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Antitrust Predation and The Antitrust Paradox

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  • Kenneth G. Elzinga
  • David E. Mills

Abstract

The widely recognized influence that the Chicago school of law and economics had on the institution of antitrust is nowhere more apparent than in predatory-pricing law. Starting with Aaron Director, this movement had many distinguished contributors. But even in this company, Robert Bork stands out for his part in persuading the judiciary to refocus antitrust law on the interests of consumers rather than on the interests of competing firms. In The Antitrust Paradox and other writings, Bork advanced the Chicago school insight that the kind of aggressive price cutting that, at the time, passed for predatory pricing is instead an essential and, for consumers, beneficial attribute of competition. The resulting change in direction that antitrust has taken in predatory-pricing cases culminated in the Court's Matsushita (Matsushita Electric Industrial Co. v. Zenith Ratio Corp., 475 U.S. 574 [1986]) and Brooke Group (Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 [1993]) opinions, both of which bear the marks of Bork's influence.

Suggested Citation

  • Kenneth G. Elzinga & David E. Mills, 2014. "Antitrust Predation and The Antitrust Paradox," Journal of Law and Economics, University of Chicago Press, vol. 57(S3), pages 181-200.
    • Handle: RePEc:ucp:jlawec:doi:10.1086/676517
    DOI: 10.1086/676517
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    References listed on IDEAS

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    1. Elzinga, Kenneth G, 1970. "Predatory Pricing: The Case of the Gunpowder Trust," Journal of Law and Economics, University of Chicago Press, vol. 13(1), pages 223-240, April.
    2. Bolton, Patrick & Scharfstein, David S, 1990. "A Theory of Predation Based on Agency Problems in Financial Contracting," American Economic Review, American Economic Association, vol. 80(1), pages 93-106, March.
    3. Ordover, Janusz A. & Saloner, Garth, 1989. "Predation, monopolization, and antitrust," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 9, pages 537-596, Elsevier.
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    6. Wayne A. Leeman, 1956. "The Limitations of Local Price-cutting as a Barrier to Entry," Journal of Political Economy, University of Chicago Press, vol. 64(4), pages 329-329.
    7. Drew Fudenberg & Jean Tirole, 1986. "A "Signal-Jamming" Theory of Predation," RAND Journal of Economics, The RAND Corporation, vol. 17(3), pages 366-376, Autumn.
    8. Corwin D. Edwards, 1955. "Conglomerate Bigness as a Source of Power," NBER Chapters, in: Business Concentration and Price Policy, pages 331-359, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Dennis W. Carlton & Michael Waldman, 2014. "Robert Bork's Contributions to Antitrust Perspectives on Tying Behavior," Journal of Law and Economics, University of Chicago Press, vol. 57(S3), pages 121-144.
    2. Roger D. Blair & Christina DePasquale, 2014. ""Antitrust's Least Glorious Hour": The Robinson-Patman Act," Journal of Law and Economics, University of Chicago Press, vol. 57(S3), pages 201-215.

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