Law and Economics Approaches to Bid Rigging
New Horizons in Competition Law and Economics series
Chapter 3: Industrial economics
This chapter seeks to give a general introduction to the economic field dealing with competition: industrial economics. The chapter is subdivided into three interrelated parts. The first (in Section 2) introduces the field of industrial economics. It reviews the Structure-Conduct-Performance paradigm and presents some of the empirical findings regarding the link between industry structure, barriers to entry and profitability of enterprises. In the course of an historical overview, the Chicago School will be introduced before arriving at the new industrial economics approach. The second part of the chapter (Section 3) depicts the basic concept of the social welfare cost of a simple static monopoly model and the economic concepts of cartelization, and reviews their implications for the general public. Section 4 focuses specifically on the industrial economics insights regarding bid rigging conspiracies and the lessons that public procurement entities can derive from them.
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