Practical Guide to Applying Behavioral Economics To Competition Policy and Law In Developing Economies

Abstract

Over the past three decades, the international competition policy and law community has been affected and dramatically altered by two parallel developments: (i) the significant expansion in the number of developing, transition and emerging market economies with modern competition policies and antitrust/competition laws to more than 100 countries and jurisdictions at the present time; and, (ii) the growing literature, discourse, and disputes on whether the insights from behavioral economics and related behavioral literatures are relevant to and should be applied to the design, administration and enforcement of competition policies and antitrust/competition laws and related policies and laws by countries and multi-country competition law jurisdictions such as the European Union and COMESA (the Common Market for Eastern and Southern Africa). However, comparatively little research and policy analysis have been conducted on assessing the interactions between these two parallel global developments. This working paper attempts to make a contribution to addressing this gap, through providing an overview of, and some guidance on, the strengths and limitations of behavioral economics and related less conventional literatures for the design, administration and enforcement of competition and related policies and laws in developing, transition and emerging market economies and in the increasingly integrated global economy. Particular attention is given to the distinctive market, socioeconomic, institutional and political economy conditions and challenges in developing economies that are important to whether, why, when and how the insights from behavioral economics should be applied to their often comparatively new competition policies, laws, rules, functions, institutions, and authorities. The guidance provided in sections 3.0 and 4.0 encompasses seventeen guidelines on the selective application of behavioral science insights to competition law matters in developing economy markets, and eleven behavioral markers of anticompetitive and non-compliant conduct, which can assist with the development of behaviorally informed theories of competitive and consumer harm. The working paper includes a quite extensive bibliography with links to articles and studies when available, in order to assist readers who may not be very familiar with some of these less conventional literatures. Furthermore, footnotes and appendices are used extensively to provide additional information to readers interested in a specific subject, while keeping the main text of the report at a “relatively reasonable” length.