I’ve mentioned previously that my colleague Lloyd Cohen and I are editing a volume for Edward Elgar Publishing on Pioneers in Law and Economics.   Look for details in this space soon on a full list of contributing authors and subjects as well as where to buy the book!  One of the perks of co-editing a volume like this was that I was able to assign myself the chapter on my dissertation advisor and co-author Benjamin Klein.

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I’ve just spent a couple of great days in spectacular Boulder, Colorado at a conference on the New Institutional Economics (NIE). (Not sure why the “the” is required, but it always seems to be used.) The conference, organized by Colorado Law’s Phil Weiser and hosted by the Silicon Flatirons Center for Law, Technology, and Entrepreneurship, was designed to provide law professors with an overview of what the NIE is about and how it can inform legal scholarship. Geoff also attended and would probably agree that the conference was great fun.

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I promised that I would write about why I think that Professor Elhauge’s claim in his new working paper, “Loyalty Discounts and Naked Exclusion,” that he has proven that loyalty discounts generally involve anticompetitive effects is mistaken. Let me begin by saying that this is a very provocative claim from a very serious antitrust analyst and deserves careful attention. Loyalty discounts are an important and highly controversial issue in antitrust at the moment and so economic analysis that enlightens us to their effects in the marketplace should be applauded. I should also note, as I made clear in the first post, that I admire Elhauge’s work and have a great deal of respect for him. Obviously, with that many caveats, you know what is coming next. I strongly disagree that Elhauge’s economic analysis lives up to his claims.

Read the full piece here.

2008 has been a busy year for Harvard Professor Einer Elhauge so far from the looks of his SSRN page (not to mention advising Senator Obama on legal policies). He’s posted three new working papers covering a diverse set of antitrust topics…

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FTC Chairman William Kovacic, easily one of the most insightful thinkers and writers on issues of global competition policy, has posted a new paper offering a thoughtful analysis of where the EU and US competition policy systems have been, where they are going, what institutional differences might cause the systems to converge or diverge further, and what to do about it. Kovacic notes that while “the apparent agreement on overall objectives would seem to be, and is, an important step toward achieving convergence between the two systems” it is important not to avoid frank discussions of what both US and EU officials mean when they invoke the concept of “consumer welfare” or “protecting competition, not competitors” precisely because these phrases can “are so open-ended that their true meaning in practice depends on how they are applied.” Kovacic goes on to discuss various institutional forces favoring both convergence and divergence and offering some suggestions for facilitating the adoption of superior norms. The paper is a must-read for anybody interested in global competition issues.

Read the full piece here.

Mike Jensen, the distinguished financial economist and co-founder of SSRN, is interviewed here by Growthology’s Tim Kane. Everyone knows that electronic distribution of working papers has been extremely important for academic research in business and the social sciences. By the time most papers are published, they’ve already been read by many, if not most, of the target readers, from working-paper circulation, conference presentations, informal discussions, and the like. Jensen points out that electronic distribution has also had an important democratization effect. The elites always had access to cutting-edge research in advance of publication through informal networks, NBER workshops, and the like. “In my own field, I was part of a very small group doing cutting-edge work in the early days of modern finance, and I noticed that elites in all fields were 2-3 years ahead of other scholars just because they knew about research that took so much time to get distributed widely. The Internet allowed everyone to see the frontier.”

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In Part V of the series on the future of law and economics (Parts I, II, III, and IV), Henry Manne graciously offered a reply to my thoughts on where L&E might be headed and why. I encourage the readers interested in the series to take time to re-read Henry’s response in its entirety. While Henry and I agree on many points concerning the problems facing L&E and what might be causing them, I interpret his post as raising two major points of disagreement. The first is that I largely ignored issues of ideology (see also Brian Tamahana’s comment here) and their role as a force pushing modern L&E out of law schools. That is fair enough. I agree with this point in the sense that I don’t think there is any doubt that the shift in the content of modern L&E toward empiricism, behavioral law and economics, and theoretical modeling is consistent with a theory that those forms of L&E are likely to be much more acceptable to the political left than the L&E scholarship of the previous several decades.

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I’ve had a wonderful time writing this series on the future of law and economics. When I started the series (Part I, Part II, Part III, and Part IV), I thought it would be a fun thought experiment for me to think through aloud and hopefully start a valuable conversation. By that measure, it has been a success. I’ve received many valuable comments, critiques and responses in blog posts, emails, and in person. But I couldn’t possibly dream up a better way to end the series than with a response from Henry Manne, a founder of the L&E movement, who is perhaps more responsible than any other single figure for its dissemination throughout the legal academy. I think this response is a treat for our readers who are interested in this topic and want to personally thank him for taking the time to offer his thoughts on my series.

Read the full piece here. 

Abstract

This chapter provides a survey of the law and literature on monopolization. The focus is American law, but the issues considered are equally applicable to European law. After briefly reviewing the history of monopolization law in the U.S., I review various approaches to the legal standard for monopolization suggested in the literature. I then attempt to model monopolization standards, and assess their desirability in light of error costs.