ANTITRUST Music Claude De Bussy Prelude

ANTITRUST • Music: Claude De. Bussy – 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. 2. 3. 4. 5. The Reach of the Antitrust Laws Public Enforcement Private Enforcement Relation Between Procedure & Substance 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 • 1945 -75: Anti-Big Business Ideology • 1975 -92: “Antitrust Revolution” • 1992 -2000: 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 SELFINTEREST

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