Chapter 2: The enforcement context
2. The enforcement context 2.1 INTRODUCTION There are three principal contextual considerations relevant to an examination of the use of economics in the enforcement of European laws relating to oligopolies. First, the economic ‘mischief’ that has potential to exist in oligopolistic industries, which underlies the need for a regulatory response. Second, the specific regulatory response, in the form of the legal notion of collective dominance that has been developed to address this economic ‘mischief’. Finally, the institutions and actors that are involved in the process of the enforcement of these laws. This chapter briefly introduces each of these contextual elements, and outlines the methodology adopted to examine how economics has featured in this specific enforcement setting. 2.2 2.2.1 THE ECONOMIC MISCHIEF Oligopolistic Interdependence Economics conceives of oligopolies as market or industry structures where there are a few sellers of a particular product, which can be distinguished from a market structure where there is only one seller of a product (monopoly) or a market structure where there are many sellers of a product (perfect competition). The key characteristic of an oligopolistic market structure is that there is a high degree of interdependence between firms. This means that the decisions of firms in the market as to production levels and prices substantively impact rivals who will be expected to respond in ways which will directly affect the profit capable of arising from those original decisions.1 Again this can be 1 To illustrate this interdependence consider a market with 3 identical firms (A,...
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