College of Law Faculty Scholarship

Abstract

In light of the financial crisis and the empirical findings from behavioral economics, policymakers should reconsider the fundamental question: what is competition? Only in understanding competition can one understand what competition can or cannot achieve under certain circumstances.

This Article reexamines one premise of competition, namely the extent to which firms, consumers, and the government are rational and act with perfect willpower. In varying this assumption, this Article maps four scenarios of competition.

Competition authorities should revisit their conception of competition, including the underlying assumptions, to better understand the competitive dynamics in different industries. In engaging in this review, competition authorities should consider the developments in several inter-disciplinary fields, such as behavioral economics, new institutional economics, and evolutionary economics. The literature can provide competition authorities a richer understanding of observed behavior in the marketplace, how consumers choose, and additional remedial options, such as default options. Ultimately, these interdisciplinary economic theories can improve antitrust analysis by helping us understand first what competition is, second what competition can achieve for us, and finally how competition can promote the good life.

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