Friday, October 19, 2007
Posted by D. Daniel Sokol
Does academic work on collusion shed light on how we should think about antitrust policy? Christoph Engel of the Max Plank Institute thinks that it does and writes about it in his paper Tacit Collusion: The Neglected Experimental Evidence.
ABSTRACT: Both in the US and in Europe, antitrust authorities prohibit merger not only if the merged entity, in and of itself, is no longer sufficiently controlled by competition. The authorities also intervene if, post merger, the market structure has changed such that tacit collusion becomes disturbingly more likely. It seems that antitrust neglects the fact that, for more than 50 years, economists have been doing experiments on this very question. Almost any conceivable determinant of higher or lower collusion has been tested. This paper standardises the evidence by way of a meta-study, and relates experimental findings as closely as possible to antitrust doctrine.