Skip to main content Accessibility help

We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.

Close cookie message
×
Hostname: page-component-848d4c4894-sjtt6 Total loading time: 0 Render date: 2024-06-23T18:46:41.849Z Has data issue: false hasContentIssue false

12 - Experimental economics and the practice of competition policy enforcement

Published online by Cambridge University Press:  04 December 2009

By
Jeroen Hinloopen  and
Hans-Theo Normann
Edited by
Jeroen Hinloopen
Afterword by
Hans-Theo Normann
Jeroen Hinloopen
Affiliation:
Universiteit van Amsterdam
Hans-Theo Normann
Affiliation:
Royal Holloway, University of London
Get access

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
Publisher: Cambridge University Press
Print publication year: 2009

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Binmore, K. and Klemperer, P. (2002), The Biggest Auction Ever: The Sale of the British 3G Telecom Licenses, Economic Journal 112, C74–C96.CrossRefGoogle Scholar
Bryant, P. G. and Eckard, E. W. (1991), Price Fixing: The Probability of Getting Caught, Review of Economics and Statistics, 73: 531–536.CrossRefGoogle Scholar
Connor, J. M. (2004), Extraterritoriality of the Sherman Act and Deterrence of Private International Cartels, Purdue University, unpublished manuscript.
Doarest, A., Hinloopen, J., and Soetevent, A. R. (2008), Signalling in an Experimental Bertrand Duopoly, Tinbergen Institute Discussion Paper.
Dufwenberg, M. and Gneezy, U. (2000), Price Competition and Market Concentration: An Experimental Study, International Journal of Industrial Organization, 18: 7–22.CrossRefGoogle Scholar
Dufwenberg, M., Goeree, J., Gneezy, U. and Nagel, R. (2007), Price Floors and Competition, Economic Theory, 33(1), 207–224.CrossRefGoogle Scholar
Emerson, T. L. N. and Taylor, B. A. (2004), Comparing Student Achievement across Experimental and Lecture-Oriented Sections of a Principles of Microeconomics Course, Southern Economic Journal, 70(3): 672–693.CrossRefGoogle Scholar
Goeree, M. S. and Hinloopen, J. (2008), Cooperation in the Classroom: Experimenting with R&D Cooperatives, Journal of Economic Education, in press.CrossRefGoogle Scholar
Hammond, S. D. (2000), Detecting and deterring cartel activity through an effective leniency program, speech delivered before the International Workshop on Cartels, Brighton, England, November.
Hinloopen, J. (2003), An Economic Analysis of Leniency Programs, De Economist, 151(4): 415–432.CrossRefGoogle Scholar
Hinloopen, J., (2007), The Pro-Collusive Effect of Increasing the Repose Period for Price Fixing Agreements, The B.E. Journal of Economic Analysis & Policy, 7, Issue 1 (Contributions), Article 17.CrossRefGoogle Scholar
Hinloopen, J. and Soetevent, A. (2006), Trust and Recidivism: The Partial Success of Corporate Leniency Programs in the Laboratory, Tinbergen Institute Working Paper.
Hinloopen, J. and Soetevent, A. (2008), Laboratory Evidence on the Effectiveness of Corporate Leniency Programs, RAND Journal of Economics, forthcoming.CrossRefGoogle Scholar
Holt, C. A. (2007), Markets, Games, & Strategic Behavior, Upper Saddle River, NJ: Pearson Addison Wesley.Google Scholar
Kroes, N. (2005), EU to beef up its cartel busters, International Herald Tribune Business, 11 March.
,OECD (2002), Fighting Hard-Core Cartels: Harm, Effective Sanctions and Leniency Programs, Paris: OECD.
Spagnolo, G. (2004), Divide Et Impera: Optimal Leniency Programs, CEPR Working Paper, No. 4840.
Spagnolo, G (2006), Leniency and Whistleblowers in Antitrust, in Buccirossi, P. (Ed.), Handbook of Antitrust Economics, Cambridge: MIT Press.Google Scholar
Teulings, C. (2005), The Wealth of Education, Enschede: SLO.Google Scholar

Save book to Kindle

To save this book to your Kindle, first ensure coreplatform@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×