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Scholarship Frank Easterbrook's seminal analysis of error-cost minimization in The Limits of Antitrust has special relevance to antitrust intervention in markets where innovation is a critical dimension of competition.
Frank Easterbrook’s seminal analysis of error-cost minimization in The Limits of Antitrust has special relevance to antitrust intervention in markets where innovation is a critical dimension of competition. Both product and business innovations involve novel practices. Historically, the economics profession has tended initially to rely upon monopoly explanations for such practices. Courts have reacted with similar hostility.
But almost always there has followed a more nuanced economic understanding of the business practice that recognized its procompetitive virtues. Antitrust standards have adjusted occasionally to reflect that new economic learning. This sequence has produced a fundamental link between innovation and antitrust error that transcends the uncontroversial point that the probability of false positives and their social costs are both higher in the case of innovation and innovative business practices.
We discuss some principles for applying Easterbrook’s error-cost framework to innovation. We then discuss the historical relationship between antitrust error and innovation. We conclude by challenging the conventional wisdom that the error-cost approach implies that the rule of reason, rather than per se rules, should apply to most forms of business conduct. We instead identify simple filters to harness existing economic knowledge to design simple rules that minimize error costs. We make five such proposals.
TOTM Leading antitrust critic and abolitionist, Dominick Armentano, has a letter to the editor in the WSJ. The point of the letter to the editor is . . .
Leading antitrust critic and abolitionist, Dominick Armentano, has a letter to the editor in the WSJ. The point of the letter to the editor is rather specific: that FTC’s attack on Intel is no outlier in the historical context of antitrust enforcement, contrary to the WSJ’s description. To the contrary, Armentano argues that Intel is just another in a long line of misguided enforcement actions.
Read the full piece here.
TOTM There will be much to say about the Federal Trade Commission’s Intel complaint in the coming months. And we’ve said quite a bit already. But . . .
There will be much to say about the Federal Trade Commission’s Intel complaint in the coming months. And we’ve said quite a bit already. But having just read the complaint and the statements from Chairman Leibowitz and Commissioner Rosch discussing the various rationales for making Section 5 the primary hook for this case, I wanted to share two thoughts about defenses for the move that appear in those statements.
TOTM The FTC brought its long-awaited case against Intel today. New York Times report here. Of course we’ve covered the various antitrust claims against Intel at . . .
The FTC brought its long-awaited case against Intel today. New York Times report here. Of course we’ve covered the various antitrust claims against Intel at great length on this blog, and have found all of the theories wanting.
TOTM The Searle Center Civil Justice Institute has announced the release of its preliminary report on State Consumer Protection Acts: An Empirical Investigation of Private Litigation. . . .
The Searle Center Civil Justice Institute has announced the release of its preliminary report on State Consumer Protection Acts: An Empirical Investigation of Private Litigation. You can read the Executive Summary here. As the Searle Center State Consumer Protection Acts Task Force Chair, I’ve been involved in the data collection, analysis, and drafting of this project over the last couple of years along with the rest of the Task Force (the Searle Center’s Executive Director Henry Butler, Jason Johnston (Penn), Jeffrey Jarosh, and Samantha Zyontz) and really is the product of a team effort including the Task Force, Searle Center research assistants (Micah Hughes, Jonathan Hillel, Matthew Sibery, Hayley Smith, and Judd Stone) and Research Coordinator Elise Nelson. I’m incredibly grateful to have worked with such a skilled group. This preliminary report is the first research project released growing out of a larger research agenda on state consumer protection regulation. Some exciting projects are to follow.
TOTM Here’s Henry Waxman on the federal government saving the newspapers from failing… Read the full piece here.
Here’s Henry Waxman on the federal government saving the newspapers from failing…
TOTM My latest working paper, which bears the same title as this post, is now available on SSRN. In the paper, I address the challenge created . . .
My latest working paper, which bears the same title as this post, is now available on SSRN. In the paper, I address the challenge created by the Supreme Court’s 2007 Leegin decision, which abrogated the 96 year-old rule declaring resale price maintenance (RPM) to be per se illegal. The Leegin Court held that instances of RPM must instead be evaluated under antitrust’s more lenient rule of reason. It also directed lower courts to craft a structured liability analysis for separating pro- from anticompetitive instances of the practice.
TOTM So, AMD and Intel settled. Its a case we’ve covered here in significant detail. Terms haven’t been announced publicly. AAI has predictably argued that the . . .
So, AMD and Intel settled. Its a case we’ve covered here in significant detail. Terms haven’t been announced publicly. AAI has predictably argued that the settlement shouldn’t preclude further enforcement action from NY and the FTC. The NY Times suggests the same. They may be right, although Herb Hovenkamp, among others, has suggested that the settlement “has taken a lot of the wind out of the sails” of the FTC case.
TOTM The New York Times is reporting that New York’s attorney general, Andrew Cuomo, has filed an antitrust suit against Intel. According to the report… Read . . .
The New York Times is reporting that New York’s attorney general, Andrew Cuomo, has filed an antitrust suit against Intel. According to the report…
