Friday, December 3, 2004

Article on Oligopoly and Antitrust

Worth looking at is Thomas A. Piraino, Jr., Regulating Oligopoly Conduct Under the Antitrust Laws, 89 Minn. L. Rev. 9 (2004). The author argues

"In oligopoly cases, the courts should concentrate on whether defendants have acted in a manner consistent with their independent self-interest, or whether their conduct only makes sense as a means of furthering a tacit agreement to raise prices. It should not be difficult for courts to identify conduct that is contrary to a firm's independent self-interest. Firms act against such self-interest when they disclose confidential pricing information, sacrifice their individual bargaining power to observe standard industry-wide terms of sale, or forego otherwise attainable profits by following their competitors' price increases during periods of overcapacity or declining demand. Under normal circumstances, oligopolists would not be willing to incur the losses associated with such conduct. Courts can assume that firms are only willing to suffer such losses because the firms have received implicit assurances from their rivals that they will be compensated by the higher long-term profits resulting from a price-fixing arrangement. Such tacit collusion should be illegal on its face, because it harms consumers without any offsetting economic benefit."

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