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The Fable Of Entry: Bounded Rationality, Market Discipline, And Legal Policy, Avishalom Tor
The Fable Of Entry: Bounded Rationality, Market Discipline, And Legal Policy, Avishalom Tor
Avishalom Tor
Legal scholars have recently advanced a behavioral approach to the law and economics school of thought, replacing the traditionally assumed rational actor with an empirically based, boundedly rational decision maker. In response, advocates of traditional law and economics have asserted that boundedly rational behavior is of little significance for the analysis of economic activities in market environments, most notably because competitive pressures will eliminate such behavior. This article argues, however, that bounded rationality has important effects on the market even under conditions of intense competition. Through a study of the competition among new entrants into industry, this analysis examines the …
Illustrating A Behaviorally Informed Approach To Antitrust Law: The Case Of Predatory Pricing, Avishalom Tor
Illustrating A Behaviorally Informed Approach To Antitrust Law: The Case Of Predatory Pricing, Avishalom Tor
Avishalom Tor
One of the core assumptions of the traditional economic approach to antitrust law is that competitors are perfectly rational, profit-maximizing, decision makers. Sometimes, this assumption serves as a useful simplification of business behavior, providing an effective foundation for antitrust doctrine. At other times, however, assuming strictly rational behavior on the part of competitors is not “approximately right” but, instead, “perfectly wrong.” In these latter cases, the reliance on the perfect rationality assumption can lead scholars to mispredict market behavior and, possibly, advocate erroneous prescriptions for antitrust policy. In contrast, a behaviorally informed approach to antitrust law is based on scientific …
Behavioral Antitrust: A New Approach To The Rule Of Reason After Leegin, William J. Rinner, Avishalom Tor
Behavioral Antitrust: A New Approach To The Rule Of Reason After Leegin, William J. Rinner, Avishalom Tor
Avishalom Tor
The Supreme Court’s recent decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc., which replaced the longstanding per-se rule against resale price maintenance (RPM) with a rule of reason approach, has resurrected the debate over RPM. Legal and economic proponents of this practice again point to its potential procompetitive benefits, while RPM detractors emphasize its possible anticompetitive consequences. Despite their disagreements regarding the overall RPM evaluation, however, scholars, the Court, and the limited empirical data appear near-unanimous in agreeing that such arrangements can either increase or decrease efficiency. Consequently, the RPM debate predominantly revolves around theoretical assertions regarding the …