Law and Economics Commons^™

Criminal Enforcement Of Section 2 Of The Sherman Act: An Empirical Assessment, Daniel A. Crane

Law & Economics Working Papers

The Biden Justice Department has announced that it may begin to bring criminal monopolization cases under Section 2 of the Sherman Act, a practice that the Department has not employed in almost half a century. The Department's leadership has justified this idea by asserting that it used to be common practice for the Antitrust Division to bring such cases. This Article presents the findings of an empirical study of all of the Justice Department's antitrust case filings. It finds that the Justice Depart brought 175 criminal monopolization cases between 1903 and 1977, but that only 20 of these involved unilateral …

Table Of Contents

Seattle University Law Review

Table of Contents

Output Effect Of Private Antitrust Enforcement, Sinchit Lai

Fordham Journal of Corporate & Financial Law

A growing body of literature evaluates the impact of antitrust laws on economic growth. Most of these empirical studies identify a positive impact; however, the existing literature only studies the effect of the existence of antitrust laws, but not their enforcement. To fill this gap in the literature, this Article uses private antitrust case filing numbers to examine the growth effect. Employing U.S. data and, after addressing endogeneity, using a two-stage least squares (2SLS) regression analysis, I identify a negative and robust association between private enforcement and output on a national level in the short run over the period from …

Dynamic Pricing Algorithms, Consumer Harm, And Regulatory Response, Alexander Mackay, Samuel Weinstein

Articles

Pricing algorithms are rapidly transforming markets, from ride-sharing, to air travel, to online retail. Regulators and scholars have watched this development with a wary eye. Their focus so far has been on the potential for pricing algorithms to facilitate explicit and tacit collusion. This Article argues that the policy challenges pricing algorithms pose are far broader than collusive conduct. It demonstrates that algorithmic pricing can lead to higher prices for consumers in competitive markets and even in the absence of collusion. This consumer harm can be initiated by a single firm employing a superior pricing algorithm. Higher prices arise from …

Freedom Without Opportunity: Using Medicare Policy And Cms Mechanisms To Anticipate The Platform Economy’S Pitfalls And Ensure Healthcare Platform Workers Are Fairly Paid, Kim A. Aquino

Brooklyn Law Review

The rapidly aging population, along with the demand for innovative Medicare delivery models such as bundled payment programs have incentivized the use of technology in healthcare because of its potential to cut costs and improve quality of care. Like many industries embracing technological strides to automate and digitize services, the healthcare industry has welcomed new labor markets like the platform economy to facilitate connections between patients and workers with ease. Along with streamlining connections, the platform economy also promises workers flexibility and autonomy over their own schedule. The platform economy’s promise of freedom, however, is not enough to prevent the …

Everything You Always Wanted To Know About Gouging (But Were Afraid To Ask): A Response To Ramsi Woodcock, Brian L. Frye

Law Faculty Scholarly Articles

Good scholarship makes you change your mind, but great scholarship

makes you think differently. As usual, Ramsi Woodcock's article "The Efficient

Queue and the Case Against Dynamic Pricing", is great, because it made me

think differently about price regulation. Woodcock observes that prices not

only communicate information, but also redistribute resources. Sometimes,

producers change prices in response to competition or changes in the cost of

production. But other times, they change prices just because they can.

When prices reflect the marginal cost of production, consumers benefit

from market efficiencies. But when prices reflect a surge in demand, they

simply transfer …

Table Of Contents, Seattle University Law Review

Seattle University Law Review

Table of Contents.

