Experimental economics and the practice of competition policy enforcement

doi:10.1017/CBO9780511576201.012

12 - Experimental economics and the practice of competition policy enforcement

Published online by Cambridge University Press: 04 December 2009

Jeroen Hinloopen and

Edited by

Afterword by

Jeroen Hinloopen: Affiliation:
Universiteit van Amsterdam
Hans-Theo Normann: Affiliation:
Royal Holloway, University of London

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Summary

In this concluding chapter we discuss more specifically the use of experimental economics for the enforcement of competition policies. Broadly speaking they may serve two goals. First, to better understand the behavioral aspects of practices with which competition authorities have to deal, and, second, to be used as a pedagogical device for those involved in the day-to-day implementation of antitrust policies. Examples are discussed of both uses. Some final remarks sketch possible future developments.

Introduction

Enforcement of competition policies is difficult as they constitute a violation that typically remains hidden (cartels), that involves conduct that is difficult to assess (abuse of dominance) or that requires an assessment of some would-be world (merger control). Moreover, parties involved are likely to submit crucial empirical facts for the competition authorities' judgments themselves, and knowing this there is ample room for strategic behavior. Indeed, quite a large and active industry exists that specializes in supplying precisely these facts.

Experimental economics is particularly well-suited for helping competition authorities with the implementation of competition laws. For instance, the laboratory setting allows for observing practices that would remain hidden in practice. This helps to understand, for example, under which circumstances cartels form and break down. The data may also explain cartel recidivism. Is it due to market structure or rather related to the type of the individuals involved? Experiments further allow for a direct market performance assessment of business strategies that could involve an abuse of dominance.

Type: Chapter
Information: Experiments and Competition Policy , pp. 301 - 312

DOI: https://doi.org/10.1017/CBO9780511576201.012 [Opens in a new window]

Publisher: Cambridge University Press

Print publication year: 2009

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