Law and Economics Commons^™

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 …

What Do Chinese Clients Want?, Ji Li, Wei Zhang

Research Collection Yong Pung How School Of Law

The world’s two largest economies are locked in an escalating trade war, and caught in the crossfire are hundreds of Chinese multinational companies (MNCs) that have made substantial U.S. investments. Facing heightened legal risks in a less hospitable environment, the Chinese MNCs increasingly depend on local lawyers. Yet, their purchase of U.S. legal service, a topic of both practical and theoretical importance, has received little attention. To fill the gap, this article empirically investigates how Chinese companies in the United States select their U.S. legal counsel. By analyzing a unique dataset, the article finds that Chinese MNC managers uniformly prioritize …

The Future Of Dairy Cooperatives In The Modern Marketplace: Redeveloping The Capper-Volstead Act, Sarah K. Phillips

Dickinson Law Review (2017-Present)

Agriculture plays a fundamental role in the U.S. economy as a multibillion-dollar industry that feeds people all over the world. However, over the past decade, the dairy industry in particular has changed from a reliable sector of the greater agricultural industry into an unsettled, politically-charged, and fractured group. Dairy farmers’ consistently receiving low milk prices has facilitated this divide. Tired of being ignored and underpaid, dairy farmers are demanding change in the current dairy market structure.

Federal Milk Marketing Orders and a variety of statutes regulate the dairy industry, but the 1922 Capper-Volstead Act remains the most notable piece of …

Table Of Contents, Seattle University Law Review

Seattle University Law Review

No abstract provided.

Section 2 Enforcement And The Great Recession: Why Less (Enforcement) Might Mean More (Gdp), Alan J. Meese

Alan J. Meese

The Great Recession has provoked calls for more vigorous regulation in all sectors, including antitrust enforcement. After President Obama took office, the Antitrust Division of the Department of Justice abandoned the Bush Administration’s standard of liability under section 2 of the Sherman Act, which forbids unlawful monopolization, as insufficiently interventionist. Based on the premise that similarly lax antitrust enforcement caused and deepened the Great Depression, the Obama Administration outlined a more intrusive and consumer-focused approach to section 2 enforcement as part of a larger national strategy to combat the “extreme” economic crisis the nation was then facing.

This Essay draws …

Reframing Antitrust In Light Of Scientific Revolution: Accounting For Transaction Costs In Rule Of Reason Analysis, Alan J. Meese

Alan J. Meese

This Article contends that modern rule of reason analysis, informed by workable competition’s partial equilibrium trade-off paradigm, is suitable for evaluating only a subset of agreements that may reduce transaction costs. The Article distinguishes between “technological” and “non-technological” transaction costs. Technological transaction costs entail the bargaining and information costs first emphasized by Ronald Coase, while non-technological transaction costs result from more fundamental departures from perfect competition, departures creating a risk of opportunism that accompanies relationship-specific investments. Modern law does accurately assess restraints that may reduce technological transaction costs—costs that are analogous to the sort of production costs recognized by the …

Property Rights And Intrabrand Restraints, Alan J. Meese

Alan J. Meese

Intrabrand restraints limit the discretion of one or more sellers-usually dealers-with respect to the disposition of a product sold under a single brand. While most scholars believe that such contracts can help assure optimal promotion of a manufacturer's products, there is disagreement about the exact manner in which such restraints accomplish this objective. Many scholars believe that such restraints themselves induce dealers to engage in promotional activities desired by the manufacturer. Others believe that such restraints merely serve as "performance bonds," which dealers will forfeit if they fail to follow the manufacturer's precise promotional instructions. Some scholars reject both approaches, …

Monopolization, Exclusion, And The Theory Of The Firm, Alan J. Meese

Alan J. Meese

No abstract provided.

Price Theory And Vertical Restraints: A Misunderstood Relation, Alan J. Meese

Alan J. Meese

The Chicago School of antitrust analysis has exerted a strong influence over the law of vertical restraints in the past two decades, leading the Supreme Court to abandon much of its traditional hostility toward such agreements. Chicago's success has provoked a vigorous response from Populists, who support the traditional approach. Chicago, Populists claim, has improperly relied upon neoclassical price theory to inform the normative and descriptive assumptions that drive its analysis of trade restraints generally and of vertical restraints in particular. This reliance is misplaced, Populists assert, because the real world departs from that portrayed by price-theoretic models and, at …

Market Failure And Non-Standard Contracting: How The Ghost Of Perfect Competition Still Haunts Antitrust, Alan J. Meese

Alan J. Meese

No abstract provided.

Exclusive Dealing, The Theory Of The Firm, And Raising Rivals' Costs: Toward A New Synthesis, Alan J. Meese

Alan J. Meese

No abstract provided.

