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The OFT closed on 31 March 2014 and this website is no longer being updated. The OFT's work and responsibilities have passed to a number of different bodies. Read more.

Completed research

Below is economic research that has been completed by the OFT.

Please note all documents are in pdf format.

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2014

  • Competing on Quality - Literature Review
    Download the report (pdf 2.4Mb)
    The quality of goods and services is of key importance for customers in many markets and suppliers often compete to win customers' business not only on price but also on quality and other non-price dimensions. This report reviews what the economics literature has to say about the link between competition and quality, in particular for the healthcare sector.

    The report reveals that the economics literature provides only limited insights into the impact of competition on quality when businesses are free to set both prices and quality levels. In contrast, the literature suggests a positive relationship between competition and quality when prices are regulated, provided that the regulated prices are set at a level so as to sufficiently cover costs.

    For the healthcare sector, the report reviews empirical studies on the actual impact of competition on the quality of healthcare services and the behavior of patients, GPs and healthcare providers in the English NHS, finding outcomes that are consistent with the predictions of the economics literature.
  • Cost pass-through: theory, measurement, and potential policy implications
    Download the report (pdf 2.9Mb)
    Cost pass-through arises when a business changes the prices of the products or services it supplies following a change in its costs. The Office of Fair Trading (OFT) has commissioned RBB Economics to undertake a comprehensive review of the literature on cost-pass through as pass-through is relevant across much of the OFT's work. The report highlights that cost pass-through is likely to differ according to a number of factors (such as the responsiveness of demand and supply conditions a business faces) and contains guidance for practitioners dealing with pass-through related issues.

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2013

  • Partitioned pricing research
    Download the covering report (pdf 193kb), behavioural experiment report (pdf 1.5Mb) and the literature review (pdf 1Mb).
    This piece of economic research seeks to explore how partitioned pricing, which is the practice of splitting the price of a good or service into multiple components, affects the consumer decision-making process. Partitioned pricing can either occur with a 'drip', where an additional fee is revealed at a later stage in the buying process than the base price, or without a 'drip'. The OFT has previously analysed partitioned 'drip' pricing and consequently this research focuses on partitioned pricing without the 'drip', where the base price and the additional fee are presented at the same time. As part of this research, the OFT commissioned Partitioned Pricing: a behavioural experiment (pdf 1.5Mb) which examines the impact on consumer decision-making of different forms of partitioned pricing.  Further, in order to consider the experiment in the context of previous research, we also conducted a literature review (pdf 1Mb), which summarises the theory of partitioned pricing and its possible impact on consumer decisions, and in turn consumer welfare.
  • The impact of reverse-fixed payments on competition
    Download the report (pdf 3.1Mb)
    The OFT commissioned this report to identify the impact of reverse-fixed payments such as shelf slotting allowances, listing fees and pay-to-stay fees on competition. To achieve these objectives, more than eighty articles, working papers, and surveys were reviewed. Besides providing a comprehensive and up-to-date review of the academic literature the report identifies a number of indicators which can help to categorize the likely competitive effects of such payments.
  • The economics of online personalised pricing
    Download the report (pdf 572kb)
    The OFT has published a report on the results of a call for information regarding the personalised pricing online (pdf 605kb). In support of this, we have published an economic report that summarises the wide and varied literature on the economic effect of price discrimination online and sets out a framework intended to guide a practical analysis of price discrimination. The report shows that price discrimination with competition is likely to be beneficial to consumers in most, but not all, cases. We identify various market characteristics that make price discrimination more likely to be harmful. You can also download a short note of a public round-table (pdf 79kb) we had regarding this research.
  • Anti-Competitive Effects of RPM (Resale Price Maintenance) Agreements in Fragmented Markets, prepared for the Office of Fair Trading by Greg Shaffer (February)
    Download report (pdf 1.9Mb)
    It is widely recognised that RPM agreements can facilitate collusion or exclude potential competitors where there is significant market power at one or both levels of the vertical supply chain. This report evaluates, and extends to increasingly fragmented markets, a number of models which have posited that networks of RPM agreements between multiple manufacturers and retailers may also soften competition where there is no market power. The report also assesses the practical implications of the findings for the OFT and identifies key characteristics that might indicate when consumer harm is more likely.

