Forest for the Trees: Economics of Joint Dominance

Recent court rulings, e.g., in the Gencor and Airtours cases, and the new EC Merger Regulation hint that the legal concept of joint dominance in oligopolistic markets should be interpreted as the economic concept of collusion. This is sensible and based on accepted economic theory. I discuss how competitive assessment in case law has taken some economics lessons seriously but ignored others. Economists and antitrust practitioners seem to speak past each other on these issues. This paper attempts to bridge the gap, and to clarify the concepts of joint dominance and coordination of market behavior. I discuss some recent advances in economic theory and empirical economic evidence related to joint dominance in order to draw policy conclusions.JEL Classification: L40, K21This article is a part of the joint research program of BRIE, the Berkeley Roundtable on the International Economy at the University of California at Berkeley, and ETLA, the Research Institute of the Finnish Economy (). Financial support from Nokia and the National Technology Agency (Tekes) is gratefully acknowledged. The article has benefited from comments by Ilkka Aalto-Setälä, Petri Kuoppamäki, Pekka Ylä-Anttila, and two anonymous referees. All opinions expressed and errors made are those of the author.