Vertical Mergers In A Model Of Upstream Monopoly And Incomplete Information, Serge Moresi, David Reitman, Steven C. Salop, Yianis Sarafidis

Georgetown Law Faculty Publications and Other Works

We examine the role of private information on the impact of vertical mergers. A vertical merger can improve the information that is available to an upstream monopolist because, after the merger, the monopolist can observe the cost of its downstream merger partner. In the pre-merger world, because the costs of the downstream firms are private information, the monopolist has incomplete information and cannot implement the monopoly outcome: The expected pre-merger equilibrium price of the downstream product is lower than the monopoly price. After a vertical merger, the equilibrium input price that is charged to the downstream rival can either increase …

Industry Concentration And Information Technology, James Bessen

Faculty Scholarship

Industry concentration has been rising in the US since 1980. Firm operating margins have also been rising. Are these signs of declining competition that call for a new antitrust policy? This paper explores the role of proprietary information technology systems (IT), which could increase industry concentration and margins by raising the productivity of top firms relative to others. Using instrumental variable estimates, this paper finds that IT system use is strongly associated with the level and growth of industry concentration and firm operating margins. The paper also finds that IT system use is associated with relatively larger establishment size and …

A Case For Higher Corporate Tax Rates, Edward G. Fox, Zachary D. Liscow

Law & Economics Working Papers

In this report, Fox and Liscow argue that, while conventional wisdom holds that we should lower taxes on corporations because of international competition, two recent changes militate in favor of higher corporate taxes, which would close the deficit, fund social programs, and reduce inequality. First, changes in tax law have increasingly targeted the corporate tax at economic “rents,” the supersized returns that businesses receive when they enjoy advantages like market power. Because taxing rents is progressive and does little to harm economic activity, a higher rate is justified. Second, shifts in the American economy have allowed companies to earn more …

The 2010 Hmgs Ten Years Later: Where Do We Go From Here?, Steven C. Salop, Fiona Scott Morton

Georgetown Law Faculty Publications and Other Works

In this short article, which is part of a RIO Symposium on the Tenth Anniversary of the 2010 Merger Guidelines, we suggest a number of improvements that should be considered in the next revision of the Guidelines. Our analysis is based on the observation that horizontal merger policy has suffered from under-enforcement. We provide evidence that the enforcement agencies face significant resource constraints which require a triage process that inevitably leads to under-enforcement. In light of merger law placing greater weight on avoiding false negatives and under-deterrence than false positive and over-deterrence, the article suggests a number of ways in …

The Economics And Antitrust Of Bundling, Rajeev R. Bhattacharya

The Journal of Business, Entrepreneurship & the Law

This article explains the economics and antitrust of bundling. I first show that popular arguments such as demand complementarities, economies of scope, and price discrimination are not sufficient. I then detail potentially anticompetitive factors such as leverage and opacity. I then use simple examples to show how variation in consumer valuations explains bundling and is not anticompetitive. Finally, I explore other business judgment rule explanations for bundling.

The Sherman Act Is A No-Fault Monopolization Statute: A Textualist Demonstration, Robert H. Lande, Richard O. Zerbe

American University Law Review

The drafters of the Sherman Act originally designed Section 2 to impose sanctions on all monopolies and attempts to monopolize, regardless whether the firm had engaged in anticompetitive conduct. This conclusion emerges from the first ever textualist analysis of the language in the statute, a form of interpretation originally performed only by Justice Scalia but now increasingly used by the Supreme Court, including in its recent Bostock decision.

Following Scalia’s methodology, this Article analyzes contemporaneous dictionaries, legal treatises, and cases and demonstrates that when the Sherman Act was passed, the word “monopolize” simply meant that someone had acquired a monopoly. …

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 …

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 …

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 …

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 …

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 …

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 …

Accommodating Competition: Harmonizing National Economic Commitments, Jonathan Baker

Scholarly Articles in Law Reviews & 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.

The At&T/Time Warner Merger: How Judge Leon Garbled Professor Nash, Steven C. Salop

Georgetown Law Faculty Publications and Other Works

The US District Court in the AT&T/Time Warner vertical merger case has issued its opinion permitting the merger. At of this writing in August 2018, the Department of Justice (DOJ) has appealed to the DC Circuit and filed its brief, as have several Amici. I was disappointed that the DOJ was unable to prove its case to the satisfaction of Judge Leon, the trial judge. Notwithstanding the court’s confidence that the merger is procompetitive, I remain concerned that it will have anti- competitive effects, both on its own and following the subsequent vertical mergers in the TV industry, which this …

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

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 …

Unlocking Antitrust Enforcement, Jonathan Baker

Scholarly Articles in Law Reviews & Journals

No abstract provided.