Economic Theory, Trader Freedom And Consumer Welfare: State Oil Co. V. Khan And The Continuing Incoherence Of Antitrust Doctrine, Alan J. Meese

Alan J. Meese

No abstract provided.

Due Process In International Antitrust Enforcement: An Idea Whose Time Has Come, Christopher S. Yoo

All Faculty Scholarship

The past year has witnessed an upsurge of international interest in due process in antitrust enforcement, reflected in two new comparative studies and International Competition Network’s (ICN’s) May 2019 adoption of its Recommended Practices for Investigative Process and Framework for Competition Agency Procedures and the Organization for Economic Cooperation and Development (OECD) Competition Committee’s discussion of the Draft Recommendation on Transparency and Procedural Fairness in Competition Law Enforcement in June 2019. This article reviews those developments, traces key differences among them, and looks ahead to what comes next.

Fascism And Monopoly, Daniel A. Crane

Law & Economics Working Papers

The recent revival of political interest in antitrust has resurfaced a longstanding debate about the role of industrial concentration and monopoly in enabling Hitler’s rise to power and the Third Reich’s wars of aggression. Proponents of stronger antitrust enforcement argue that monopolies and cartels brought the Nazis to power and warn that rising concentration in the American economy could similarly threaten democracy. Skeptics demur, observing that German big business largely opposed Hitler during the crucial years of his ascent. Drawing on business histories and archival material from the U.S. Office of Military Government’s Decartelization Unit, this Article assesses the historical …

Taming Sherman's Wilderness, Derrian Smith

Indiana Law Journal

This Note proceeds in four Parts. Part I outlines the interpretive difficulties spawned by the vagueness of the Sherman Act—particularly, the judiciary’s necessary but undeniable departures from the text of the statute and the resulting doctrinal confusion. Part II considers ways in which the judiciary’s decision-making in Sherman Act cases approximates agency rulemaking and whether it makes sense to delegate interpretive authority to an antitrust agency. Yet, while the agency solution has upside, it would not easily escape criticisms that the Act does not provide sufficient notice of the conduct it proscribes and that the Act is an impermissible delegation …

Five Principles For Vertical Merger Enforcement Policy, Jonathan B. Baker, Nancy L. Rose, Steven C. Salop, Fiona Scott Morton

Georgetown Law Faculty Publications and Other Works

There seems to be consensus that the Department of Justice’s 1984 Vertical Merger Guidelines do not reflect either modern theoretical and empirical economic analysis or current agency enforcement policy. Yet widely divergent views of preferred enforcement policies have been expressed among agency enforcers and commentators. Based on our review of the relevant economic literature and our experience analyzing vertical mergers, we recommend that the enforcement agencies adopt five principles: (i) The agencies should consider and investigate the full range of potential anticompetitive harms when evaluating vertical mergers; (ii) The agencies should decline to presume that vertical mergers benefit competition on …

Apple V. Pepper: Rationalizing Antitrust’S Indirect Purchaser Rule, Herbert J. Hovenkamp

All Faculty Scholarship

In Apple v. Pepper the Supreme Court held that consumers who allegedly paid too much for apps sold on Apple’s iStore could sue Apple for antitrust damages because they were “direct purchasers.” The decision reflects some bizarre complexities that have resulted from the Supreme Court’s 1977 decision in Illinois Brick, which held that only direct purchasers could sue for overcharge injuries under the federal antitrust laws. The indirect purchaser rule was problematic from the beginning. First, it was plainly inconsistent with the antitrust damages statute, which gives an action to “any person who shall be injured in his business …

Occupational Licensing And The Limits Of Public Choice Theory, Gabriel Scheffler, Ryan Nunn

All Faculty Scholarship

Public choice theory has long been the dominant lens through which economists and other scholars have viewed occupational licensing. According to the public choice account, practitioners favor licensing because they want to reduce competition and drive up their own wages. This essay argues that the public choice account has been overstated, and that it ironically has served to distract from some of the most important harms of licensing, as well as from potential solutions. We emphasize three specific drawbacks of this account. First, it is more dismissive of legitimate threats to public health and safety than the research warrants. Second, …

Analyzing Vertical Mergers To Avoid False Negatives: Three Recent Case Studies, Steven C. Salop

Georgetown Law Faculty Publications and Other Works

This article analyzes three recent vertical mergers: a private antitrust case attacking the consummated merger of Jeld-Wen and Craftmaster Manufacturing Inc. (“CMI”) that was cleared by the DOJ in 2012 but subsequently litigated and won by the plaintiff, Steves & Sons in 2018; and two recent vertical merger matters investigated and cleared (with limited remedies) by 3-2 votes by the Federal Trade Commission in early 2019 -- Staples/Essendant and Fresenius/NxStage. There are some factual parallels among these three matters that make it interesting to analyze them together. First, the DOJ’s decision to clear Jeld-Wen/CMI merger appears to be a clear …

