Sunday, May 24, 2009
Rarely Tried, and . . . Rarely Successful': Theoretically Impossible Price Predation Among the Airlines
Posted by D. Daniel Sokol
Chris Sagers, Cleveland State University - Cleveland-Marshall College of Law, analyzes Rarely Tried, and . . . Rarely Successful': Theoretically Impossible Price Predation Among the Airlines.
ABSTRACT: Two large bodies of literature bearing on the competitive health of the deregulated airlines are in sharp conflict: (1) the volumes of judicial and academic output to the effect that the phenomenon of predatory pricing is, as a practical matter, impossible, and (2) the similarly massive body of industry-specific theory and empirical evidence that predation not only occurs in airline markets, but has been a key tool to preserve market power held by the surviving legacy carriers. This paper seeks to establish from the latter that the former is a poor basis for policy, especially if, as the paper argues, there is nothing really so special about airline markets as to make predation uniquely likely there. The paper therefore offers a basically casual but essential empiricism to the largely theoretical predation debate. The paper also takes the opportunity to reflect on the deeper philosophical role of generalization in antitrust.