of the economic motivation for RPM when the products at issue are relatively simple goods that do not fit the most well-known efficiency rationales for the practice. The study found no evidence of collusion among Corning's dealers or competitors, and stock market movements (as well as the value of sales) for Corning and some of its competitors do not support anticompetitive theories. The authors find the results "consistent with the theory that RPM may at times be used as a method of increasing distribution of 'simple' products sold through multiproduct dealers."
2. Effects of Unfair Imports on Domestic Industries: U.S. Antidumping and Countervailing Duty Cases, 1980-1988, Morris E. Morkre and Kenneth H. Kelly, February 1994.
The study analyzes the effects of dumped and/or subsidized imports on the domestic industries with which they competed. The authors found that, in nearly 90 percent of the 179 cases analyzed, unfair imports caused reductions in domestic industry revenue of less than 10 percent.
1993
No reports available from 1993.
1992
1. Case Studies of the Price Effects of Horizontal Mergers, Laurence Schumann, Robert P. Rogers, and James D. Reitzes, April 1992.
The study examines the aftermath of mergers in three industries: titanium dioxide, cement, and corrugated paperboard. The study finds a mixture of results with likely pro-competitive outcomes in cement and paperboard, and a potentially large anti-competitive outcome in titanium dioxide (depending on the model specification).
2. An Analysis of Department Store Reference Pricing in Metropolitan Washington, Ronald S. Bond and R. Dennis Murphy, September 1992.
This report presents empirical evidence on the likely consumer injury associated with department store reference pricing, the common pricing strategy in which sale prices are contrasted prominently with regular prices in newspaper advertising. The study concludes that although regular prices claimed by department stores are higher than consumers would likely find elsewhere, the so-called sale prices are generally quite competitive.
1991
1. Petroleum Tariffs as a Source of Government Revenue, Keith B. Anderson and Michael R. Metzger, February 1991.
The study evaluates the desirability of import tariffs on crude oil and refined petroleum products. Such tariffs would cost consumers between $2 and $5 per dollar of revenue raised. Excise taxes, on the other hand, would cost consumers $1.05 to $1.13 per dollar of revenue raised.
Most of the neighborhood's two million residents are poor migrants from other parts of Indonesia who aren't legally employable. So they're forced to scrape by in a vast informal economy — encompassing everything from pushcart restaurants to cheap t-shirt vendors — and pay ever-higher prices for staple foods and other necessities.
Saraswati's husband makes about $4 a day hawking snacks and drinks. The couple and their four children squeeze into a 150-square-foot house with unreliable electricity and no running water. They buy jerry cans full of water for cooking and drinking — water that could be contaminated.
Drinking dirty water is life-threatening. In 2002, more than 3.5 million people died as a result of poor water, sanitation and hygiene, according to the UN.
And the cost of that water alone eats up nearly 10 percent of Saraswati's family income — a heavy burden on a family budget already under siege from skyrocketing food and fuel costs.
"Life is getting harder these days," explains Saraswati, 45. "Everything is expensive now. I spend the money only for our daily meals and monthly regular expenses like electricity, water and gasoline for cooking. The only way to survive is sacrificing the children's education. We can't afford it, so they only went until high school."
You can help families increase their resiliency in a time of uncertainty.
In her neighborhood of Penjaringan, Mercy Corps field teams are building a communal water-supply system. We're working with a private-water company, Palyja, to construct a 900-meter pipeline from a tank that will store filtered water. By mid-December, 60 families will get clean drinking water piped directly into their homes for a monthly fee — cutting water bills by an estimated 40 to 80 percent.
Yet huge challenges remain: including securing better job opportunities, getting garbage service and upgrading rickety and overcrowded housing conditions.Bureau of Economics Reports: Major, published reports, usually containing original research and entailing a substantial commitment of resources, concerning an issue of current policy interest or of long term impact on Federal Trade Commission antitrust or consumer protection missions.
The more recent Economic Reports are offered in Adobe Acrobat PDF format.
If you have trouble accessing one of these reports, please email ReportRequests@ftc.gov.
