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David Lewis, Dec 15, 2008
Macroeconomists often stand accused with good reason of treating firms as black boxes whose diverse features are not acknowledged, or even understood, when responses to fiscal and monetary policy decisions are considered. But by the same token, much of microeconomics treats the broader economic and political context as a black box, as a mere neutral stage on which firms and individuals interact. Competition and regulatory economics, in all its stimulating, mind-bending complexity is the province of very clever microeconomists who endlessly model and theorize the strategic interactions of firms and the behavior of consumers without giving much thought to the context in which this behavior occurs. However, broader contextual issues set the stage for those interactions and when that set changes, the parameters and possibilities, the outcomes and the public expectations of regulatory interventions shift, sometimes markedly. We are currently experiencing such a change in the stage set, and I want to look at the immediate prospects for competition law and policy in this changed context.