An Administrable and Efficient Legal Standard for Refusals to Deal and Price Squeezes by an Unregulated, Vertically Integrated Monopolist

Posted by D. Daniel Sokol

Steve Salop (Georgetown Law) has a very interesting piece, An Administrable and Efficient Legal Standard for Refusals to Deal and Price Squeezes by an Unregulated, Vertically Integrated Monopolist.

ABSTRACT: This paper formulates a rigorous rule of reason legal standard under Section 2 of the Sherman Act for refusals to deal and price squeezes undertaken by an unregulated, vertically integrated monopolist against actual or potential competitors. This rule of reason standard is administrable by the courts and the monopolist. It takes into account the direct effects on consumers, as well as the longer run effects on the innovation and investment incentives of both the monopolist and its would-be competitors. In this way, the legal standard protects consumers and the competitive process on which a successful market economy is based.