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Articles 1 - 14 of 14
Full-Text Articles in Law and Economics
Amazon's Pricing Paradox, Rory Van Loo, Nikita Aggarwal
Amazon's Pricing Paradox, Rory Van Loo, Nikita Aggarwal
Faculty Scholarship
Antitrust scholars have widely debated the apparent paradox of Amazon seemingly wielding monopoly power while offering low prices to consumers. A single company’s behavior thereby helped spark an intellectual renaissance as scholars debated why Amazon’s prices were so low, whether antitrust enforcers should intervene, and, eventually, how the field should be reformed for the era of large online platforms. One of the few things that all parties have agreed upon amidst those contentious conversations is that Amazon offers low prices. This Article challenges that assumption by demonstrating that Amazon charges higher prices than commonly understood. More importantly, unraveling the disconnect …
Error Costs, Ratio Tests, And Patent Antitrust Law, Keith N. Hylton, Wendy Xu
Error Costs, Ratio Tests, And Patent Antitrust Law, Keith N. Hylton, Wendy Xu
Faculty Scholarship
This paper examines the welfare tradeoff between patent and antitrust law. Since patent and antitrust law have contradictory goals, the question that naturally arises is how one should choose between the two in instances where there is a conflict. One sensible approach to choosing between two legal standards, or between proof standards with respect to evidence, is to consider the relative costs of errors. The approach in this paper is to consider the ratio of false positives to false negatives in patent antitrust. We find that the relevant error cost ratio for patent antitrust is the proportion of the sum …
Common Ownership And Executive Incentives: The Implausibility Of Compensation As An Anticompetitive Mechanism, David I. Walker
Common Ownership And Executive Incentives: The Implausibility Of Compensation As An Anticompetitive Mechanism, David I. Walker
Faculty Scholarship
Mutual funds, pension funds and other institutional investors are a growing presence in U.S. equity markets, and these investors frequently hold large stakes in shares of competing companies. Because these common owners might prefer to maximize the values of their portfolios of companies, rather than the value of individual companies in isolation, this new reality has lead to a concern that companies in concentrated industries with high degrees of common ownership might compete less vigorously with each other than they otherwise would. But what mechanism would link common ownership with reduced competition? Some commentators argue that one of the most …
Digital Platforms And Antitrust Law, Keith N. Hylton
Digital Platforms And Antitrust Law, Keith N. Hylton
Faculty Scholarship
This Article is about "big data" and antitrust law. Big data, for my purposes, refers to digital platforms that enable the discovery and sharing of information by consumers, and the harvesting and analysis of consumer data by the platform. The obvious example of such a platform is Google. The big platforms owe their market dominance not to anticompetitive conduct, but to economies of scale. This Article discusses three types of anticompetitive conduct associated with digital platforms: kill zone expropriation, acquisition of nascent rivals, and denial of access to data. There is nothing so unusual about digital platforms that would require …
Serial Collusion By Multi-Product Firms, Michael J. Meurer, William Kovacic, Robert Marshall
Serial Collusion By Multi-Product Firms, Michael J. Meurer, William Kovacic, Robert Marshall
Faculty Scholarship
We provide empirical evidence that many multi-product firms have each participated in several cartels over the past 50 years. Standard analysis of cartel conduct, as well as enforcement policy, is rooted in the presumption that each cartel in which a given firm participates is a singular activity, independent of other cartel conduct by the firm. We argue that this analysis is deficient in many respects in the face of serial collusion by multi-product firms. We offer policy recommendations to reign in serial collusion, including a mandatory coordinated effects review for any merger involving a serial colluder, regardless of the apparent …
The Policy Challenge Of Artificial Intelligence, James Bessen
The Policy Challenge Of Artificial Intelligence, James Bessen
Faculty Scholarship
New "artificial intelligence" (AI) technology promises to bring dramatic social and economic changes, demanding major policy changes. In intellectual property and antitrust law, AI will exacerbate a damaging trend: across all major sectors of the economy, proprietary information technology is increasing the market dominance of large firms. This trend might not seem like bad news, but it is evidence of a slowdown in the spread of technical knowledge throughout the economy. The result is rising industry concentration, slower productivity growth and growing wage inequality. The key challenge to IP and antitrust policy will be counter this trend yet maintain innovation …
Markovits On Defining Monopolization: A Comment, Keith N. Hylton
Markovits On Defining Monopolization: A Comment, Keith N. Hylton
Faculty Scholarship
In this comment I focus on Richard Markovits’s definition of monopolization in his new book, Economics and the Interpretation and Application of U.S. and E.U. Antitrust Law (Springer 2014), and also his assertion that monopolization is distributively unjust. I agree wholeheartedly with his approach to defining monopolization, though I might alter a few details. However, I think the distributive justice effects of monopolization are ambiguous.
