Complexity-minded antitrust

Abstract

Complexity science permeates the policy spectrum but not antitrust. This is unfortunate. Complexity science provides a high-resolution screen on the empirical realities of markets. And it enables a rich understanding of competition, beyond the reductionist descriptions of markets and firms proposed by neoclassical models and their contemporary neo-Brandeisian critique. New insights arise from the key teachings of complexity science, like feedback loops and the role of uncertainty. The present article lays down the building blocks of a complexity-minded antitrust method.

The evolution of economies, technologies, and other institutions: exploring W. Brian Arthur's insights

“…Although the ‘allocation problem is by now well understood and highly mathematicized, the formation question is less well understood’ (Arthur, 2018b). Arthur's work in complexity economics helps with the second question (Petit and Schrepel, 2023). He seeks to answer, ‘[h]ow do economies come into being?…”

“…In the short run, these institutions should see positive feedback loops as generating economic uncertainty (i.e. competition) because they change the business environment and thus force agents to ‘cognize’ (Arthur, 2009) 14 – rather than rationally devise – new strategies (Petit and Schrepel, 2023). In the medium to long term, institutions in charge of competition policy should see that positive feedback loops have the potential to lead to lock-ins and path dependency, i.e.…”

In The Light Of Dynamic Competition: Should We Make Merger Remedies More Flexible?

“…716). & Teece 2009;Federico et al 2020;Petit & Schrepel 2023) and putting an emphasis on dynamic capabilities of firms as a decisive factor for innovation, paired with a sceptical view towards acquiring such capabilities through mergers and acquisitions (Petit & Teece 2021;Teece 2023). Altogether, the question of change and innovation does not trivially connect to market concentration, which turns the dynamic side of merger control into a particularly difficult business.…”