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2012

  • The Economics of Secondary Product Markets
    Download report (pdf 1.4Mb)
    Where there is competition in a primary market, but a lack of competition in a secondary market, for example due to consumers being partially or completely locked in to the secondary product following the purchase of the primary product, then the market power in the secondary market may result in the firm earning high profits. However, these high secondary profits may induce additional competition, and therefore lower prices, in the primary market. This has been termed a "waterbed effect". A complete waterbed effect occurs when all additional secondary market profits are competed away in the primary market. The report considers whether, when and to what extent high secondary market profits can be expected to be offset by low primary market pricing and identifies a number of observable factors which may indicate whether the waterbed effect is more or less likely to be complete.
  • Price Relationship Agreements A report prepared for the OFT by Lear
    Download report (pdf 2.8Mb)
    PRAs are arrangements linking one supplier's price to those charged to other customers or by competitors. Examples of PRAs include 'most favoured nation' clauses (MFNs), price guarantees, and meeting competition clauses. The report provides a comprehensive literature review of PRAs, bringing together different economic theories of harm and efficiency motivations for the different types (and critiques of these theories) and drawing out possible policy implications.

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2011

  • Competition and Growth
    Download report (pdf 395kb)
    This economic discussion paper provides evidence of the links between competition and growth, considering how competition can contribute to the better utilisation of capital, labour and natural resources, and to increased innovation and better management, and highlights the role of government and competition authorities in ensuring that these links are maximised.
  • Conjectural Variations and Competition Policy: Theory and Empirical Techniques (October)
    Download report (pdf 3.58mb)
    The report questions whether incorporating firms’ conjectures of how their rivals will react to price changes will impact competition policy. Specifically the report looked how firms’ conjectures impact on (i) unilateral merger analysis, (ii) coordinated merger analysis and (iii) empirical estimates of the degree of competition.
    A report prepared for the OFT by RBB.
  • Consumer behavioural biases in competition (May)
    Download report (951kb)
    The report carries out a review of how consumer behavioural biases impact firms' decisions and hence the competitive equilibria.

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2010

  • The impact of price frames on consumer decision making (May)
    Download report (3.5Mb)
    This report examines the impact on consumer decision-making of different ways in which prices can be framed.
  • Choice and competition in the delivery of public services (March)
    Download report (pdf 658kb) and case studies (pdf 1.34Mb)
    A report prepared for the OFT by Frontier Economics.
  • What does Behavioural Economics mean for Competition Policy? (March)
    Download report (344kb)
    An economic discussion paper examining the implications of behavioural economics to competition policy.
  • Minority interests in competitors (March)
    Download report (1.43Mb)
    A research report prepared by DotEcon Limited
  • Behavioural Economics as Applied to Firms: A Primer (March)
    Download report (618kb)
    An economic discussion paper examining how behavioural economics might apply to the behaviour of firms.

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2009

  • An assessment of discretionary penalties regimes (October)
    Download report (1.4Mb)
    A report prepared for the OFT by London Economics
  • Road testing of consumer remedies - final report (July)
    Download report (798kb)
    A report prepared for the OFT by London Economics
  • The economics of self-regulation in solving consumer quality issues (March)
    Download report (265kb)

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2008

  • The competition impact of environmental product standards (October)
    Download report (574kb)
    A report prepared by Frontier Economics for the OFT.
  • Assessing the effectiveness of potential remedies in consumer markets (April)
    Download report (636kb)
    A report on assessing the effectiveness of potential remedies in consumer markets.
  • Interactions between competition and consumer policy (April)
    Download report (695kb)
    An economic perspective on the interactions of competition and consumer policy.
  • An evaluation of the impact upon productivity of ending resale price maintenance on books (March)
    Download report (439kb)
    An examination of how the ending of resale price maintenance on books affected productivity in book publishing and retailing.

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2007

  • Economic analysis of markets characterised by bidding processes (May)
    Download report (696 kb)
    The objective of this research is to provide an analytical framework for the competitive assessment of markets where key competitive variables are determined by an auctions or bidding processes.
  • Competition in markets with commission rates (January)
    Download report (529 kb)
    Download Annexe (591 kb)
    This report looks at the rationale for using commission rates as a payment mechanism and any impact that their use has on competition and consumer welfare.
  • The competitive effects of buyer groups (January)
    Download report (566 kb)
    This report explores the competitive effects of cooperation between buyers and suggests a framework of analysis to assess these in individual cases.
  • Productivity and competition (January)
    Download report (399 kb)
    This research explores the links between competition and productivity that are identified in academic literature.  It considers the role that competition policy can play in promoting productivity growth, and suggests ways in which productivity analysis can feed into OFT prioritisation.

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2006

  • Research into the costs of inappropriate intervention/non intervention under Article 82 (September)
    Download report (589 kb)
    Download annexes (2.1 mb)
    The object of this research is to improve the OFT's understanding of the costs of inappropriate competition authority (non) intervention in cases relating to abuse of dominance.  A key aim is a greater understanding of these 'error costs' by type of abuse, industry characteristics and form of competition.