Deterrence And Antitrust Punishment: Firms Versus Agents, Keith N. Hylton
Deterrence And Antitrust Punishment: Firms Versus Agents, Keith N. Hylton
Faculty Scholarship
Antitrust enforcement regimes rely on penalties against two groups of actors for deterrence: penalties against the violating firm and penalties against the violating firm's agents. Here, I examine the economics of punishing agents versus firms. My area of application is antitrust, but the argument applies generally to other fields in which the government has the choice of punishing the agent, the firm, or both. This analysis suggests that whenever the firm has an incentive, given existing penalties, to engage in some illegal act that may result in relatively modest punishment for its agents, the firm can almost always induce its …
Innovation And Optimal Punishment, With Antitrust Applications, Keith N. Hylton, Haizhen Lin
Innovation And Optimal Punishment, With Antitrust Applications, Keith N. Hylton, Haizhen Lin
Faculty Scholarship
This article modifies the optimal punishment analysis by incorporating investment incentives with external benefits. In the models examined, the recommendation that the optimal penalty should internalize the marginal social harm is no longer valid. We focus on antitrust applications. In light of the benefits from innovation, the optimal policy will punish monopolizing firms more leniently than suggested in the standard static model. It may be optimal not to punish the monopolizing firm at all, or to reward the firm rather than punish it. We examine the precise balance between penalty and reward in the optimal punishment scheme.
Injunctive And Reverse Settlements In Competition-Blocking Litigation, Keith N. Hylton, Sungjoon Cho
Injunctive And Reverse Settlements In Competition-Blocking Litigation, Keith N. Hylton, Sungjoon Cho
Faculty Scholarship
We distinguish standard settlements, in which the status quo is preserved, and injunctive settlements, which prohibit the defendant's activity. The reverse (payment) settlement is a special type of injunctive settlement. We examine the divergence between private and social incentives to settle and policies that would minimize socially undesirable injunctive and reverse settlements (e.g., banning reverse settlements). The results are applied to competition-blocking litigation, such as patent infringement and antidumping.
American And European Monopolization Law: A Doctrinal And Empirical Comparison, Keith N. Hylton, Haizhen Lin
American And European Monopolization Law: A Doctrinal And Empirical Comparison, Keith N. Hylton, Haizhen Lin
Faculty Scholarship
This paper focuses on the differences between Article 82 and Section 2, reflecting largely on the American experience. We start with a discussion of the American experience and use that as a background from which to examine the European law on monopolies. American law is more conservative (less interventionist), reflecting the error cost analysis that is increasingly common in American courts. The second half of this paper provides an empirical comparison of the American and European regimes. Although a preliminary empirical examination suggests that the scope of a country’s monopolization law is inversely related to its degree of trade dependence, …
The Law And Economics Of Monopolization Standards, Keith N. Hylton
The Law And Economics Of Monopolization Standards, Keith N. Hylton
Faculty Scholarship
Monopolization, the restriction of competition by a dominant firm, is regulated in roughly half of the world’s nations. The two most famous laws regulating monopolization are Section 2 of the Sherman Act, in the United States, and Article 82 of the European Community Treaty. Both laws have been understood as prohibiting ‘abuses’ of monopoly power.
Measuring Market Power When The Firm Has Power In The Input And Output Markets, Keith N. Hylton, Mark Lasser
Measuring Market Power When The Firm Has Power In The Input And Output Markets, Keith N. Hylton, Mark Lasser
Faculty Scholarship
We examine the problem of measuring market power when the firm has monopoly power in the output market and monopsony power in the input market - a case we refer to as 'dual-market' power. We show how the Lerner index, which measures the mark-up over the marginal cost, can be modified to reflect the firm's ability to set price above the competitive level.
Economic Rents And Essential Facilities, Keith N. Hylton
Economic Rents And Essential Facilities, Keith N. Hylton
Faculty Scholarship
This paper presents an economic analysis of the essential facility doctrine of antitrust. According to this doctrine, a firm or group of firms that possesses exclusive access to a cost-reducing facility must be prepared to share such access on fair terms with competitors.