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The economics of dependence: A theory of relativity

Author

Listed:
  • Hans W. Friederiszick

    (ESMT European School of Management and Technology and E.CA Economics)

  • Alexis Walckiers

    (E.CA Economics and ECARES – Université Libre de Bruxelles)

Abstract

An increasing number of countries have introduced some form of prohibition of abuses of economic dependence or broadened the scope of their existing legislation. Yet, very little has been written on the economics of economic dependence, that is on economic reasoning, tools or metrics that can be relied upon to identify whether a company is economically dependent on another company. The present paper aims to fill this gap, and argues that bargaining theory and the economics of relative market power can be helpful to characterise economic dependence. We summarise a number of takeaways from this literature, and describe empirical strategies that can be relied upon to try and quantify economic dependence in specific cases.

Suggested Citation

  • Hans W. Friederiszick & Alexis Walckiers, 2021. "The economics of dependence: A theory of relativity," ESMT Research Working Papers ESMT-21-02, ESMT European School of Management and Technology.
    • Handle: RePEc:esm:wpaper:esmt-21-02
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    File URL: http://static.esmt.org/publications/workingpapers/ESMT-21-02.pdf
    File Function: First version, 2021
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    More about this item

    Keywords

    economic dependency; bargaining theory; vertical restraints; law & economics; competition law;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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