Consumer Fraud in the United States: The Second FTC Survey, Keith B. Anderson (October 2007)
This study reports the results of the Federal Trade Commission’s second statistical survey of fraud in the United States. The survey found that 30.2 million adults – 13.5 percent of the adult population – were victims of one or more of the frauds included in the survey during the year studied. More people – an estimated 4.8 million U.S. consumers – were victims of fraudulent weight-loss products than any of the other frauds covered by the survey. Fraudulent foreign lottery offers and buyers club memberships tied for second place in the survey, with an estimated 3.2 million people were victims of each of these frauds during the period studied. Fraudulent prize promotions and work-at-home programs ranked fourth and fifth.
Text of the Commission Staff ReportRequest Mailed Copy of ReportNews Release
Credit-Based Insurance Scores: Impacts on Consumers of Automobile Insurance: A Report to Congress By the Federal Trade Commission (July 2007)
This study examines the effect of credit-based insurance scores on the price and availability of automobile insurance and the impact of such scores on racial and ethnic minority groups and on low-income groups. Using a large database of insurance policies, the study shows that scores are effective predictors of risk under automobile policies. At the same time, scores are observed to be distributed differently among racial and ethnic groups, and this difference is likely to have an effect on the insurance premiums that these groups pay, on average. Nonetheless, scores appear to derive a relatively small amount of their predictive power from their correlation with race and ethnicity. Finally, the Commission could not develop an alternative scoring model that would continue to predict risk effectively, yet decrease the differences in scores among racial and ethnic groups.
Text of the Commission Report Statement of Chairman Majoras, Commissioner Kovacic, and Commissioner RoschDissenting Statement of Commissioner HarbourConcurring Statement of Commissioner LeibowitzRequest Mailed Copy of ReportNews Release
Improving Consumer Mortgage Disclosures: An Empirical Assessment of Current and Prototype Disclosure Forms, James M. Lacko and Janis K. Pappalardo (June 2007)
This study presents the results of 36 in-depth interviews with recent mortgage customers, and quantitative consumer testing with over 800 mortgage customers, that examined how consumers search for mortgages, how well consumers understand current mortgage cost disclosures and the terms of their own recently obtained loans, and whether better disclosures could improve consumer understanding of mortgage costs, consumer shopping for mortgage loans, and consumers’ ability to avoid deceptive lending practices. The results of the study show that current mortgage cost disclosures fail to convey key mortgage costs to many consumers, and that prototype disclosures developed for the study significantly improved consumer recognition of mortgage costs, demonstrating that better disclosures are feasible.
Executive Summary of the ReportText of the ReportSample Prototype Disclosure FormSample Current Disclosure FormsRequest Mailed Copy of ReportNews Release
Children's Exposure to Television Advertising in 1977 and 2004: Information for the Obesity Debate, Debra J. Holt, Pauline M. Ippolito, Debra M. Desrochers, and Christopher R. Kelley (June 2007)
This study provides a comprehensive assessment of the amount and type of television advertising seen by children in 2004 and compares these results to similar studies conducted for the Federal Trade Commission's 1978 Children's Advertising Rulemaking. This study finds that children in 2004 are exposed to more television ads, fewer paid ads, and fewer food ads compared to 30 years ago. Over half of children's exposure to food advertising comes from children's shows in 2004 compared to about 25 percent in 1977. Sixty-one percent of children's ad exposure and 72 percent of their food ad exposure is from cable programming, but nearly 30 percent comes from primetime broadcast programming. This report also provides a baseline against which to measure future changes in children's exposure to television advertising as parents, firms and children react to obesity concerns.
Text (color version) of the ReportText (black and white version) of the ReportRequest Mailed Copy of ReportNews Release
Supplementary MaterialsAn Analysis of Exposure to Non-Network Television Advertising, Prepared for the Children's Advertising Proceeding by J. Howard Beales, III, Economist, Federal Trade Commission (November 21, 1978)
Network and Non-Network Sources of Programming and Advertising for Children, Prepared for the Children's Advertising Rulemaking Proceeding by John D. Abel, Associate Professor, Department of Telecommunication, Michigan State University (November 24, 1978), As Supplemented By Letter Dated April 16, 1979
Consumer Fraud in the United States: An FTC Survey, Keith B. Anderson, (August 2004)
This survey will help the FTC better serve fraud victims through law enforcement and education. The survey was designed, in part, to assist that agency in determining whether information in the FTC’s Consumer Sentinel database of fraud complaints is representative of consumers’ actual experiences with fraud in the marketplace. The survey provides the agency with a broader snapshot of fraud in America which, in addition to helping target law enforcement actions, will allow the FTC to target education campaigns more precisely towards particular consumer groups who are at risk of falling victim to fraud but who may not complain to the FTC about their experiences.
