Competition Policy and the Economic Approach
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Competition Policy and the Economic Approach

Foundations and Limitations

Edited by Josef Drexl, Wolfgang Kerber and Rupprecht Podszun

This outstanding collection of original essays brings together some of the leading experts in competition economics, policy and law. They examine what lies at the core of the ‘economic approach to competition law’ and deal with its normative and institutional limitations. In recent years the ‘more economic approach’ has led to a modernisation of competition law throughout the world. This book comprehensively examines for the first time, the foundations and limitations of the approach and will be of great interest to scholars of competition policy no matter what discipline.
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Chapter 6: Modern Industrial Economics: Open Problems and Possible Limits

Oliver Budzinski

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6. Modern industrial economics: open problems and possible limits Oliver Budzinski INTRODUCTION 1. The advantages and disadvantages of an economic approach to competition law are currently discussed remarkably vividly among economists, legal scholars and also political scientists. It can hardly be doubted that the design and application of competition law must be informed by up-to-date knowledge about the underlying economics of competition. However, it should also be clear that competition policy inherently represents a multidisciplinary issue, and legal as well as political arguments cannot be neglected either. In this complex situation, the controversy about an economic approach to competition law actually does not refer to the question of using economics at all. The question is whether competition policy should embrace more strongly modern mainstream industrial economics as its sole or dominant economic influence. In this context, the editors of this volume asked me critically to assess the current and future capabilities of this approach and its performance in specific case analysis. Specific emphasis is to be put on the remaining open problems and on possible limits, while recognizing the widely accepted merits of this approach. Therefore, I address open problems and possible limits as they have been raised in the literature and the underlying case practice. In doing so, I scrutinize each issue as to whether (i) it hits this specific economic approach at all, (ii) it represents a teething problem or (iii) it has to be considered as a serious limitation. The focus on problems and limits rather than...

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