ANTITRUST Music: Claude DeBussy –Prelude: Afternoon of a Faun (1894) –Nocturnes (1900) –La Mer (The Sea) (1905) Performed by Orchestre de la Suisse Romande, Conductor: Armin Jordan (1991)

Possible Goals Balance Allocative & Productive Efficiency Protect Small Businesses –Concern re Survival: “Right” to Profit –Concern re Concentrated Political Power Distributive Justice: Prevent Overcharges to Consumers Business Ethics: Outlaw Offensive Commercial Practices

Antitrust Revolution 4 th Edition: Contains Thirteen Case Studies I Have Assigned in Prior Years 5 th Edition: Only Has Six of These

SCOPE & ENFORCEMENT 1.The Reach of the Antitrust Laws 2.Public Enforcement 3.Private Enforcement 4.Relation Between Procedure & Substance 5.Conduct of Large Private Civil Lawsuit

CONDUCT OF LARGE PRIVATE CIVIL LAWSUITS

Conduct of Large Private Civil Lawsuits Primary Focus: Settlement Secondary Focus: Summary Judgment

Order of Proceedings Preliminary Negotiations Complaint Motion to Dismiss Part or All Investigation & Discovery Summary Judgment Motions Trial Prep/Negotiations

Investigation & Discovery: Interactive Process Legal Research  Set of Relevant Facts to Investigate Discovery of Facts  More Detailed Legal Qs to Research Theories Change as Get More Info

Investigation & Discovery: Goals Defendant –Limit Info Going to Plaintiff –Identify D Theory of Case (& Support) –Identify Evidence Key to P Theory of Case Plaintiff: Find Evidence Sufficient to Survive Summary Judgment –Evidence Consistent w P Theory –Evidence Inconsistent w D Theory

Investigation & Discovery: Finding Evidence Witness Interviews Early Interrogatories –Contentions –I.D. Witnesses & Documents Document Review (Most Important) Depositions Later Interrogatories: What Evidence Supports Claims

Order of Proceedings Preliminary Negotiations Complaint Motion to Dismiss Part or All Investigation & Discovery Summary Judgment Motions Trial Prep/Negotiations

THEMES OF THIS COURSE 1.Power of Attorneys & Legal Academics to Change the Law

HISTORICAL TRENDS : Anti-Big Business Ideology : “Antitrust Revolution” : Line-Drawing and Some Counter-Revolution 2001: ???

INTRODUCTION TO THE ECONOMICS OF ANTITRUST

ASSUMPTIONS OF CLASSICAL ECONOMICS PEOPLE ACT RATIONALLY TO MAXIMIZE THEIR OWN INTERESTS

ASSUMPTIONS OF CLASSICAL ECONOMICS PEOPLE ACT RATIONALLY TO MAXIMIZE THEIR OWN INTERESTS RESOURCES MOVE TO MOST VALUABLE USE IF VOLUNTARY EXCHANGE PERMITTED

“VALUE” MEASURED BY AGGREGATE CONSUMER WILLINGNESS TO PAY FOR THINGS

“EFFICIENCY” EXPLOITING ECONOMIC RESOURCES TO MAXIMIZE “VALUE”

Given these definitions … Voluntary transactions are “efficient”

Given these definitions … Voluntary transactions are “efficient” Free market is “efficient” –allows sequences of transactions –resources end up w those who most value them

Given these definitions … Voluntary transactions are “efficient” Free market is “efficient” –allows sequences of transactions –resources end up w those who most value them Interference with market by government or cartel is “inefficient”

PROBLEMS WITH ASSUMPTIONS DEFINITION OF “VALUE” PEOPLE OFTEN IRRATIONAL

PROBLEMS WITH ASSUMPTIONS DEFINITION OF “VALUE” –CONSUMER CULTURE –DEPENDS ON INCOME DISTRIBUTION –MORE $ = MORE VOTES

PROBLEMS WITH ASSUMPTIONS PEOPLE OFTEN IRRATIONAL –OFTEN APPEAR TO ACT AGAINST SELF-INTEREST –OFTEN PERCEIVE SELVES ACTING AGAINST SELF- INTEREST

PROBLEMS WITH ASSUMPTIONS Raise Qs About Normative Use of Theory –Claims that results of comp. market always desirable –Claims that interference w comp. market always bad

PROBLEMS WITH ASSUMPTIONS Raise Qs About Normative Use of Theory Theory Often Describes World Pretty Well

PROBLEMS WITH ASSUMPTIONS Raise Qs About Normative Use of Theory Theory Often Describes World Pretty Well ME: Works Best if Addressing Basic Consumer Items

DEMAND CURVE : GENERALLY BUY MORE OF GOOD THE LESS IT COSTS

DEMAND

DEMAND CURVE: GENERALLY BUY MORE OF GOOD THE LESS IT COSTS: SUBSTITUTION EFFECT INCOME EFFECT

DEMAND CURVE: GENERALLY BUY MORE OF GOOD THE LESS IT COSTS SUBSTITUTION EFFECT: AS GOOD BECOMES CHEAPER, BUY IT INSTEAD OF ALTERNATIVES INCOME EFFECT

DEMAND CURVE: GENERALLY BUY MORE OF GOOD THE LESS IT COSTS SUBSTITUTION EFFECT INCOME EFFECT: AS GOOD BECOMES CHEAPER, PURCHASING POWER INCREASES, SO BUY MORE

DEMAND CURVE: GENERALLY BY MORE OF GOOD THE LESS IT COSTS EXCEPTIONS (RARE) : INFERIOR GOODS LUXURY GOODS

DEMAND CURVE: GENERALLY BY MORE OF GOOD THE LESS IT COSTS EXCEPTIONS: INFERIOR GOODS: GOODS YOU BUY MORE OF, THE LESS $ YOU HAVE LUXURY GOODS

DEMAND CURVE: GENERALLY BY MORE OF GOOD THE LESS IT COSTS EXCEPTIONS: INFERIOR GOODS LUXURY GOODS: GOODS YOU BUY BECAUSE OF THE HIGH PRICE

FACTORS AFFECTING DEMAND PERSONAL TASTE INCOME PRICE OF COMPLEMENTARY GOODS PRICE OF SUBSTITUTES

FACTORS AFFECTING DEMAND PERSONAL TASTE INCOME PRICE OF COMPLEMENTARY GOODS PRICE OF SUBSTITUTES

FACTORS AFFECTING DEMAND PERSONAL TASTE INCOME PRICE OF COMPLEMENTARY GOODS PRICE OF SUBSTITUTES

FACTORS AFFECTING DEMAND PERSONAL TASTE INCOME PRICE OF COMPLEMENTARY GOODS PRICE OF SUBSTITUTES