Competition as a Socially Desirable Dilemma

39 Pages Posted: 17 May 2006

See all articles by Christoph Engel

Christoph Engel

Max Planck Institute for Research on Collective Goods; University of Bonn - Faculty of Law & Economics; Erasmus University Rotterdam (EUR), Erasmus School of Law, Rotterdam Institute of Law and Economics, Students; Universität Osnabrück - Faculty of Law

Date Written: May 2006

Abstract

A cartel is socially not desirable. But is it a normative problem? And has merger control reason to be concerned about tacit collusion? Neither is evident once one has seen that the members of a cartel face a problem of strategic interaction. It is routinely analysed in terms of game theory. Much less frequently, however, an obvious parallel is drawn. For cartel members, the formation of the cartel and cartel discipline are a public good. Making the parallel explicit is elucidating both at the theoretical and at the experimental levels. The paper contrasts oligopoly theory with public goods theory, and oligopoly experiments with public goods experiments.

Keywords: Oligopoly, Public Good, Experiment

JEL Classification: C72, D21, D43, H41, K21, L13, L41

Suggested Citation

Engel, Christoph, Competition as a Socially Desirable Dilemma (May 2006). MPI Collective Goods Preprint No. 12. Available at SSRN: https://ssrn.com/abstract=902813 or http://dx.doi.org/10.2139/ssrn.902813

Christoph Engel (Contact Author)

Max Planck Institute for Research on Collective Goods ( email )

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University of Bonn - Faculty of Law & Economics

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Erasmus University Rotterdam (EUR), Erasmus School of Law, Rotterdam Institute of Law and Economics, Students ( email )

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Netherlands

Universität Osnabrück - Faculty of Law

Osnabruck, D-49069
Germany

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