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Full-Text Articles in Industrial Organization
Activating Actavis, Aaron Edlin, C. Scott Hemphill, Herbert J. Hovenkamp, Carl Shapiro
Activating Actavis, Aaron Edlin, C. Scott Hemphill, Herbert J. Hovenkamp, Carl Shapiro
Aaron Edlin
In Federal Trade Commission v. Actavis, Inc., the Supreme Court provided fundamental guidance about how courts should handle antitrust challenges to reverse payment patent settlements. The Court came down strongly in favor of an antitrust solution to the problem, concluding that “an antitrust action is likely to prove more feasible administratively than the Eleventh Circuit believed.” At the same time, Justice Breyer’s majority opinion acknowledged that the Court did not answer every relevant question. The opinion closed by “leav[ing] to the lower courts the structuring of the present rule-of-reason antitrust litigation.”This article is an effort to help courts and counsel …
Actavis And Error Costs: A Reply To Critics, Aaron S. Edlin, C. Scott Hemphill, Herbert J. Hovenkamp, Carl Shapiro
Actavis And Error Costs: A Reply To Critics, Aaron S. Edlin, C. Scott Hemphill, Herbert J. Hovenkamp, Carl Shapiro
Aaron Edlin
The Supreme Court’s opinion in Federal Trade Commission v. Actavis, Inc. provided fundamental guidance about how courts should handle antitrust challenges to reverse payment patent settlements. In our previous article, Activating Actavis, we identified and operationalized the essential features of the Court’s analysis. Our analysis has been challenged by four economists, who argue that our approach might condemn procompetitive settlements.As we explain in this reply, such settlements are feasible, however, only under special circumstances. Moreover, even where feasible, the parties would not actually choose such a settlement in equilibrium. These considerations, and others discussed in the reply, serve to confirm …
New Powers- New Vulnerabilities? A Critical Analysis Of Market Inquiries Performed By Competition Authorities, Tamar Indig, Michal Gal
New Powers- New Vulnerabilities? A Critical Analysis Of Market Inquiries Performed By Competition Authorities, Tamar Indig, Michal Gal
Michal Gal
In the past two decades the number of jurisdictions which have empowered their Competition Authorities to engage in market inquiries (MIs) has grown substantially. Although jurisdictions differ in the scope and procedure adopted for such studies, they all share an important common trait: attempting to allocate the roots of limited competition in the studied market. Market studies differ from traditional competition law tools in their triggers, range, object, and the level of pro-activity of the Competition Authority. They are not triggered by a suspicion of anti-competitive conduct of specific firm(s), but rather allow the Authority to use a broad prism …
The Hidden Costs Of Free Goods: Implications For Antitrust Enforcement, Michal Gal, Daniel Rubinfeld
The Hidden Costs Of Free Goods: Implications For Antitrust Enforcement, Michal Gal, Daniel Rubinfeld
Michal Gal
Today a growing number of goods and services are provided in the marketplace free of charge; indeed, free or the appearance of free, have become part of our ecosystem. More often than not, free goods and services provide real benefits to consumers and are clearly pro-competitive. Yet free goods may also create significant costs. We show that despite the fact that the consumer does not pay a direct price, there are indirect prices that reflect the opportunity cost associated with the consumption of free goods. These indirect costs can be overt or covert, in the same market in which the …
Strategic Effects Of Three-Part Tariffs Under Oligopoly, Yong Chao
Strategic Effects Of Three-Part Tariffs Under Oligopoly, Yong Chao
Yong Chao
The distinct element of a three-part tariff, compared with linear pricing or a two-part tariff, is its quantity target within which the marginal price is zero. This quantity target instrument enriches the firm's strategy set in dictating the competition to a specific level, even in the absence of usual price discrimination motive. With general differentiated linear demand system, the competitive effect of a three-part tariff in contrast to linear pricing depends on the degree of substitutability between products: competition is intensified when two products are more differentiated, yet softened when two products are more substitutable.
Freedom To Trade And The Competitive Process, Aaron S. Edlin, Joseph Farrell
Freedom To Trade And The Competitive Process, Aaron S. Edlin, Joseph Farrell
Aaron Edlin
Although antitrust courts sometimes stress the competitive process, they have not deeply explored what that process is. Inspired by the theory of the core, we explore the idea that the competitive process is the process of sellers and buyers forming improving coalitions. Much of antitrust can be seen as prohibiting firms’ attempts to restrain improving trade between their rivals and customers. In this way, antitrust protects firms’ and customers’ freedom to trade to their mutual betterment.
