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Modern Industrial Economics and Competition Policy: Open Problems and Possible Limits

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Author Info
Oliver Budzinski () (Department of Environmental and Business Economics, University of Southern Denmark)

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Abstract

Naturally, competition policy is based on competition economics made applicable in terms of law and its enforcement. Within the different branches of competition economics, modern industrial economics, or more precisely game-theoretic oligopoly theory, has become the dominating paradigm both in the U.S. (since the 1990s Post-Chicago movement) and in the EU (so-called more economic approach in the 2000s). This contribution reviews the state of the art in antitrust-oriented modern industrial economics and, in particular, critically discusses open questions and possible limits of basing antitrust on modern industrial economics. In doing so, it provides some hints how to escape current enforcement problems in industrial economics-based competition policy on both sides of the Atlantic. In particular, the paper advocates a change of the way modern industrial economics is used in competition policy: instead of more and more case-by-cases analyses, the insights from modern industrial economics should be used to design better competition rules. I like to thank the co-panelists Laurence Idot, Michele Polo and Daniel Rubin-feld as well as all the participants of the conference “Foundations and Limita-tions of an Economic Approach to Competition Law” (Max-Planck-Institute for Intellectual Property, Competition and Tax Law; Munich 12th / 13th March 2009), Arndt Christiansen and Nadine Lindstädt for very valuable and helpful comments.

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Publisher Info
Paper provided by University of Southern Denmark, Department of Environmental and Business Economics in its series Working Papers with number 93/09.

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Length: 58 pages
Date of creation: Jun 2009
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Handle: RePEc:sdk:wpaper:93

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Related research
Keywords: competition policy; antitrust; modern industrial economics; more economic approach; merger control;

Find related papers by JEL classification:
L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
L00 - Industrial Organization - - General - - - General
M21 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - Business Economics
B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Institutional; Evolutionary

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Wernhard Möschel, 2001. "The Proper Scope of Government Viewed from an Ordoliberal Perspective: The Example of Competition Policy," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 157(1), pages 3-, March. [Downloadable!] (restricted)
  2. Oliver Budzinski, 2008. "Monoculture versus diversity in competition economics," Cambridge Journal of Economics, Oxford University Press, vol. 32(2), pages 295-324, March. [Downloadable!] (restricted)
  3. Arndt Christiansen and Wolfgang Kerber & Wolfgang Kerber, 2006. "Competition Policy with Optimally Differentiated Rules Instead of "Per se Rules vs. Rule of Reason"," Marburg Working Papers on Economics 200606, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung). [Downloadable!]
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  7. Richard J. Gilbert & Michael L. Katz, 2001. "An Economist's Guide to U.S. v. Microsoft," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 25-44, Spring. [Downloadable!] (restricted)
    Other versions:
  8. Gregory Werden, 2001. "Microsoft's Pricing of Windows and the Economics of Derived Demand Monopoly," Review of Industrial Organization, Springer, vol. 18(3), pages 257-262, May. [Downloadable!] (restricted)
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    Other versions:
  11. Ivaldi, Marc & Verboven, Frank, 2005. "Quantifying the effects from horizontal mergers in European competition policy," International Journal of Industrial Organization, Elsevier, vol. 23(9-10), pages 669-691, December. [Downloadable!] (restricted)
    Other versions:
  12. Oliver Budzinski & Arndt Christiansen, 2007. "The Oracle/PeopleSoft Case: Unilateral Effects, Simulation Models and Econometrics in Contemporary Merger Control," Marburg Working Papers on Economics 200702, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung). [Downloadable!]
  13. Oliver Budzinski & Isabel Ruhmer, 2009. "Merger Simulation in Competition Policy: A Survey," Working Papers 82/09, University of Southern Denmark, Department of Environmental and Business Economics. [Downloadable!]
    Other versions:
  14. Hausman, Jerry A. & Leonard, Gregory K., 2005. "Using merger simulation models: Testing the underlying assumptions," International Journal of Industrial Organization, Elsevier, vol. 23(9-10), pages 693-698, December. [Downloadable!] (restricted)
  15. Ivaldi, Marc & Verboven, Frank, 2005. "Quantifying the effects from horizontal mergers: Comments on the underlying assumptions," International Journal of Industrial Organization, Elsevier, vol. 23(9-10), pages 699-702, December. [Downloadable!] (restricted)
  16. Philip Crooke & Luke Froeb & Steven Tschantz & Gregory Werden, 1999. "Effects of Assumed Demand Form on Simulated Postmerger Equilibria," Review of Industrial Organization, Springer, vol. 15(3), pages 205-217, November. [Downloadable!] (restricted)
  17. Hansen, Lars Peter & Heckman, James J, 1996. "The Empirical Foundations of Calibration," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 87-104, Winter. [Downloadable!] (restricted)
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  19. Schmalensee, Richard, 1987. "Horizontal Merger Policy: Problems and Changes," Journal of Economic Perspectives, American Economic Association, vol. 1(2), pages 41-54, Fall. [Downloadable!] (restricted)
  20. Edlin, Aaron S & Emch, Eric R, 1999. "The Welfare Losses from Price-Matching Policies," Journal of Industrial Economics, Blackwell Publishing, vol. 47(2), pages 145-67, June. [Downloadable!] (restricted)
    Other versions:
  21. Damien J. Neven, 2006. "Competition economics and antitrust in Europe," Economic Policy, CEPR, CES, MSH, vol. 21(48), pages 741-791, October. [Downloadable!] (restricted)
  22. Dennis W. Carlton, 2007. "Does Antitrust Need to be Modernized?," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 155-176, Summer.
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