Counter-Ip Conspiracies: Patent Alienability And The Sherman Antitrust Act, Hannibal Travis

University of Miami Law Review

Anticompetitive collusion by intellectual property owners frequently triggered antitrust enforcement during the twentieth century. An emerging area of litigation and scholarship, however, involves conspiracies by potential licensees of intellectual property to reduce or eliminate opportunities by a property’s holders to profit from it, or even to recoup their investments in creating and protecting it. The danger is that potential licensees will collude with one another to suppress royalties or sale prices. This Article traces the history of such litigation, provides an overview of the scholarly and theoretical arguments against monopsonistic or oligopsonistic collusion against licensors of intellectual property, and summarizes …

Market Power And Inequality: The Antitrust Counterrevolution And Its Discontents, Lina M. Khan, Sandeep Vaheesan

Faculty Scholarship

In recent years, economic inequality has become a central topic of public debate in the United States and much of the developed world. The popularity of Thomas Piketty’s nearly 700-page tome, Capital in the Twenty-First Century, is a testament to this newfound focus on economic disparity. As top intellectuals, politicians, and public figures have come to recognize inequality as a major problem that must be addressed, they have offered a range of potential solutions. Frequently mentioned proposals include reforming the tax system, strengthening organized labor, revising international trade and investment agreements, and reducing the size of the financial sector.

One …

Economic Law, Inequality, And Hidden Hierarchies On The Eu Internal Market, Damjan Kukovec

Michigan Journal of International Law

This Article has several aims. First, the aim is to show the continuing importance and relevance of antitrust and international trade lawyers in countering the concentration of power in the hands of the few or in some geographic areas of the world, if some of the assumptions of antitrust and trade are adjusted. Second, the goal is to articulate a particular analysis from the perspective of the (European) periphery. As the recent Euro crises and the near exit of Greece from the Union show, the European prospect of development for all has not arrived. This Article will articulate the privilege …

A Socio-Economic Approach To Antitrust: Unpacking Competition, Consumer Surplus, And Allocative Efficiency, Jeffrey L. Harrison

Akron Law Review

The primary function of socio-economics is to ask questions and broaden the discussion. I have attempted to do that by unpacking and contextualizing the two economic goals of antitrust law - maximizing consumer surplus and allocative efficiency. I have avoided what I believe is today's faith-based approach as exemplified by the Supreme Court. That approach has now gone beyond economics and seems to reveal, in its most benign form, a deep distrust of government.

At its most basic and obvious level the two antitrust goals cede to those with income - earned or not - the right to determine how …

Monopoly Power With A Short Selling Constraint, Robert Baumann, Bryan Engelhardt, David L. Fuller

Economics Department Working Papers

We show if a speculator can benefit from reducing a monopoly’s rents through short selling, then a speculator may take a short position in a monopoly, overcome the barriers to entry, and compete with the monopoly. The competition drives down the monopoly’s rents, and as a result, the short position becomes profitable and covers the cost of entry. If entry is impossible, then the speculator may coordinate and pay the firm’s counter-parties to stop trading with the monopoly rather than entering. Either way, increasing a speculator’s ability to short a firm’s rents results in a constraint on the monopoly and …

Antitrust And Wealth Inequality, Daniel Crane

Articles

In recent years, progressive public intellectuals and prominent scholars have asserted that monopoly power lies at the root of wealth inequality and that increases in antitrust enforcement are necessary to stem its rising tide. This claim is misguided. Exercises of market power have complex, crosscutting effects that undermine the generality of the monopoly regressivity claim. Contrary to what the regressivity critics assume, wealthy shareholders and senior corporate executives do not capture the preponderance of monopoly rents. Such profits are broadly shared within and dissipated outside the firm. Further, many of the subjects of antitrust law are middle-class professionals, sole proprietors, …