Posted by Social Science Research Network
Antitrust Economics in the Raw
By Adriaan Ten Kate Sr.
Abstract: In this essay I argue that economics has not played the role it should have played in the resolution of competition cases and that it is unlikely that it ever will. Thus far competition analysis has put up a smokescreen of sophistication around a number of vaguely defined concepts, such as market power and relevant markets, but has fallen short of its main task: that of estimating the competitive effects from mergers and business conduct with a reasonable degree of reliability. The toolkit is inadequate to cope with the challenges, and the analysis fails, in the same way as economic forecasting often fails to predict the future. The difference is that with economic forecasts one can check them against what happens in reality, so that everybody knows what they are worth, while that is not the case with the estimates of competition analysis. Unfortunately, few antitrust economists are ready to admit the limitations of their discipline and many antitrust lawyers do not protest for a lack of better guidance.
