I’ve been, for some time, a behavioral law and economics skeptic.  Sometimes this position is confused with skepticism about behavioral economics, as in — believing that behavioral economics itself offers nothing useful to economic science or is illegitimate in some way.   That’s not true.  Now, I have some qualms about the explanatory power of some of the behavioral models as well — but the primary critique (in my view) has always been the threat that behavioral economics will be used as the intellectual cover for regulation judged by the preferences of the regulators rather than rigorous economic analysis of any sort.

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Simon Johnson argues that the conventional antitrust tools of Sherman Act are outdated and ill-equipped to deal with the power of big banks…

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Part 1 of this short blog series on “Nudging Antitrust,” focused on defining Commissioner Rosch’s recently articulated vision of behavioral economics as it relates to antitrust and competition policy and its differences with more “conventional” economic approaches that are bound by the rationality assumption.  By the way, one should note that these more conventional approaches include both Chicago and game-theoretic Post-Chicago approaches, though the Commissioner reserves most of his ire for the former.  Today, in Part 2, I’ll turn to Commissioner Rosch’s vision for antitrust policy informed by a particular version of behavioral economics focuses on the Commissioners case against the critiques of behavioral economics as he interprets them.

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Increasingly, the notion that updating antitrust policy with the insights of behavioral economics would significantly improve matters for consumers.   Others have called for more major surgery, favoring an outright rejection of the current economic foundation of antitrust policy — and especially the portions of the foundation “Made in Chicago” — in favor of a new regime based on behavioral economics.  There are plenty of antitrust scholars who’ve begun to make this case, with perhaps Professor Stucke having been the most prolific on this score.  And behavioral economics has provided the intellectual support, or perhaps cover depending on who you ask, for the recent regulatory expansion involving consumer credit.  The issue is also getting more and more attention.  Competition Policy International recently published a symposium issue dedicated to the topic.

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I’ve been struck of late by the level of activity surrounding antitrust exemptions: health care, insurance, beer and wine wholesalers, retail merchants for the purpose of negotiate interchange fees, newspapers, agricultural cooperatives, and sports leagues.  Throw in the high-stakes games being played between rivals to influence the decision-making processes of competition agencies in the US and abroad (and of course, private suits in the US), and it would appear that the insights of public choice for understanding antitrust has never been more important.  Or maybe not.  Consider the following 1982 NY Times article I found discussing the major push for antitrust exemptions in the early 1980s.  There are, of course, earlier examples.  But this one struck me as having some interesting parallels with current times…

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Compared to the nominations of Justices Alito, Roberts and Sotomayor, there has been little excitement for the antitrust community on the most recent Supreme Court nomination of Elena Kagan.  But there is something.   The WSJ Law Blog reports that while Kagan refused to “praise the Leegin decision.”   Legal Times reports that in response to Senator Kohl’s questions about recent Supreme Court antitrust activity, including Leegin Creative Leather Products v. PSKS and Bell Atlantic v. Twombly, Kagan offered some thoughts on the manner in which economic theory should be incorporated into antitrust doctrine…

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Apparently, the Illinois Attorney General is investigating Lollapalooza for potential antitrust violations arising out of exclusivity clauses that the concert promoter includes in the contracts signed with artists who play the show.

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Danny Sokol has posted the most downloaded antitrust law professors.  I come in 4th behind Damien Geradin, David Evans, and Herb Hovenkamp.   It is flattering to be in company like that by any measure.  Cool.  But, as Danny points out, what is even cooler is that George Mason is one of only a handful of schools with more than one faculty member making the list, with my colleague, co-author, and fellow Bruin economist Bruce Kobayashi coming in at #15.

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There is a nice example in the WSJ concerning the economics of vertical contractual arrangements.  I’ve noted previously the apparent trend in the soda industry toward vertical integration and the link to the economics of promotional shelf space.  In particular, incentive conflicts between manufacturers and retailers of differentiated products over the use of promotional shelf space are pervasive.

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