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Maverick – Making Sense of a Conjecture of Antitrust Policy in the Lab

Author

Listed:
  • Christoph Engel

    (Max Planck Institute for Research on Collective Goods, Bonn)

  • Axel Ockenfels

    (Universität Köln, Staatswissenschaftliches Seminar)

Abstract

Antitrust authorities all over the world are concerned if a particularly aggressive competitor, a "maverick", is bought out of the market. Yet there is a lack of theoretical justification. One plausible determinant of acting as a maverick is behavioral: the maverick derives utility from acting competitively. We test this conjecture in the lab. In a pretest, we classify participants by their social value orientation. Individuals who are rivalistic in an allocation task indeed bid more aggressively in a laboratory oligopoly market. This disciplines incumbents. In our setting, this does not create sufficient incentives for buying out mavericks, though.

Suggested Citation

  • Christoph Engel & Axel Ockenfels, 2013. "Maverick – Making Sense of a Conjecture of Antitrust Policy in the Lab," Discussion Paper Series of the Max Planck Institute for Behavioral Economics 2013_14, Max Planck Institute for Behavioral Economics, revised Jan 2014.
    • Handle: RePEc:mpg:wpaper:2013_14
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    References listed on IDEAS

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    1. J. Solnick, Sara & Hemenway, David, 1998. "Is more always better?: A survey on positional concerns," Journal of Economic Behavior & Organization, Elsevier, vol. 37(3), pages 373-383, November.
    2. van Damme, E.E.C., 2002. "The Dutch UMTS-auction," Other publications TiSEM e33a97f5-c69b-4c3b-9aca-4, Tilburg University, School of Economics and Management.
    3. Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(2), pages 185-199.
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    Cited by:

    1. Donja Darai & Catherine Roux & Frédéric Schneider, 2019. "Mergers, mavericks, and tacit collusion," Working Papers 201902, Cambridge Judge Business School, University of Cambridge.
    2. Christoph Engel, 2015. "Tacit Collusion: The Neglected Experimental Evidence," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 12(3), pages 537-577, September.
    3. repec:rnp:ecopol:ep1468 is not listed on IDEAS

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    Keywords

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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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