Valerie Suslow, What Are You Thinking About?

Vertical Restraints and Hats
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INTERVIEWED BY TERRY KOSDROSKY

Valerie Suslow is senior associate dean for MBA programs, Louis and Myrtle Moskowitz Research Professor of Business and Law, and professor of business economics and public policy. As associate dean, she oversees curriculum and the student experience for all the Ross MBA programs. As faculty, she teaches and engages in research. Whichever hat she is wearing, Suslow believes learning is a lifelong endeavor.


Q: What Are You Thinking About?


A: It depends which hat I'm wearing.

My research focuses on cooperative behavior by firms, with an emphasis on illegal price-fixing conspiracies (cartels). Recently I became interested in vertical restraints – contractual terms between suppliers and manufacturers or manufacturers and resellers. An example of this would be exclusive distribution agreements. Economists have found that most vertical agreements enhance efficiency. My co-author, Ross Professor Maggie Levenstein, and I have turned that question on its head by looking for vertical restraints adopted by known cartels. It turns out that 25 percent of cartels in our sample used vertical restraints to attempt to maintain their joint market power.

With my associate dean hat on, I'm thinking about how to improve student learning. This is joint work with Melissa Peet, director of Integrative Learning & Knowledge Management. Ross is piloting several efforts in the MBA program to create a less fragmented student experience, link content and ideas across courses, and better equip students to tackle multifaceted business problems.

Why is this interesting to you?

My research focuses on firms with market power, their behavior, and implications for society. That includes pricing tactics, entry deterrence tactics, and, my favorite, cooperative behavior. It’s quite difficult to predict the outcome when firms attempt to coordinate behavior. Just think of any team project you have worked on — there’s a range of potential outcomes. We should care as consumers and as a society if firms are fixing prices or allocating markets, and we should have government policies in place (which almost all countries now do) to deter this behavior.

On the business education side, giving students tools to help them connect the dots across courses is important for solving complex problems and for their growth as lifelong learners. In the past two years, our core MBA faculty have experimented with mechanisms to connect content for students and to prompt students to make their own connections. Ross is well positioned to take a leadership role in the area of integrative learning.

On the business education side, giving students tools to help them connect the dots across courses is important for solving complex problems and for their growth as lifelong learners. In the past two years, our core MBA faculty have experimented with mechanisms to connect content for students and to prompt students to make their own connections. Ross is well positioned to take a leadership role in the area of integrative learning.

What are the practical implications for industry?

My research has a policy component to it, and that in turn has implications for industry. Certain business practices are beneficial to consumers – whether they lower costs or promote innovation. Other business practices are scrutinized by antitrust agencies and firms should be aware of the law. The costs are high to firms engaging in illegal price-fixing, both in terms of fines (levied around the world) and (in the U.S.) jail sentences for executives involved.

For our MBA students, my hope is that they get as much as they can out of their business education and continue learning and teaching others for years to come.