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2005

  • Selective price cuts and fidelity rebates (July)
    Download report (1,864 kb)
    Download annexes (802 kb)
    The object of this research is to identify the potential anti-competitive effects of such strategies and their potential benefits and to provide practical guidance on how to assess when such conduct is to the detriment of ultimate consumers.
  • Price comparisons research (July)
    Download cover report (204 kb)
    Download report (1,678 kb)
    The object of this research is to develop our understanding of how consumers react to price advertisements and which factors are influential in this process.
  • Predicting cartels (March)
    Download report (466 kb)
    Empirical study into the economic and structural factors that are typically considered to contribute to the formation, maintenance or detection of cartels with a view to informing the assessment of cartels.
  • Ex-post evaluation of mergers (March)
    Download report (519 kb)
    Analysis of a sample of mergers that were referred to the Competition Commission for investigation and ultimately unconditionally cleared. Aims to see if there are any lessons that can be drawn that may guide future merger decisions.

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2004

  • Empirical indicators for market investigations (Sep)
    Download Summary and conclusions (314 kb), Part 1: main report (812 kb), Part 2: main report (1,014 kb)
    Research aims at developing a method of selecting potential areas for market studies.
  • Assessing the impact of public sector procurement on competition (Sep)
    Download Summary (421kb) Volume 1: main report (1102 kb) Volume 2: case studies (490 kb)
    Preliminary research into the impact of public procurement on competition including an in-depth economic analysis of the relationships between public procurement and competition.

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2003

  • Assessing profitability in competition policy analysis (July)
    Download discussion paper (744 kb)
    Economic discussion paper 6. The paper is intended to be a 'practitioner's guide' to profitability assessment, targeted at lawyers, economists and generalists. It is also intended to stimulate debate on this increasingly important, and yet relatively unexplored, branch of competition policy analysis. This report was commissioned by the OFT from OXERA.
  • Switching costs (Apr)
    Download report (651 kb) Annexe A (756kb) Annexe B (584 kb) Annexe C (873 kb)
    Economic discussion paper 5. This report was wriiten by the National Economic Research Associates and jointly commissioned by the OFT and the Department for Business, Enterprise and Regulatory Reform. It examines the implications of consumer switching costs for the way in which markets work.
  • A study into certain aspects of the cost of capital for regulated utilities in the UK (Feb)
    Download report (635 kb)
    A study into the cost of capital. This is an independent study and does not necessarily reflect the views of either the OFT or the regulators.

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2002

  • The development of targets for consumer savings arising from competition policy (June)
    Download Part 1 (376 kb) Part 2 (105 kb)
    Economic discussion paper 4. This report suggests an appropriate methodology for quantifying the benefits to consumers that arise from the competition policy work of the OFT.
  • Innovation and competition policy (Mar)
    Download Part 1 (383 kb) Part 2 (233 kb)
    This paper examines the role and application of competition policy within markets where there is large scale innovation.

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2001

  • The role of market definition in monopoly and dominance inquiries (July)
    Download report (273 kb)
    Economic discussion paper 2.

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2000

  • E-commerce and its implications for competition policy (Aug)
    Download report (446 kb)
    Economic discussion paper 1. Research into the possible competition policy implications arising from the growth in e-commerce.

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1999

  • Merger appraisal in oligopolistic markets (Nov)
    Download report (309 kb)
    Prepared for the OFT by National Economic Research Associates. OFT Research Paper 19.
  • Quantitative techniques in competition analysis (Oct)
    Download report (322 kb)
    Prepared for the OFT by LECG Ltd. OFT Research Paper 17.

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1998

  • The welfare consequences of the exercise of buyer power (Sep)
    Download report (137 kb)
    Prepared for the OFT by Paul Dobson, Michael Waterson, and Alex Chu. OFT Research Paper 16.

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1997

  • Competition in retailing (Sep)
    Download report (344 kb)
    Prepared for the OFT by London Economics. Research Paper 13. Report asks whether the UK competition authorities need to follow a different approach when they assess competition issues involving retailing.
  • Consumer detriment under conditions of imperfect information (Aug)
    Download report (pdf 298 kb)
    Prepared for the Office of Fair Trading by London Economics.

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1996

  • Vertical restraints and competition policy (Dec)
    Download report (179 kb)
    by Paul Dobson and Michael Waterson. Research paper 12.

Please note the following documents are only available in hard copy and can be obtained by phoning 0800 389 3158.

  • The assessment of profitability by Competition Authorities (Feb 1997)
    Reviews the significance of supra-normal profits in competition policy and, in particular, the way they correspond to the exploitation of market power and the existence of barriers to entry.
  • Predatory behaviour in UK competition policy (Nov 1994)
    Economics research paper 5
    Prepared for the OFT by Geoffrey Myers
  • Barriers to entry and exit in UK competition policy (Mar 1994)
    Economics research paper 2
    Prepared for the OFT by London Economics 
  • Market Definition in UK competition policy (Feb 1992)
    Economics research paper 1
    Prepared for the OFT by NERA

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