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Competition Policy and the Control of Buyer Power

A Global Issue

Peter C. Carstensen

This book provides a comprehensive overview of the economic and competition policy issues that buyer power creates. Drawing on economic analysis and cases from around the world, it explains why conventional seller side standards and analyses do not provide an adequate framework for responding to the problems that buyer power can create. Based on evidence that abuse of buyer power is a serious problem for the competitive process, the book evaluates the potential for competition law to deal directly with the problems of abuse either through conventional competition law or special rules aimed at abusive conduct. The author also examines controls over buying groups and mergers as potentially more useful responses to risks created by undue buyer power.
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Chapter 2: The goals of competition policy

A Global Issue

Peter C. Carstensen

Extract

This chapter addresses the choice of goals for competition law and policy. It describes goals based on economic theory (maximizing consumer welfare, aggregate welfare or producer welfare), fairness in the competition and promoting and protecting the competitive process itself. The chapter argues that the last of these options is the best basic goal because neither economic theory nor fairness provide a coherent basis for policy over time given the dynamics of markets and the ambiguity of both economic theory and fairness. But even the goal of promoting and protecting the competitive process is not self-defining because determining the appropriate degree of legal intervention is dependent on the assessment of the risks to the competitive process if there were no intervention. Given the many examples of market failure, the chapter concludes that the legal system must provide significant oversight of the competitive process in order to ensure the long-term viability of the competitive process.

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