Text of Report Request Mailed Copy of ReportNews Release
The Petroleum Industry: Mergers, Structural Change, And Antitrust Enforcement: A Report of the Staff of the Federal Trade Commission Bureau of Economics (August 2004)
This report updates two earlier FTC studies on mergers and structural change in the U.S. petroleum industry. Reviewing industry developments since the 1980s, this report finds, among other things, that concentration in crude oil at the country or company level has remained relatively low and that mergers among private oil companies have not significantly affected crude oil concentration.. There have been some increases in industry concentration at other vertical levels in the domestic industry such as refining and gasoline marketing, but industry concentration for most levels of the industry has remained low to moderate. Economies of scale have become increasingly important in shaping the industry, although the incentives for firms to be vertically integrated throughout all or most levels of production and distribution have diminished. The report also describes in detail the FTC’s antitrust merger enforcement policy in the petroleum industry since the1980s.
Text of the Bureau of Economics ReportStatement of the Commission Appendix: Commission Testimony Concerning Market Forces, Anticompetitive Activity, and Gasoline Prices (July 15, 2004) Statement of Commissioner ThompsonStatement of Commissioner Harbour
Earlier ReportsMergers In the U.S. Petroleum Industry 1971-1984: An Updated Comparative Analysis (May 1989)Mergers In the Petroleum Industry (September 1982)
News Release
To receive a paper copy of this report, please email ReportRequests@ftc.gov.
The Effect of Mortgage Broker Compensation Disclosures on Consumers and Competition: A Controlled Experiment, James M. Lacko and Janis K. Pappalardo (February 2004).
This report presents the results of a study that uses a controlled experiment with over 500 recent mortgage customers to examine the mortgage broker compensation disclosure proposed by the Department of Housing and Urban Development (HUD) as part of its July 2002 RESPA reform proposal. The focus of the disclosure is on any “yield spread premium” paid by the lender to the broker for loans originated with “above par” interest rates. The study finds that the disclosure is likely to confuse consumers, cause a significant proportion to choose loans that are more expensive than the available alternatives, and create a substantial consumer bias against broker loans, even when the broker loans cost the same or less than direct lender loans. The report concludes that a better way to help consumers obtain less expensive mortgages would be to encourage and facilitate consumer comparison shopping on loan costs.
Full Report [PDF 2.9MB]Executive Summary [PDF 261KB]Text of the Report [PDF 1.1MB]Appendices [PDF 1.14MB] Request Mailed Copy of ReportNews Release
Advertising Nutrition & Health, Evidence from Food Advertising 1977-1997, Pauline M. Ippolito and Janis K. Pappalardo (September 2002)
This report reviews data collected by Commission staff on the types of claims made in 11,647 advertisements taken from a sample of eight leading magazines between 1977 and 1997. The primary focus of the study is on advertising claims related to health and nutrition, but it also examines other types of advertising claims. The report further reviews how nutrition-related claims in advertising changed under the various regulatory policies in place during these years. It is revealed that nutrition-related claims were a major focus of food advertising and an important focus of competition during the two-decade period covered by the report. Moreover, data indicate a sustained movement toward specific nutrient claims, such as "low fat," in place of, or in addition, to more general nutrition claims, such as "nutritious." The study finds that changes in advertising content appear to be associated with changes in regulatory rules and enforcement policies.
Executive Summary [PDF 599KB]Text of Report [PDF 3.25MB] Request Mailed Copy of Report
Competition and Consumer Protection Perspectives on Electric Power Regulatory Reform, joint report of the Bureau of Economics with the Bureau of Consumer Protection, Bureau of Competition, and Policy Planning, (July 2000).