Eleven Things They Don’T Tell You About Law & Economics: An Informal Introduction To Political Economy And Law

Minnesota Journal of Law & Inequality

Many legal scholars have critiqued the dominant law and economics paradigm. However, important work is all too often neglected because it is not popularized in an accessible form. This Article features experts who synthesize their key insights into memorable and concise vignettes. Our 11 Things project is inspired by the work of the Cambridge economist Ha-Joon Chang, who distilled many facets of his work into a book called 23 Things They Don’t Tell You About Capitalism. That book was a runaway success, translated for markets around the globe, because it challenged conventional economic reasoning with a series of short and …

Procompetitive Justifications In Antitrust Law, John M. Newman

Indiana Law Journal

The Rule of Reason, which has come to dominate modern antitrust law, allows defendants the opportunity to justify their conduct by demonstrating procompetitive effects. Seizing the opportunity, defendants have begun offering increasingly numerous and creative explanations for their behavior.

But which of these myriad justifications are valid? To leading jurists and scholars, this has remained an “open question,” even an “absolute mystery.” Examination of the relevant case law reveals multiple competing approaches and seemingly irreconcilable opinions. The ongoing lack of clarity in this area is inexcusable: procompetitive-justification analysis is vital to a properly functioning antitrust enterprise.

This Article provides answers …

The Warren Campaign’S Antitrust Proposals, Herbert J. Hovenkamp

All Faculty Scholarship

Antitrust policy promises to be an important issue in the 2020 presidential election, and for good reason. Market power measured by price-cost margins has been on the rise since the 1980s. Presidential candidate Senator Elizabeth Warren has two proposals directed at large tech platforms. One would designate large platform markets such as Amazon “platform utilities,” and prohibit them from selling their own merchandise on the platform in competition with other retailers. The other proposes more aggressive enforcement against large platform acquisitions of smaller companies.

This paper concludes that the first proposal is anticompetitive, leading to reduced output and higher prices …

Given Today's New Wave Of Protectionsim, Is Antitrust Law The Last Hope For Preserving A Free Global Economy Or Another Nail In Free Trade's Coffin?, Allison Murray

Loyola of Los Angeles International and Comparative Law Review

No abstract provided.

Venezuela Undermines Gold Miner Crystallex's Attempts To Recover On Its Icsid Award, Sam Wesson

Loyola of Los Angeles International and Comparative Law Review

No abstract provided.

Table Of Contents, Seattle University Law Review

Seattle University Law Review

No abstract provided.

Anticompetitive Mergers In Labor Markets, Ioana Marinescu, Herbert J. Hovenkamp

All Faculty Scholarship

Mergers of competitors are conventionally challenged under the federal antitrust laws when they threaten to lessen competition in some product or service market in which the merging firms sell. Mergers can also injure competition in markets where the firms purchase. Although that principle is widely recognized, very few litigated cases have applied merger law to buyers. This article concerns an even more rarefied subset, and one that has barely been mentioned. Nevertheless, its implications are staggering. Some mergers may be unlawful because they injure competition in the labor market by enabling the post-merger firm anticompetitively to suppress wages or salaries. …

Intellectual Property And The Economics Of Product Differentiation, Christopher S. Yoo

All Faculty Scholarship

The literature applying the economics of product differentiation to intellectual property has been called the most important development in the economic analysis of IP in years. Relaxing the assumption that products are homogeneous yields new insights by explaining persistent features of IP markets that the traditional approaches cannot, challenging the extent to which IP allows rightsholders to earn monopoly profits, allowing for sources of welfare outside of price-quantity space, which in turn opens up new dimensions along which intellectual property can compete. It also allows for equilibria with different welfare characteristics, making the tendency towards systematic underproduction more contingent and …

Copyright Arbitrage, Kristelia A. García

Publications

Regulatory arbitrage—defined as the manipulation of regulatory treatment for the purpose of reducing regulatory costs or increasing statutory earnings—is often seen in heavily regulated industries. An increase in the regulatory nature of copyright, coupled with rapid technological advances and evolving consumer preferences, have led to an unprecedented proliferation of regulatory arbitrage in the area of copyright law. This Article offers a new scholarly account of the phenomenon herein referred to as “copyright arbitrage.”

In some cases, copyright arbitrage may work to expose and/or correct for an extant gap or inefficiency in the regulatory regime. In other cases, copyright arbitrage may …

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 …

Accommodating Competition: Harmonizing National Economic Commitments, Jonathan Baker

Articles in Law Reviews & Other Academic Journals

This article shows how the norm supporting governmental action to protect and foster competitive markets was harmonized with economic rights to contract and property during the 19th century, and with the development of the social safety net during the 20th century. It explains why the Constitution, as understood today, does not check the erosion of the entrenched but threatened national commitment to assuring competitive markets.