A Comparison Of Anti-Manipulation Rules In U.S. And Eu Electricity And Natural Gas Markets: A Proposal For A Common Standard, Shaun D. Ledgerwood, Dan Harris
A Comparison Of Anti-Manipulation Rules In U.S. And Eu Electricity And Natural Gas Markets: A Proposal For A Common Standard, Shaun D. Ledgerwood, Dan Harris
Shaun D. Ledgerwood
In this paper, we describe the development and current status of anti-manipulation rules as they apply to wholesale electricity and natural gas markets in the United States and the European Union, including the institutions that are responsible for overseeing these rules. We then compare and contrast these jurisdictions to discuss similarities, differences, and potential gaps in coverage within and across their internal markets. We note that while the behavior prohibited by the U.S. and EU statutes is remarkably similar, there is in fact no common standard for defining market manipulation. The absence of a common EU/U.S. framework for examining manipulative …
Rummaging Through The Bottom Of Pandora’S Box: Funding Predatory Pricing Through Contemporaneous Recoupment, Shaun D. Ledgerwood, Wesley J. Heath
Rummaging Through The Bottom Of Pandora’S Box: Funding Predatory Pricing Through Contemporaneous Recoupment, Shaun D. Ledgerwood, Wesley J. Heath
Shaun D. Ledgerwood
Predatory pricing doctrine is currently a dead area of the law. To proceed beyond summary judgment, a plaintiff must prove the predation created a "dangerous probability" of supracompetitive pricing as the mechanism for recouping the losses “invested” in the predation. This requires proof that the predator sold products below its average variable cost and raised an entry barrier that ultimately enabled the recoupment of profits at some later time. We offer an alternative to this two-phased recoupment model. In this paper we show that a multiproduct retailer can target loss leading behavior in a market segment to punish or eliminate …
An Economic Assessment Of Patent Settlements In The Pharmaceutical Industry, Bret Dickey, Jonathan Orszag, Laura Tyson
An Economic Assessment Of Patent Settlements In The Pharmaceutical Industry, Bret Dickey, Jonathan Orszag, Laura Tyson
Bret Dickey
In recent years, patent settlements between branded and generic manufacturers involving “reverse payments” from branded manufacturers to generic manufacturers have received close antitrust scrutiny, driven by concerns that such settlements harm consumers by delaying the entry of lower-priced generic drugs. It appears that such settlements will be a focus of the Obama Administration’s antitrust enforcement policy. Yet there is a growing consensus among the courts that such settlements are anticompetitive only under narrow sets of circumstances. In this paper, we present an analytical framework for evaluating the competitive effects of patent settlements, including those involving reverse payments, and demonstrate that …
Monitoring Managers Through Corporate Compliance Programs, Charles Angelucci, Martijn Han
Monitoring Managers Through Corporate Compliance Programs, Charles Angelucci, Martijn Han
Martijn A. Han
Compliance programs entail monitoring of employees' behavior with the claimed objective of fighting corporate crime. (Competition) Authorities promote such intra-firm monitoring. In a three-tier hierarchy model, authority-shareholder-manager, we study the impact of monitoring through a compliance program on contracting within the firm and the authority's optimal sanctions and leniency policy. We find that compliance programs are beneficial in the fight against corporate crime if and only if the managerial sanction is low. Moreover, when the shareholder blows the whistle, the authority optimally grants partial corporate leniency, while not granting individual leniency to the involved employees. Conversely, when the employee blows …
The Overcharge As A Measure For Antitrust Damages, Martijn Han, Maarten Pieter Schinkel, Jan Tuinstra
The Overcharge As A Measure For Antitrust Damages, Martijn Han, Maarten Pieter Schinkel, Jan Tuinstra
Martijn A. Han
Victims of antitrust violations can recover damages in court. Yet, the quantification of antitrust damages and to whom they accrue is often complex. An illegal price increase somewhere in the chain of production percolates through to the other layers in a ripple of partial pass-ons. The resulting reductions in sales and input demands lead to additional harm to both downstream (in)direct purchasers and upstream suppliers. Nevertheless, U.S. civil antitrust litigation is almost exclusively concerned with direct purchaser claims for (treble) damages calculated on the basis of the overcharge. Similar best practice rules are emerging in Europe. In this paper, we …
Academic Testimony On Unilateral Conduct Before The U.S. Dept. Of Justice & Federal Trade Commission Hearings, Aaron S. Edlin
Academic Testimony On Unilateral Conduct Before The U.S. Dept. Of Justice & Federal Trade Commission Hearings, Aaron S. Edlin
Aaron Edlin
No abstract provided.