Smiley Faces and Frowning Professors: Economic Modelling in the Qantas-Air NZ Case

Abstract:     
The way that economic models are used in an adjudicative setting is different from the way they are used in other settings. The Qantas-Air NZ case is an example of areas in which economists can improve the way they present models to courts and commissions. This paper takes two different forms of criticism. First, we examine how Cournot modelling was used, and misused, to argue about the potential competitive detriments of the proposed airline alliance. Cournot modelling was the subject of an extraordinary amount of debate in the proceedings before the High Court and before the New Zealand Commerce Commission. Second, we consider models in a broader sense, and criticise their use as instruments of economic rhetoric and of legal rhetoric. We conclude that, somewhere in the story-telling, the economists forgot who the audience was, and just started talking among themselves. We recommend more modest kinds of economic arguments, ones more considerate to the audience.

Number of Pages in PDF File: 9

Keywords: Modelling, methodology, rhetoric, law and economics, airlines

JEL Classification: B40, K21

working papers series