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TOTM There has been a lot of talk recently about the possibility that lax antitrust gave rise to the financial crisis or that antitrust could be . . .
There has been a lot of talk recently about the possibility that lax antitrust gave rise to the financial crisis or that antitrust could be used as a proactive weapon to prevent mergers and acquisitions that would create entities “too big to fail.” George Priest recently took AAG Varney to task for suggesting that there was a consensus amongst economists that lax antitrust contributed to the current financial situation. Simon Johnson has been pushing the idea that antitrust is an appropriate tool for dealing with the type of financial risk imposed by businesses that become so large that their failure would cause substantial damage throughout the economy. The idea might be catching on. Frank Pasquale recently cited to Johnson’s work favorably. The idea has also been favorably cited by Commissioner Rosch.
Read the full piece here.
TOTM Economic theory is essential to antitrust law. It is economic analysis that constrains antitrust law and harnesses it so that it is used to protect . . .
Economic theory is essential to antitrust law. It is economic analysis that constrains antitrust law and harnesses it so that it is used to protect consumers rather than competitors. And the relationship between economics and antitrust is responsible for the successful evolution of antitrust from its economically incoherent origins to its present state. In my view, which I’ve expressed in greater detail elsewhere, the fundamental challenge for antitrust is one that is created by having “too many theories” without methodological commitments from regulators and courts on how to select between them. The proliferation of economic models that came along with the rise of Post-Chicago economics and integration of game theory into industrial organization has led to a state of affairs where a regulator or court has a broad spectrum of models to choose from when analyzing an antitrust issue.
Popular Media But wholesale rejection of the document — the most complete statement to date on the law and economics of Section 2 — because of disagreement with some of its positions is irresponsible and premature.
But wholesale rejection of the document — the most complete statement to date on the law and economics of Section 2 — because of disagreement with some of its positions is irresponsible and premature. And the rejection of specific conclusions from among the range of possibilities discussed in the report without any discussion of which other policy positions the DOJ would support, and why, severely undermines the intellectual efforts that the DOJ and FTC staffs put into the original report by summarily dismissing them. Instead, Varney asserts that the report “loses sight of an ultimate goal of antitrust laws — the protection of consumer welfare” — but cites no evidence. (And the report, for its part, mentions “consumer welfare” 31 times.) Meanwhile, the mere reference in Varney’s speech to the idea of returning to “tried and true” principles of Section 2 enforcement is meaningless, since no one knows what those are, and the whole point of the report was to define them. It is difficult to avoid the conclusion that the announcement dismisses the report and its intellectual bases simply because it was inconvenient to the agenda upon which the DOJ’s antitrust division is about to embark.
TOTM The NYT ran an unsigned editorial on “Intel and Competition” that, quite frankly, doesn’t make much sense to us. It offers two basic arguments: (1) . . .
The NYT ran an unsigned editorial on “Intel and Competition” that, quite frankly, doesn’t make much sense to us. It offers two basic arguments: (1) that the Bush administration DOJ is responsible for the state of Section 2 law requirement that plaintiffs demonstrate actual consumer harm, and (2) that foreign antitrust jurisdictions’ pursuit of enforcement actions against Intel’s loyalty rebates suggests that the failure of the Federal Trade Commission to do so is a failure of the Bush administration to enforce the antitrust laws to protect consumers.
Popular Media Wired’s Chris Anderson drinks the New Economy Kool-Aid. It’s the same old argument — information technology reduces transaction costs, leading to a radical disaggregation of industry and society — . . .
Wired’s Chris Anderson drinks the New Economy Kool-Aid. It’s the same old argument — information technology reduces transaction costs, leading to a radical disaggregation of industry and society — still supported by little more than a few colorful anecdotes, not any kind of systematic analysis. The new twist is the financial crisis, described by Anderson as “not just the trough of a cycle but the end of an era.”
TOTM I’ll be testifying tomorrow at the Federal Trade Commission hearings on Resale Price Maintenance. My panel will focus on rule of reason analysis of RPM . . .
I’ll be testifying tomorrow at the Federal Trade Commission hearings on Resale Price Maintenance. My panel will focus on rule of reason analysis of RPM Post-Leegin. There is a bit of awkwardness testifying about different modes of rule of reason analysis with legislation that would restore the Dr. Miles per se rule pending, but it strikes me as a valuable exercise nonetheless. The early afternoon panel looks very interesting and focuses on the legal and business history of RPM. I do not have a written statement for my prepared remarks, but you can see my slides here.
TOTM Reacting to the EU fines imposed on Intel, Geoff raises a nice point about the difficulty of constructing the but-for world in antitrust cases generally, . . .
Reacting to the EU fines imposed on Intel, Geoff raises a nice point about the difficulty of constructing the but-for world in antitrust cases generally, but particularly in cases where prices are falling. This discussion reminded me of Thom’s excellent post responding to the NYT editorial and an AAI working paper and putting theoretical anticompetitive concerns to an empirical test and discussing evidence of falling prices for both Intel and AMD products and increased operating margins for AMD. So how are we to sensibly evaluate the EU decision?
TOTM Expanding on the themes in this post from the TOTM symposium book review of Professor Carrier’s new book on “Harnessing the Power of Intellectual Property . . .
Expanding on the themes in this post from the TOTM symposium book review of Professor Carrier’s new book on “Harnessing the Power of Intellectual Property and Antitrust Law” to encourage innovation, I’ve posted an essay co-authored with a very talented former student and research assistant, Aubrey Stuempfle. The essay expands on some of the themes we touched upon in reviewing Carrier’s analysis of standard setting issues, including the potential threat to innovation posed by invoking antitrust remedies to govern the SSO contracting process (whether under Section 2 of the Sherman Act of Section 5 of the FTC Act) in patent holdup cases. The review (along with the others from the symposium on Carrier’s book) will be published in the Alabama Law Review.
TOTM The “error cost” or “decision theory” approach to Section 2 legal standards emphasizes the probabilities and costs of errors in monopolization decisions. Two types of . . .
The “error cost” or “decision theory” approach to Section 2 legal standards emphasizes the probabilities and costs of errors in monopolization decisions. Two types of error, and two associated types of cost are examined. One type of error is that of a false acquittal, or false negative. The other type of error is that of a false conviction, or false positive. Under the error cost approach to legal standards, a legal standard should be chosen that minimizes the total expected costs of errors.
