Antitrust Law Outline
8/24/09
· Antitrust is common law
· The mkt works best when businesses and firms are competitive
· Sec. 1 and sec. 2 of the Sherman Act
· Clayton Act
· Robinson – Patman Act
· Price discrimination – can’t sell same product to diff buyers at diff prices
· 3 ways antitrust laws enforced – justice dept., FTC (cease and desist), and private action
8/25/09
· Demand –schedule of prices, amount willing and able to buy at a certain price
· Inverse rel’ship b/w P and Q
· D curve shifts inwards when a substitute exists
o Buy less at each price
· When price of complementary good increases, the complemented good’s demand decreases
· Steep slope – necessities (kidney), no good substitutes
o Inelastic – price doesn’t matter
· Main cause S curve shifts – cost of implements
· Competitive mkt – tendency for price to gravitate towards $3 for 30 units sold
· Consumer surplus – diff b/w what you paid and how much you would be willing to pay
o Should that triangle be as big as possible b/c indicia of social welfare
· Debate: should we max entire triangle or just the consumer surplus triangle?
· Allocative efficiency
· Competitive Market
o 1. Large # of buyers and sellers
o 2. Perfect info
o 3. Items that are fungible
8/27/09
· Monopoly – higher price at lower output
o 1. P increases
o 2. Q decreases
o 3. CS decreases
o 4. CS à PS
o 5. Allocative efficiency decreases – social welfare decreases
o 6. Cost of rent-seeking and avoidance à never be bigger than x rectangle
· CS shifted over to PS
· Theft – just redistribution but real cost of it is measures taken to prevent it
· Real cost of monopoly is methods of doing it and methods of avoiding it
o No wealth destroyed – just a redistributio
its
o Overcharge measure
· Offensive: P absorbed the hgiehr price
· Ct: can’t say no to defense and yes to offense b/c will pay dmgs to 1st one and still liable to 20th, etc. so either all of it contained at manuf/wholesale level or apportion it down entire level of distribution
· Ct chooses 1st option – have to be direct purchaser to recover from price-fixing firms
· If allow everyone to sue, everyone will recover $.20 if price was increased by $1
· Exceptions:
o Where direct purchaser owned or controlled by its customer – also removes a lot of the uncertainty b/c like a single entity
· Monopsony
o 1 buyer
o Buyers can get together and collude to pay one price
o Can have indirect seller to the monopsony
