Einer Elhauge

Antitrust law : an analysis of antitrust principles and their application

Recognized by antitrust practitioners and the courts as the most authoritative and comprehensive treatise on antitrust principles and practice, Antitrust Law explains the interplay of judicial, statutory, public policy, and economic forces that shape the world of antitrust. Its thorough analysis and criticism of U.S. Supreme Court, appellate court and major lower court antitrust decisions will help you truly understand the underpinnings of the law and frame successful arguments in litigation. The most recently revised volumes contain greatly expanded coverage of the Noerr-Pennington doctrine; state action, implied, and statutory immunity; and the international and extraterritorial application of U.S. antitrust laws. Author Herbert Hovenkamp is recognized as one of the foremost experts on antitrust law in the country and has consulted extensively for both the government and the private sector.

Does Interest Group Theory Justify More Intrusive Judicial Review

t Acting Professor of Law, Boalt Hall, University of California at Berkeley. I am grateful for helpful comments on earlier versions of this Article by Peter Aranson, Steve Barnett, Steve Bundy, Evan Caminker, Bob Cooter, Daniel Farber, Willy Fletcher, Michael Fitts, Philip Frickey, Herbert Hovenkamp, Michael Klarman, Lewis Kornhauser, Jonathan Macey, Peter Menell, Geoffrey Miller, Paul Mishkin, Rachel Moran, William Page, Andrea Peterson, Robert Post, Eric Rakowski, Jed Rubenfeld, Dan Rubinfeld, Joe Sax, Martin Shapiro, Daniel Shaviro, Matthew Spitzer, Cass Sunstein, Laurence Tribe, and Mark Tushnet. I absolve all of them from responsibility for anything that strikes the reader as wrong or displeasing. I would also like to thank the library staffs at Boalt and the rest of the University of California at Berkeley for their invaluable efforts in collecting the materials for this articie.

Why Above-Cost Price Cuts To Drive Out Entrants Are Not Predatory-and the Implications for Defining Costs and Market Power

t Professor of Law, Harvard Law School. I am grateful for funding by Harvard Law School, the Handler Foundation, and the John M. Olin Center for Law, Economics and Business at Harvard Law School. I have also benefited from comments on earlier drafts by Jonathan Baker, William Baumol, Lucian Bebchuk, Joe Brodley, Allen Ferrell, Bruce Hay, Howell Jackson, Louis Kaplow, Benjamin Klein, Al Klevorick, Michael Levine, Janus Ordover, Mark Ramseyer, Mark Roe, Hal Scott, Matt Stephenson, Bill Stuntz, and Gregory Werden, and from comments by workshop participants at the American Law and Economics Association annual meetings, the Harvard Law and Economics Workshop, the U.S. Department of Justice, and the U.S. Federal Trade Commission.

Allocating Health Care Morally

This Article examines the promise and limits of a moral paradigm for allocating resources both to health care and among competing health care needs, and derives the essential attributes of a moral health care system. The author concludes that, given societys limited resources, the absolutist position that no beneficial health care should ever be denied is untenable. Nonetheless, no health care system can survive unless it avoids ongoing tradeoffs between health needs and monetary costs by imposing a budgetary constraint derived outside the moral paradigm. The author also concludes that the principle that everyone should receive a minimum of adequate care lacks a concrete affirmative meaning sufficient to guide health care allocations. However, the absence in the health care context of important negative reasons for refraining from an equal distribution of societal resources supports defining adequate care roughly as the level of health care enjoyed by the middle class. The author then addresses how to allocate morally a limited budget among the different health care needs of a group. He rejects arguments that certain health maximization standards are discriminatory or in tension with equity, showing that these arguments generally assume without justification that the status quo is the proper baseline for measuring discrimination. Upon examination, each maximiza-tion standard simply reflects a different baseline of what an equitable distribution of health care would look like. Although moral analysis provides various useful criteria for making health care tradeoffs within a fixed budget, in the end it cannot dictate any particular measure of group health maximization. Accordingly, individuals should have a diversity of moral choice by being able to choose-among an array of health plans-the plan that allocates resources according to the policy they prefer. Finally, the author examines consent-based theories of moral justice and concludes they cannot alone resolve allocation questions. The reason is that one must go outside the consent-based framework both to determine the timing and con-19941 1451 CALIFORNIA LAW REVIEW ditions for valid actual consent and, where meaningful actual consent is unfeasible, to determine when and to what individuals should be presumed to have consented. Nonetheless, when coupled with the other propositions derived in this Article, consensual theories can help legitimate binding individuals to their choices among group health maximization policies and can exclude some allocations that we can presume no one would have consented to ex ante. This Article thus provides a morally and practically tenable framework-grounded in …

