EALE Conference, EALE Stockholm 2012

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Understanding Behavioral Antitrust
Avishalom Tor

Last modified: 2012-09-06

Abstract


The application of empirical behavioral evidence to antitrust law—also known as behavioral antitrust—is increasingly popular and hotly debated by legal scholars and the enforcement agencies alike. This Article shows, however, that both supporters and detractors of behavioral antitrust frequently and fundamentally misconstrue its methodology, treating behavioral phenomena as broad hypothetical assumptions rather than specific empirical findings. Following this fundamental misconception, scholars make four classes of mistakes in behavioral antitrust analyses: First, they frequently fail to appreciate the inevitably limited universality and uniformity of behavioral phenomena. Second, scholars often disregard the concrete ways in which the institutions of antitrust—from markets and firms to enforcement agencies and courts—at different times facilitate and inhibit rational behavior by antitrust actors. Third, commentators who mistakenly equate all deviations from standard rationality with both private and social sub-optimality and antitrust concerns tend to embrace or reject the behavioral approach based on their respective policy predispositions instead of the merits of the empirical evidence. Fourth, when researchers recognize the empirical nature of the behavioral evidence they tend to exaggerate its intractability, thus understating its usefulness for antitrust analysis. After examining these four common mistakes and their manifestations in antitrust analysis, the Article outlines the developments needed for the behavioral approach to fulfill its promise of making antitrust law and policy more realistic and empirically-grounded and, therefore, more effective in protecting competition. All in all, it finds that while the behavioral approach already provides important antitrust lessons, it is not only in its early stages but the nature of its empirical foundations makes it an invaluable complement—but clearly not a substitute—for traditional antitrust law and economics.


Keywords


Antitrust, Behavioral Law and Economics, Methodology

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