Economic Theory and Competition Law
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Economic Theory and Competition Law

Edited by Josef Drexl, Laurence Idot and Joël Monéger

The context for this book is the increasingly complex relationship between economic theory and competition law which gives rise to lively political and academic debate on the direction competition law should take in a more global and innovation-oriented market place.
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Chapter 2: Competition Law and the Institutional Embeddedness of Economics

David J. Gerber


David J Gerber* 1 INTRODUCTION Transnational debates about the role of economics in competition law have paid relatively little systematic attention to the embeddedness of economics in institutions. They typically proceed as if embeddedness were not an issue. The assumption appears to be that economics looks, acts and functions the same wherever it is applied. This assumption is often the basis for claims supporting increased use of economics in legal systems around the world. The claim is that economics represents a standardized and internationally applicable language and thus that its increased use in competition law will lead to or at least support global harmonization of antitrust law. In particular, European discussions of a ‘more economic approach’ to competition law often refer to the use of economics in US antitrust law, and they frequently assume that if economics works in a particular way in the United States and has particular consequences there, it will function the same way in Europe and have similar consequences. Lack of attention to the embeddedness of economics in institutions can be attributed to two sets of closely related factors. One is a lack of sufficient incentives to explore these issues. Economists themselves generally have little reason to study the institutional application of economics. It is not their issue. Their role and function is to talk about the substance of economics itself and to apply its methods.1 Legal scholars may be dissuaded from approaching these issues because they do not fit neatly into any exist- * Distinguished...

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