Antitrust
For the assignments there may be references to statutes with an appendix of the Sherman Act, these are often in the back of the book.
Semi-Socratic
Page 170 has all the economics you need to know for this course. The case law, however, involves a great deal of economic language.
Open book, handwritten exams
Exam: 2-3 questions, one likely about mergers.
Introduction to Antitrust Law
What is it, what it does, who it is designed to protect, and so on.
We generally like markets in the western world, but should they be regulated and for what purpose?
Sherman Act, Sec. 1: There are certain types of actions and conduct that in some way restrain trade.
Bork revolutionized the thinking about antitrust in that he postulates that legislative intent is opaque and it can be safely ignored in the efforts to achieve economic efficiency.
Posner is also a big name, became famous because of his work in antitrust.
Hovencamp tries to argue that there are several points where the Chicago School is wrong in that it does not conform to the conservative goal of economic efficiency.
Philip Areeda is one of the critical people in the field (from Harvard), wrote the leading treatise in antitrust. One of the first academics to bring economic thinking to the doctrinal analysis of antitrust law. Died about five years ago.
Elhaughe has taken up Areeda’s mantle.
Pitofsky is a leading moderate in antitrust (Georgetown).
Salop also falls into this realm (also from Georgetown presumably).
The liberal position is more enforcement; the conservative position is less enforcement.
The FTC can only bring civil cases; the antitrust division of the DOJ can bring civil and criminal cases. They share jurisdiction. Somewhat ironic that those who are charged with economic efficiency are configured inefficiently.
Demand Curve (p170)
The reserve price is the maximum price a consumer will pay for a good.
The excess money that people would pay over the price one pays for a good is called the consumer surplus.
To say something is inelastic is to mean that demand doesn’t change much even if the price changes.
The competitive cost is the consumer price that includes a reasonable profit for the business.
The monopoly price is the price a vendor can demand if that vendor as monopolized the market (read: some price higher than the competitive price.
The are certain points which represent the monopoly price and quantity within the market, as well as the Optimum price and quantity.
The dead weight triangle (fa
or service, but there is a sweet spot of intersection between the maximum consumer reservation price and profitability. Consumers who are willing to pay more (but actually pay less) are surplus. For extra units that could be produced unprofitably but would therefore attract more consumers, those consumers are not considered.
The monopoly price is where profits are maximized (anything higher would reduce consumer purchases to the point where none would buy).
“Leaving a mutually beneficial transaction on the table is inefficient. A tragedy, really.” This is deadweight loss.
Any price that is above cost (supra-competitive) is a potential anti-trust problem, even if below the monopoly price. Some arrangements, such as price-fixing, do not approach the monopoly price and yet are still in violation of anti-trust laws.
To determine if there is an anti-trust violation, one needs to look at what the competitive price should have been, versus the price charged. Damages are trebled for the amount of money unlawfully taken in.
