An Experimental Investigation of Article 82 Rebate Schemes
Competition Law Review, Vol. 2, No. 2, pp. 1-31, 2006
30 Pages Posted: 2 May 2011 Last revised: 5 May 2011
Date Written: May 1, 2011
We conduct an experiment to test standard theoretical predictions concerning switching behavior in a rebate and a discount scheme. Beyond theoretical expectations we find that rebate and discount schemes exert a significant attraction that enhances the potentially exclusionary effect of the schemes. From a competition policy perspective this is an important result because it emphasizes that it may be crucial to analyze to what extent firms deviate predictably from decision patterns prescribed by standard economic theory. Competition policy cannot afford to neglect the possibility of boundedly rational firms deviating systematically from standard theoretical predictions.
Keywords: rebates, discounts, antitrust, Article 102, Article 82, experiment, behavioral economics, competition policy
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