This policy analysis examines various competition and consumer protection issues that arise in restructuring the electric power industry. The topics were addressed by FTC staff in comments to state regulatory commissions and to FERC, and include existing market power in generation services; vertical discrimination in transmission access; affiliate transactions; horizontal mergers; vertical and convergence mergers; retail competition entry conditions; and advertising claims, information disclosures, and deceptive business practices. The report also incorporates information on these topics gathered at the FTC's public workshop on market power and consumer protection issues in this industry.
Survey of Rent-to-Own Customers, James M. Lacko, Signe-Mary McKernan, and Manoj Hastak (April 2000)
This report presents the results of a nationwide survey of rent-to-own customers. The survey found that most rent-to-own merchandise is ultimately purchased by the customer, most customers are satisfied with their rent-to-own transactions, and most customers are treated well if they are late making a payment, although some customers are subject to possibly abusive collection practices. The report recommends that the total cost of purchasing merchandise through a rent-to-own transaction be disclosed on product labels that the consumer can see while shopping, in addition to disclosures in rental agreements and advertisements.
Executive SummaryCopy of Report [PDF 11 MB]Request Mailed Copy of Report
Transformation and Continuity: The U.S. Carbonated Soft Drink Bottling Industry and Antitrust Policy Since 1980, Harold Saltzman, Roy Levy, and John C. Hilke (November 1999)
This report analyzes the U.S. carbonated soft drink ("CSD") industry, with its primary focus on the 1980s and early 1990s, a period of rapid structural change that transformed the industry. In addition to documenting these changes, an empirical model is developed to evaluate the antitrust merger policies that were pursued by the Federal Trade Commission ("FTC") during this period -- the FTC challenged large horizontal acquisitions of Dr Pepper and 7UP franchises by Coca-Cola and Pepsi-Cola bottlers, but did not challenge vertical acquisitions of CSD bottlers by their franchisors or other horizontal bottler acquisitions. The findings tend to support or are consistent with these policies, but also identify areas that seem to warrant further study.
Executive SummaryText of Report [PDF 500KB]
The Pharmaceutical Industry: A Discussion of Competitive and Antitrust Issues in an Environment of Change, Roy Levy (March 1999)
The report reviews significant informational, institutional, and structural changes that have influenced price and non-price competition strategies of brand-name pharmaceutical companies, particularly during the last 15 years. The study considers the possible antitrust implications of these changes by examining alternative anticompetitive and procompetitive explanations for the pricing, vertical contracting, and vertical and horizontal consolidation strategies that have emerged in this environment of change in the pharmaceutical industry.
Executive SummaryCopy of Report [PDF 19.4MB]
A Generic Copy Test of Food Health Claims in Advertising, Dennis Murphy (principal author), Theodore H. Hoppock and Michelle K. Rusk (contributing authors) (November 1998) [a joint report of the Bureau of Economics and the Bureau of Consumer Protection].
Executive SummaryCopy of Report [PDF 199Kb]
Appendix A [PDF 2MB]
Appendix B [PDF 220KB]
Competition and the Financial Impact of the Proposed Tobacco Industry Settlement, joint report of the Bureau of Economics with the Bureau of Competition and the Bureau of Consumer Protection (September 1997)
The report analyzes the potential impact of the proposed tobacco industry settlement on cigarette prices, industry profits, and government revenues. The main conclusions of the report are that (1) the antitrust exemption may reduce competition in the industry and allow the industry to profit from the settlement by raising prices more than enough to cover the annual payments requires; (2) since the annual payments are essentially equivalent to an excise tax, even if the settlement does not have anti-competitive effects, we can expect that cigarette prices will rise by enough to generate revenues to make the annual payments; and (3) the government revenues will increase due to the settlement.
Executive Summary Copy of Report [PDF 207KB]
Information and Advertising Policy: A Study of Fat and Cholesterol Consumption in the United States, 1977-1990, Pauline M. Ippolito and Alan D. Mathios (September 1996)
The study examines changes in the consumption of fat, saturated fat, and cholesterol from 1977 to 1990, a period when federal policy governing diet-disease claims changed. The study finds that dietary improvements occurred more rapidly in the post-1985 years, when the rules were relaxed. The study also includes a variety of detailed data on differences in consumer knowledge and sources of dietary fats over the period.
