This book represents one of the best attempts to summarize the most advanced theoretical research in industrial organization and its implications for competition (or antitrust) policy. Beyond a solid introduction to the theory of market structures, welfare analysis and to the problems of competition policy, it contains wonderful sections on collusion, horizontal and vertical mergers, vertical restraints, inter-brand competition, predatory pricing, tying and bundling, strategic investments, interoperability and price discrimination. Very recent results are discussed to shed new light on important antitrust cases, mainly in the European market but also in the American one.

A main thesis supported by this book is the necessity of a roboust economic analysis to draw policy implications on which strategies harm consumers and which not. Recently many other economists have pointed out the necessity of a closer focus on consumer welfare in the implementation of competition policy. While antitrust legislation was written with this objective in mind, its concrete application has been often biased against market leaders and in defense of their competitors rather than toward the defense of free competition and of the interests of consumers. The two objectives do not necessarily overlap. The development of the New Economy, characterized by very dynamic and innovative markets, has increased the pressure for a new approach. In July 2005 also a Report by a group of important economists of the Economic Advisory Group for Competition Policy of the European Union has argued in favor of an effect-based approach to competition policy, which associates abuses of dominant positions with anti-competitive strategies that harm consumers (“An Economic Analysis to Article 82” by J. Gual, M. Hellwig, A. Perrot, M. Polo, P. Rey, K. Schmidt and R. Stenbacka).

Praises:

‘Motta brings together today's economic theory with important cases from both sides of the Atlantic. It will be a valuable resource for students and practitioners, and I look forward to using it in classes.’ Joseph Farrell, University of California, Berkeley, United States of America.

‘Massimo Motta has filled a major lacuna by providing a comprehensive treatment of the modern theory of antitrust/competition policy. He masterfully blends theory and E.U. cases to produce a treatise that works at both the undergraduate and graduate levels, serves as a valuable resource for working economists, and is readable to many non-economists. In addition, by offering his own judicious views on the state of competition policy, he encourages the reader to go beyond digesting current knowledge and to think critically. A course on U.S. antitrust economics could do no better than to assign this text while complementing it with a collection of U.S. cases.’ Joseph Harrington, Johns Hopkins University, United States of America.

‘This careful treatment of the economics of competition policy, from an expert who has himself made important contributions to the theory, should be an essential reference for anyone working in the field. It fills a real gap in the market, and should be useful to practitioners as well as both advanced undergraduate and graduate students.’ Paul Klemperer, Oxford University, United Kingdom.