Yesterday's research lounge session was historic, because it was the last one for the term. The talk was by Grigoriy Edel on "Russia. Transition to Market Economy and Antitrust Regulation". The last part of his presentation was from his Econometric project, and Gods, one thing is for sure - he will get full marks on his project. Congrats in advance, Grigoriy.
The turnout was fairly good, this being the last presentation, and because of the interesting topic. Those who didn't turn up, however, had good reasons:
1) They were knocked out by the looming assignment deadlines
2) They were knocked out by the Global Finance Test
3) They were knocked out by the wind. (those who went strolling on campus yesterday would realise what I am talking about).
Anyway, here is a short introduction about Grigoriy - Before joining the M.Sc Economics at Warwick, Grigory graduated from the faculty of Economics of the Lomonosov Moscow State University. Besides, he was working as an intern at the Federal Antimonopoly Service of the Russian Federation for several months.
The presentation was hugely interesting right at the beginning, largely because of the following pictures. Let's see what you can make of them:
Most people think of Russia as synonymous with these things. According to Grigoriy and the data he provided, these are actually misconceptions!
The AK 47 obviously represents the crimes which are thought to be numerous in Russia - but, this was the case in 1990s, not now.
Russia is not as cold as it is perceived to be. Moscow has actually experienced temperatures like 38.2 degrees Celsius in summer!
Russians don't consume alcohol all the time.The reason for this misconception is the amount of spirits consumed by them - 6.88 litres per person per week year. (this is the figure for 15+ years old people).
Russia is not only known for arts and balailaka (the musical instrument). It has made contributions to every field: space exploration, science, history, geography and sports.
Other known facts about Russia are as follows: it is the largest country in the world, and its population is falling (must be a spacious place to live in), and it is VERY close to the U.S.A, in terms of its proximity to Alaska (it is 300 m away from Alaska :O). Most of the economic progress that Russia has had is due to its dependence on the oil sector (80% of the economic growth is due to this sector), which has seen a substantial rise in prices.
After this brief introduction, Grigoriy moved on to his topic - transition of the Russian industries from monopoly to oligopoly in 15 years. The Herfindahl-Hirschman Index (HHI) shows that in recent years, there has been high concentration - few firms hold large market shares in the industries. This doesn't imply that antitrust guidelines should be followed, and that "we should pack our things up and go home". There is scope for intermission. Before that, however, here is a look at antitrust in Russia:
The HHI is high in the Russian flat glass industry as compared to the EU. The fines imposed in EU on flat glass cartels come up to 486.9 million euros! Does this mean Russia should follow the same example? "When was the last time you saw an economics presentation without mathematical equations?" Grigoriy asked, and used econometrics to find a possible answer. Sigh. How true.
I am unable to include the empirical model here - don't know what Blogger's problem is. If you want to have a look, contact Grigoriy for the slides. If you have a look, you will know why I said he will get full marks. :O
One of the possible explanations on the switching point is the Critical Concentration Ratio (CCR) theory.
The theory claims that at some level of concentration the firms collude so the profit rates, price-cost margins and prices rise to monopolistic level to Chamberlin (1948) and the first empirical test was conducted by Bain (1951)
At this point, he included an interesting picture where according to the CCR estimation, a concentration ratio beyond 1807 would imply switching from monopoly to oligopoly - here, he represented "beyond 1807" as "hell and far below 1807" as heaven.
On a concluding note, he provided the following suggestions:
-Academic theories can provide plausible insights
-Transition process can result in disruptive innovation adaptation
-CCR can be applied to transition countries, taking into account institutional differences
(I copy-pasted the suggestions from his slides).
He ended the presentation by showing the various landscapes of Russia to indicate the diversity in its climate and the resultant diversity in various other aspects influenced by climate.
The last session for the term, of course, ended in a group photo, and a generous return gift provided by Lukas to Ankita and me - glasses full of roasted, salted peanuts. Now that is another definition of heaven :D