Peter Klein‘s post over at the always excellent Organizations and Markets reminded me that I have been wanting to blog about the most recent exchange between Ben Klein and Ronald Coase over the asset specificity, vertical integration, and the famous Fisher Body – General Motors example which has become a classic example of hold up in the literature. While this example from the original Klein, Crawford, and Alchian (1978) piece is almost 30 years old, and has been the subject of literally thousands of pages of debate and an entire JLE issue (April 2000), there is still some disagreement over the facts and what they tell us about the relationship between asset specificity and vertical integration.

Read the full piece here.

Ben Klein’s new paper, “The Economic Lessons of Fisher Body – General Motors,” appears in the February 2007 issue of the International Journal of the Economics of Business. He is not about to give Ronald Coase the last word. Indeed, Klein writes, the newest evidence on the history of the relationship between Fisher and GM confirms his earlier claim that GM’s acquisition of Fisher in 1926 was a response to opportunistic behavior by Fisher. This evidence…

Read the full piece here.

Paul Rubin (Emory Law) has an excellent piece in the WSJ taking state regulators to task for “Item Pricing Laws” which require that most goods in retail stores have an individual price sticker rather than, for example, a price tag on the store shelf. IPLs increase “menu costs” when retailers want to change prices which chills sales and are likely to increase prices. Luckily, one doesnt have to wait for the evidence because Professor Rubin and his co-authors have it.

Read the full piece here.

There’s just so much paper going back and forth on Leegin that it’s hard to keep up.

In addition to various briefs and commentaries and Commissioner Harbour’s de facto brief (also discussed here), there has been some interesting correspondence between Rep. Conyers, Chair of the House Committee on the Judiciary, and Deborah Platt Majoras, Chair of the FTC.

Read the full piece here. 

Steve Levitt thinks that tenure is overrated. But relative to what? Levitt proposes doing away with tenure because it distorts the incentives of scholars to front load their productivity and then ride off into the sunset after tenure is granted. Surely he is right about this incentive effect.

Read the full piece here.

For the next two days, the Section 2 Hearings will explore “different methods of evaluating monopoly power in single-firm conduct cases, including issues relating to market definition, the Cellophane fallacy, the use of direct evidence, single-firm markets, and technology markets.”

Read the full piece here.

The proposed merger has been making lots of waves in the press as of late, including a Congressional hearing (Antitrust Review has links to all the hearing testimony) but not much serious grappling with the antitrust issues. I even read today that John Ashcroft has chimed in. Of course, it is very difficult to do much serious analysis about likely competitive effects without more information than is available publicly.

Read the full piece here. 

Federal Trade Commissioner Pamela Jones Harbour has sent the U.S. Supreme Court justices an “open letter” regarding the pending Leegin case. [HT: Danny Sokol.]

Leegin, as regular TOTM readers know, will test the continued vitality of Dr. Miles, the 1911 decision making it per se illegal for manufacturers and retailers to agree on minimum retail prices for the manufacturers’ products. I have previously argued (here and here) that such “vertical resale price maintenance,” or “VRPM”, should not be automatically illegal and that Dr. Miles should be overruled. Based on his upcoming eCCP presentation, I believe Josh agrees. He may, however, be reluctant to go head-to-head with a commissioner since he’s now a scholar-in-residence at the FTC.

Read the full piece here. 

Thursday night I will be speaking at a dinner and discussion sponsored by the eSapience Center for Competition Policy (eCCP) on the pending Leegin decision and the application of per se rules to minimum RPM.

Read the full piece here.