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Transaction Cost Economics, Antitrust Rules, and Remedies

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  • Paul L. Joskow

Abstract

This article discusses the application of transaction cost economics (TCE) to the specification of antitrust legal rules and antitrust remedies and explains why the application of TCE analysis may lead to very different legal rules and remedies from approaches that ignore TCE considerations. Antitrust legal rules must be sensitive to the attributes of the institutions we rely upon to enforce antitrust policies, the information and analytical capabilities these institutions possess, the uncertainties they must confront in the diagnosis and mitigation of anticompetitive behavior and market structures, and the associated costs of type I and type II errors implied by alternative legal rules and remedies. Modern imperfect competition theory that fails to take TCE principles into account is likely to lead to poor legal rules and remedies. These conclusions are supported by a discussion of the Kodak case and its progeny and of the proposed divestiture remedies approved by the District Court's decision in the Microsoft case. Copyright 2002, Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Journal of Law, Economics, and Organization.

Volume (Year): 18 (2002)
Issue (Month): 1 (April)
Pages: 95-116

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Handle: RePEc:oup:jleorg:v:18:y:2002:i:1:p:95-116

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Citations

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Cited by:
  1. Paul Joskow & Roger Noll, 2013. "Alfred E. Kahn, 1917–2010," Review of Industrial Organization, Springer, vol. 42(2), pages 107-126, March.
  2. Andrei Y. Shastitko & Svetlana V. Golovanova, 2014. "Collusion in markets characterized by one large buyer: lessons learned from an antitrust case in Russia," HSE Working papers WP BRP 49/EC/2014, National Research University Higher School of Economics.
  3. Arndt Christiansen and Wolfgang Kerber & Wolfgang Kerber, 2006. "Competition Policy with Optimally Differentiated Rules Instead of "Per se Rules vs. Rule of Reason"," Marburg Working Papers on Economics 200606, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  4. Jo Seldeslachts & Joseph A. Clougherty & Pedro Pita Barros, 2007. "Remedy for Now but Prohibit for Tomorrow: The Deterrence Effects of Merger Policy Tools," CIG Working Papers SP II 2007-02, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  5. Shastitko, A., 2012. "Competition on Aftermarkets: the Subject Matter and Policy Applications," Journal of the New Economic Association, New Economic Association, vol. 16(4), pages 104-126.
  6. Shastitko, A., 2011. "Errors of I and II Types in Economic Exchanges with Third Party Enforcement," Journal of the New Economic Association, New Economic Association, issue 10, pages 125-148.
  7. Wolfgang Kerber & Jürgen-Peter Kretschmer & Georg von Wangenheim, 2008. "Optimal Sequential Investigation Rules in Competition Law," MAGKS Papers on Economics 200816, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  8. Joseph A. Clougherty & Jo Seldeslachts, 2011. "The Deterrence Effects of U.S. Merger Policy Instruments," Tinbergen Institute Discussion Papers 11-095/1, Tinbergen Institute.
  9. Natalia Pavlova & Andrey Shastitko, 2014. "Effects Of Hostility Tradition In Antitrust: Leniency Programs And Cooperation Agreements," HSE Working papers WP BRP 58/EC/2014, National Research University Higher School of Economics.
  10. Golovanova, S., 2013. "Competition Restriction Problem in the Markets Linked to the Markets of Essential Facilities," Journal of the New Economic Association, New Economic Association, vol. 20(4), pages 110-132.
  11. Raynaud, Emmanuel & Sauvee, Loic & Valceschini, Egizio, 2002. "Governance of the Agri-food Chains as a Vector of Credibility for Quality Signalization in Europe," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24917, European Association of Agricultural Economists.
  12. Oliver E. Williamson, 2005. "The Economics of Governance," American Economic Review, American Economic Association, vol. 95(2), pages 1-18, May.
  13. Stefan Voigt, 2006. "Robust political economy: The case of antitrust," The Review of Austrian Economics, Springer, vol. 19(2), pages 203-215, June.
  14. Shastitko, A. & Kurdin, A., 2014. "Protection of Intellectual Property Rights and Competition Policy: Seeking for a Better Balance," Journal of the New Economic Association, New Economic Association, vol. 21(1), pages 111-135.
  15. Pedro Barros & Joseph Clougherty & Jo Seldeslachts, 2010. "How to Measure the Deterrence Effects of Merger Policy: Frequency or Composition?," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 17(1), pages 1-8.
  16. Andreea Cosnita-Langlais & Lars Sørgard, 2014. "Enforcement vs Deterrence in Merger Control: Can Remedies Lead to Lower Welfare?," EconomiX Working Papers 2014-29, University of Paris West - Nanterre la Défense, EconomiX.
  17. Yannis Katsoulacos & David Ulph, 2008. "On Optimal Legal Standards for Competition Policy: A General Welfare-Based Analysis," Discussion Paper Series, Department of Economics 200812, Department of Economics, University of St. Andrews.
  18. Patrice Bougette & Christian Montet & Florent Venayre, 2006. "L'adaptation légale de la stratégie d'entreprise aux contraintes du droit de la concurrence," Post-Print halshs-00482177, HAL.
  19. Lars Kumkar, 2002. "Regulatory Choices and Commitment � Challenges for Electricity Market Regulation in Kosovo," Kiel Working Papers 1114, Kiel Institute for the World Economy.
  20. Yvrande-Billon, Anne & Menard, Claude, 2005. "Institutional constraints and organizational changes: the case of the British rail reform," Journal of Economic Behavior & Organization, Elsevier, vol. 56(4), pages 675-699, April.

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