Knowledge about Legal Sanctions

For a system that likes to say that ignorance of its rules is no excuse, the legal system can be remarkably ambivalent about whether the dissemination of knowledge about those rules is good or bad. Lawyers have, in particular, been roundly condemned for providing truthful information about the law that helps clients avoid punishment for wrongdoing, exploit loopholes to engage in legal but undesirable activity, recognize illegal activities that have low penalties or chances of detection, and do better in litigation than they should have.1 Ignorance of the law may be no excuse, but too much knowledge of the law is, apparently, no virtue. Often, however, knowledge or advice about the law is undeniably desirable. How, then, do we sort out the good from the bad? The legal professions answer, at least as reflected in its rules governing the provision of advice to a client, has been to presume that advice is strongly desirable. Traditionally those rules have required lawyers to provide their clients with complete and accurate advice about the law and the legal system, unless the lawyer knows that the advice will simply further criminal or fraudulent conduct.2 Many observers believe that this approach allows lawyers to give far too much undesirable advice. One responsive intuition has been to distinguish between functional categories of advice: for example, between advice that alters legal penalties (or sanctions) for a given

Preference-Estimating Statutory Default Rules

One puzzlement of statutory interpretation is that so many statutory canons run contrary to likely legislative preferences, sound policy, or even the judicial self-interest in avoiding being legislatively overridden. The first conflict seems inconsistent with honest agent theories of interpretation, including theories (like mine) that counsel judges to resolve statutory uncertainty in ways that maximize the satisfaction of enactable political preferences. The second conflict seems inconsistent with traditional legal models of interpretation that assume judges should exercise their own policy judgment in resolving statutory uncertainty. The third conflict seems inconsistent with more cynical modern rational choice models that assume judges try to push their own ideological views as far as they can without being overruled. These puzzlements are deepened by the commonplace observation that judges do not consistently apply these canons but often ignore them or apply counter-canons. This article argues that the solution to these puzzlements is to understand many canons as preference-eliciting statutory default rules, which maximize the satisfaction of enactable political preferences by eliciting a legislative reaction that eliminates uncertainty about what those preferences are. Such preference-eliciting default rules will, however, enhance political satisfaction only when one interpretive default rule is sufficiently more likely to elicit a legislative response to outweigh a weak estimate that another interpretation might better match enactable preferences. The seemingly inconsistent application of these canons can then be explained because this theory indicates these canons should not be uniformly applied but rather should be (and generally are) applied only in cases where these limited conditions are satisfied. Where the preferences of neither the enacting nor current legislatures can be reliably estimated or elicited, courts should and do use default rules that track the preferences of political subunits or, where that is unavailing, that limit the variance of judicial judgment. Various alternative default rules - like interpreting all statutory ambiguities to disfavor interest groups, protect reliance interests, or reduce the effect or change caused by the statute - should be rejected because they are not limited to cases where they satisfy the conditions for maximizing political satisfaction but rather advance one view on substantive controversies that the political process is supposed to resolve.

Anticompetitive Market Division through Loyalty Discounts without Buyer Commitment

We show that loyalty discounts without buyer commitment create an externality among buyers because each buyer who signs a loyalty discount contract softens competition and raises prices for all buyers. This externality can enable an incumbent to use loyalty discounts to effectively divide the market with its rival and raise prices. We prove that, provided the entrants cost advantage is not too large, with enough buyers, this externality implies that in any equilibrium some buyers sign loyalty discount contracts, segmenting the market and reducing consumer welfare and total welfare. These propositions are true even if the buyers coordinate, the entrant is more efficient, the loyalty discounts cover less than half the market, and all the loyalty discounts are above cost. We also prove that these propositions hold even if we assume no economies of scale, no downstream competition, no buyer switching costs, no financial constraints, no limits on rival expandability, and no intraproduct bundle of contestable and incontestable demand.

Research Handbook on the Economics of Antitrust Law

One might mistakenly think that the long tradition of economic analysis in antitrust law would mean there is little new to say. Yet the field is surprisingly dynamic and changing. The specially commissioned chapters in this landmark volume offer a rigorous analysis of the field’s most current and contentious issues.

The limited regulatory potential of medical technology assessment.

Expensive new technology is routinely blamed for our health care cost explosion. Predictably, curbing its entry has become increasingly advocated in this and other developed nations. True, there are other popular culprits. Our populations need more health care because they are larger and older than before. And they can afford more care because they have higher disposable income. But these factors explain a relatively small portion of cost increases. Population increases cannot explain why inflation-adjusted expenditures have increased nine-fold per person. An older (and thus sicker) profile of patients explains only two percent of this increase, and greater income explains only five percent. And even if these factors were to

Robust Exclusion through Loyalty Discounts with Buyer Commitment

We show that loyalty discounts with buyer commitments create anticompetitive effects beyond those possible with pure exclusive dealing. The loyalty discount adds a seller commitment to maintain a distinction between the loyal and disloyal price. This seller commitment reduces the sellers incentives to compete for free buyers because the loyalty discount means that lowering prices to free buyers requires lowering prices to committed buyers. This softened seller competition reduces the rivals incentive to lower its own prices to free buyers. The result is inflated prices to free buyers, which in turn inflates prices to committed buyers because they are priced at a loyalty discount from those free buyer prices. Because each buyer who signs a loyalty discount contract thus softens competition and raises prices for all buyers, the result is to create an externality among buyers even without economies of scale or downstream competition. If enough buyers exist and the entrants cost advantage is not too large, we prove that this externality means that: (1) in any equilibrium, enough buyers sign loyalty discount contracts to anticompetitively increase prices; and (2) there always exists a possible equilibrium in which all buyers sign, completely foreclosing a more efficient rival. As a result, the incumbent can use loyalty discounts to increase its profit and decrease both buyer and total welfare.