Executive SummaryRequest Mailed Copy of Report
The Effectiveness of Collusion Under Antitrust Immunity: The Case of Liner Shipping Conferences, Paul S. Clyde and James D. Reitzes (January 1996) [PDF 162KB]
This study analyzes whether ocean shipping rates are affected by the presence and practices of ocean liner conferences. The study provides some support for the conclusion that some aspects of the conference system may contribute to higher shipping rates, particularly when the conference has a sizable market share.
Disentangling Regulatory Policy: The Effects of State Regulations on Trucking Rates, Timothy P. Daniel and Andrew N. Kleit (November 1995) [PDF 165KB]
This study estimates the relationship between intrastate trucking rates and three different types of state-level regulations: 1) the strictness with which rates are regulated; 2) the requirements placed on motor carriers seeking to enter the market; and 3) whether the state provides antitrust immunity for decisions made by motor carrier rate bureaus.
The Salt Producers Discount Practices Before and After the Robinson- Patman Act and the FTC's Challenge to Them: The Morton and International Salt Cases, John L. Peterman (October 1995)
This study describes the pricing and distribution of salt during the National Industrial Recovery Act period and beyond (1930-1945). Two FTC cases brought to enforce the Robinson-Patman anti- discrimination law during this period are examined in some detail. Also included is a statistical description of industries in which the FTC brought Robinson-Patman Act cases between 1936 and 1980.
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Measurements of Market Power in Long Distance Telecommunications, Michael R. Ward (April 1995) [PDF 504KB]
This study assesses empirically the competitiveness of the long distance telephone market. To do so, it estimates firm-specific long- run demand elasticities for AT&T and its rivals for long distance service marketed to households and small businesses during 1988-91.
Older Economic Reports
To receive a copy of one of these reports, please email (include mailing address) to:ReportRequests@ftc.gov.
1994
1. Resale Price Maintenance: An Economic Study of the FTC's Case Against Corning Glass Works, Pauline M. Ippolito and Thomas R. Overstreet, Jr., January 1994.
The study is intended to help increase understanding of the economic motivation for RPM when the products at issue are relatively simple goods that do not fit the most well-known efficiency rationales for the practice. The study found no evidence of collusion among Corning's dealers or competitors, and stock market movements (as well as the value of sales) for Corning and some of its competitors do not support anticompetitive theories. The authors find the results "consistent with the theory that RPM may at times be used as a method of increasing distribution of 'simple' products sold through multiproduct dealers."
2. Effects of Unfair Imports on Domestic Industries: U.S. Antidumping and Countervailing Duty Cases, 1980-1988, Morris E. Morkre and Kenneth H. Kelly, February 1994.
The study analyzes the effects of dumped and/or subsidized imports on the domestic industries with which they competed. The authors found that, in nearly 90 percent of the 179 cases analyzed, unfair imports caused reductions in domestic industry revenue of less than 10 percent.
1993
No reports available from 1993.
1992
1. Case Studies of the Price Effects of Horizontal Mergers, Laurence Schumann, Robert P. Rogers, and James D. Reitzes, April 1992.
The study examines the aftermath of mergers in three industries: titanium dioxide, cement, and corrugated paperboard. The study finds a mixture of results with likely pro-competitive outcomes in cement and paperboard, and a potentially large anti-competitive outcome in titanium dioxide (depending on the model specification).
2. An Analysis of Department Store Reference Pricing in Metropolitan Washington, Ronald S. Bond and R. Dennis Murphy, September 1992.
This report presents empirical evidence on the likely consumer injury associated with department store reference pricing, the common pricing strategy in which sale prices are contrasted prominently with regular prices in newspaper advertising. The study concludes that although regular prices claimed by department stores are higher than consumers would likely find elsewhere, the so-called sale prices are generally quite competitive.
1991
1. Petroleum Tariffs as a Source of Government Revenue, Keith B. Anderson and Michael R. Metzger, February 1991.
The study evaluates the desirability of import tariffs on crude oil and refined petroleum products. Such tariffs would cost consumers between $2 and $5 per dollar of revenue raised. Excise taxes, on the other hand, would cost consumers $1.05 to $1.13 per dollar of revenue raised.
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