Oxera’s report is the first to assess systematically how behavioural economics in its current state influences, or could influence, each of the main instruments and tools used in competition policy. The result is a practical overview that indicates a number of areas where, based on the current state of the literature, the insights from behavioural economics can already be useful for the analysis in competition cases.
This is not to say that behavioural economics has, or should have, a radical impact on competition policy. Indeed, if one were to write, or update, a textbook on competition law and economics, most of the text would probably remain unaffected by behavioural economics. Instead, behavioural economics can be seen as providing useful additional insight. That there are certain market situations and outcomes that are driven by consumer biases and bounded rationality, and that can be understood or explained through behavioural economics.
The report explains that in many conduct and merger cases in consumer markets, it may be useful to consider whether there any relevant behavioural economics aspects, not as the sole approach, but rather as part of the broader economic toolkit with which a case can be analysed (which also draws on the fields of IO, financial economics, and econometrics).
The ACM has published its own note on this topic together with the Oxera report, and both organisations will be presenting their findings at several conferences and other events over the coming months.
Oxera is grateful for the discussions and brainstorm sessions held for this study with the following people: ACM/NMa staff; economists at the UK Financial Services Authority; Professor Vincent Crawford, All Souls College, University of Oxford; and Professor Sir John Vickers, All Souls College, University of Oxford. Oxera is fully responsible for the content of this report. It does not reflect the views of the ACM.
The ACM (in Dutch: Autoriteit Consument en Markt) came into existence in April 2013 through the merging of the competition authority (the NMa), the telecommunications and postal regulator (OPTA) and the Consumer Authority. The study was initially commissioned by the NMa