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The NFL and the Theory of the Firm

TOTM Some serious reading first on American Needle, Inc. v. National Football League, No. 08-661 (U.S. S. Ct.)… Read the full piece here.

Some serious reading first on American Needle, Inc. v. National Football League, No. 08-661 (U.S. S. Ct.)…

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Antitrust & Consumer Protection

Alchian and Demsetz (1972), Dallas Cowboys Edition

Popular Media In Alchian and Demsetz’s (1972) nexus-of-contracts approach to the firm, bosses don’t necessarily hire workers; workers may just as easily hire bosses. Recall Cheung’s (1983, p. 8) famous illustration: . . .

In Alchian and Demsetz’s (1972) nexus-of-contracts approach to the firm, bosses don’t necessarily hire workers; workers may just as easily hire bosses. Recall Cheung’s (1983, p. 8) famous illustration: “My own favorite example is riverboat pulling in China before the communist regime, when a large group of workers marched along the shore towing a good-sized wooden boat. The unique interest of this example is that the collaborators actually agreed to the hiring of a monitor to whip them.” In Alchian and Demsetz’s example, the employee can “fire” his employer by quitting, just as I can “fire” my grocer by shopping at a different store.

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Antitrust & Consumer Protection

Merger Guidelines Reading

TOTM Volume 16, Issue 4 of the George Mason Law Review (which I received in my mailbox today) has a well timed issue from its antitrust . . .

Volume 16, Issue 4 of the George Mason Law Review (which I received in my mailbox today) has a well timed issue from its antitrust symposium featuring several articles on revisions to the Merger Guidelines.  Especially recommended is DOJ economist Greg Werden’s article here, which usefully sets the stage for some of the important debates.  Here is a key excerpt from Werden’s analysis, which I think can fairly be interpreted as coming out “against” revision…

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Antitrust & Consumer Protection

Antitrust to Protect “Small Dealers and Worthy Men”?

TOTM As I skimmed through the White House White Paper on innovation (HT: Patently-O), I noticed that a repeated theme in the document is that US . . .

As I skimmed through the White House White Paper on innovation (HT: Patently-O), I noticed that a repeated theme in the document is that US innovation policy must “Promote Competitive Markets that Spur Productive Entrepreneurship” (e.g., p. 9).   There is no real substantive discussion of antitrust issues in the White Paper, except for the following passage, suggesting that the key role for antitrust in promoting innovation is to…

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Antitrust & Consumer Protection

Coming Soon: New Merger Guidelines

TOTM The possibility of new Merger Guidelines has been much discussed in the antitrust community, particularly in light of appointment of the two new chief agency . . .

The possibility of new Merger Guidelines has been much discussed in the antitrust community, particularly in light of appointment of the two new chief agency economists, Carl Shapiro and Joe Farrell, who have done substantial work on the economics of horizontal mergers and market definition.  Today, the FTC and DOJ announced a series of workshops and period for public comment to explore potential revision of the Guidelines…

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Antitrust & Consumer Protection

How Competitive Is the Health Insurance Market, Really?

TOTM Not very, according to the President in his recent health care speech, making the case that lack of competition and for-profit monopolists are what ails . . .

Not very, according to the President in his recent health care speech, making the case that lack of competition and for-profit monopolists are what ails the health care market…

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Antitrust & Consumer Protection

Three Problematic Truths About the Consumer Financial Protection Agency Act of 2009

Scholarship Abstract The creation of a new Consumer Financial Protection Agency (“CFPA”) is a very bad idea and should be rejected. The proposal is not salvageable . . .

Abstract

The creation of a new Consumer Financial Protection Agency (“CFPA”) is a very bad idea and should be rejected. The proposal is not salvageable and cannot be improved in substance or in form. The foundational premise of the CFPA is that a failure of consumer protection, and specifically irrational consumer behavior in lending markets, was a meaningful cause of the financial crisis and that the CFPA would have or could have averted the crisis or lessened its effects. To the contrary, there is no evidence that consumer ignorance or irrationality was a substantial cause of the crisis or that the existence of a CFPA could have prevented the problems that occurred. The CFPA is likely to do more harm than good for consumers. In this article, we highlight three fundamentally problematic truths about the CFPA: (1) The CFPA is premised on a flawed understanding of the financial crisis, (2) the CFPA will have significant unintended consequences, including but not limited to reducing competition, consumer choice, and availability of credit to consumers for productive uses; and (3) the CFPA creates a powerful bureaucracy with undefined scope, risking expensive and wasteful regulatory overlap at both the federal and state levels without any evidence of its own expertise in the core areas it is designed to regulate.

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Financial Regulation & Corporate Governance

The Onion or Reality: Ron Kirk Edition

Popular Media Today’s installment of our series featuring statements so self-evidently absurd you wonder how anyone could have made them with a straight face focuses on US . . .

Today’s installment of our series featuring statements so self-evidently absurd you wonder how anyone could have made them with a straight face focuses on US Trade Representative Ron Kirk. Here’s Captain Kirk failing Economics 101…

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Antitrust, Multi-Dimensional Competition, and Innovation: Do We Have an Antitrust-Relevant Theory of Competition Now?

Scholarship Abstract Harold Demsetz once claimed that ‘economics has no antitrust relevant theory of competition.’ Demsetz offered this provocative statement as an introduction to an economic . . .

Abstract

Harold Demsetz once claimed that ‘economics has no antitrust relevant theory of competition.’ Demsetz offered this provocative statement as an introduction to an economic concept with critical implications for the antitrust enterprise: the multi-dimensional nature of competition. Competition does not take place upon a single margin, such as price competition, but several dimensions that are often inversely correlated such that a liability rule deterring one form of competition will result in more of another. This insight has important implications for the current policy debate concerning how to design antitrust liability standards for conduct involving both static product market competition and dynamic innovative activity. The primary purpose of this essay is to revisit Demsetz’s broader challenge to antitrust regulation in the context of the frequently discussed tradeoffs between innovation and price competition. I summarize recent developments in our knowledge of the relationship between competition and innovation, highlighting the deficiencies that significantly constrain antitrust enforcers’ abilities to confidently calculate inevitable welfare tradeoffs. I conclude by discussing policy implications that follow from these limitations.

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Antitrust & Consumer Protection