The Competitive Effects of Quantity Discounts (original) (raw)

An Early Assessment of the Sherman Antitrust Act: Three Case Studies

The majority of the research literature on early antitrust law focuses on prices and output, but few empirical studies decompose these symptoms into the causes that the underlying theory suggests. The literature has been equally silent about secondary effects, even when their derivative claims dependent on and could be proven (or disproven by) evidence in such data. This paper focuses on three case studies where the United States Supreme Court used the Sherman Antitrust Act to justify significant government intervention in an industry, resulting in the breakup of a major trust or cartel-Chesapeake & Ohio Fuel Co. v. United States, Standard Oil Co. of New Jersey v. United States, and United States v. American Tobacco Co.-by measuring five industry metrics and their relation to the antitrust action: capital, number of establishments, employment, profit margin, and revenue.

Law and Economics Scholarship and Supreme Court Antitrust Jurisprudence, 1950–2010

Lewis & Clark Law Review, 2017

Although law and economics has influenced nearly every area of American law, few have been as deeply and as thoroughly "economized" as antitrust. Beginning in the 1970s, antitrust law—traditionally informed by populist hostility to economic concentration—was dramatically transformed by a new and overriding focus on economic efficiency. This transformation was associated with a provocative new wave of antitrust scholarship, which claimed that economic efficiency (or "consumer welfare") was the sole legitimate aim of antitrust policy. The U.S. Supreme Court seemingly agreed, issuing decision after decision rejecting traditional antitrust values and adopting the efficiency norm of the law and economics movement. By century's end, the populist origins of antitrust had faded into memory, and the professional discourse of the antitrust community (scholars, practitioners, and judges) had become dominated by economic analysis. Although this transformation in antitrust law has been the subject of considerable academic commentary, its causes remain poorly understood. Many scholars assume, sometimes tacitly, that the economic analysis of law and economics scholarship had a direct, educative influence on the Supreme Court. Other scholars argue that changes in the Court's antitrust jurisprudence were merely a reflection of changes in its composition, specifically the conservative appointments of the Nixon administration. What these opposing interpretations share in common is their limited evidentiary basis—both are derived from impressionistic reviews of a select number of Supreme Court decisions, rather than systematic analysis of larger historical trends. This Article moves beyond previous scholarship by presenting a comprehensive, quantitative study of every Supreme Court antitrust case from 1950 to 2010, a period including the decades before, during, and after the economic turn in antitrust. This comprehensive approach allows for more generalized conclusions regarding the real-world influence of law and economics scholarship. Based on both quantitative and qualitative evidence, this Article concludes that the Nixon appointments of the late 1960s and early 1970s were the primary cause of changes in antitrust jurisprudence, but that academic developments have infused these changes with an intellectual legitimacy they might otherwise have lacked, broadening their appeal and effectively insulating them from future changes in the composition of the Court.

The Legal Culture of the Formative Period in Sherman Act Jurisprudence

1990

discussing the relationships between economic and political theory and the development of the Sherman Act). 4. Literalism espoused the view that when the body of an act pronounces as illegal every contract or combination in restraint of trade or commerce among the several States, etc., the plain and ordinary meaning of such language is not limited to that kind of contract alone which is in unreasonable restraint of trade, but all contracts are included in such language, and no exception or limitation can be added without placing in the act that which has been omitted by Congress. United States v. Trans-Missouri Freight Ass'n, 166 U.S. 290, 328 (1897). NEW YORK LAW SCHOOL LAW REVIEW States v. Trans-Missouri Freight Association, 5 United States v. Joint Traffic Associatidn, 6 and Addyston Pipe & Steel Co. v. United States, 7 and to some degree by Justice Harlan's plurality opinion in Northern Securities Co. v. United States, 8 and the first articulations of the rule of reason in Justice White's dissent in Trans-Missour and his opinion for the majority in Standard Oil. This section also examines the writings of three of the lawyers who argued the Joint Traffic case as an introduction to the vigorous debate over the nature of law which dominated American jurisprudence in the late nineteenth century. The second section of this article places these two opposing views-the literalist approach and the rule of reason-in the context of larger debates about the nature of law. Oliver Wendell Holmes, Jr. is given the third section as a representative of views which were his alone. The fourth section examines William Howard Taft's circuit court opinion in Addyston Pipe 1 " and certain scholarly reaction to court decisions to illustrate yet a third branch of legal culture closely related to the then-emerging case method of teaching law, and attempts to link this story to the present day. I. Justice Peckham's opinions establishing the literalism interpretation of the Sherman Act rest on two striking assumptions. The first is that although "combinations of capital" may be more efficient than "the small dealers and worthy men whose lives have been spent" in a line of trade, superiority in that regard does not justify driving the small dealers out of business." The second is that once Congress "speaks upon a particular subject, over which it has constitutional power to legislate, public policy is what the statute enacts.., whatever may have been theretofore decided by the courts to have been the public policy of the country on that subject." 12

The Legislative History of the Sherman Act Re‐Examined

Economic Inquiry, 1992

According to Robert Bork's influential analysis, the Sherman Act was expressly instituted by the 51st Congress to advance consumer welfare, but has often been misinterpreted by federal courts handing down anticonsumer decisions. This paper suggests that the political coalition backing the 1890 antitrust statute sought multiple social ends and did not faithfully seek to impose economic efficiency. The key evidence includes historical economic trends, congressional debate, the legislative agenda of Senator John Sherman, and the political conflict generated by the most contentious (and most electorally important) issue of the 51st Congress: the highly protectionist McKinley Tariff Act.

The Jurisprudence of Antitrust

1995

Since 1973 the number of private actions which have been brought independently of government-instituted actions has substantially exceeded those which piggyback on government actions. See Thomas E.

When low is no good: predatory pricing and US antitrust law (1950-1980)

European Journal of the History of Economic Thought, 2011, vol. 18, n.5 (December), 2011

""The history of predatory pricing law and economics is peculiar on account of the seemingly inescapable contradiction between the legal habit of condemning a business practice on account of its possible unfair and inefficient effects and the necessity of providing an economic rationale for the condemnation without undermining the essence of competition itself. The apparently rock-solid equation “low price = good price” makes such a rationale neither immediate nor easy to find – and predatory pricing such an interesting issue from the viewpoint of historians of economics. How to circumvent the equation has been the challenge for several of the most brilliant minds of postwar microeconomics, as well as for outstanding law scholars. It is a fascinating story, with deep implications for at least two major historiographic issues: first, the evolution of neoclassical economics, as embodied in one of its most important branches, industrial organization; second, the relationship between the formal results of theoretical economics and their policy implications, in a particular their applicability for courtroom litigation. This is the first in a pair of papers dedicated to this story. The division between the two works is strictly chronological: the present paper covers the period from the 1950s to about 1980, that is to say, until the verge of the game-theoretic revolution in industrial organization; the other will focus on the period 1980–2000, covering the above-mentioned revolution and its relationship with a couple of remarkable Supreme Court’s decisions on predatory pricing. The main thesis of the two works is that the traditional dichotomy between alternative legal standards, those based on “stories” and those based on “rules”, may prove useful in interpreting the evolution of economists’ thought about predatory pricing and, more generally, in explaining under what conditions a theoretical statement may have an effective policy impact, especially in courtrooms.""