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Games judges don't play: predatory pricing and strategic reasoning in US antitrust

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  • Nicola Giocoli

Abstract

The paper analyzes the last three decades of debates about predatory pricing in US antitrust law, starting from the literature that followed Areeda and Turner's 1975 landmark paper and ending in the beginning of this century, upon the Brooke 1993 decision. Special emphasis is given to the game-theoretic approach to predation and to the reasons why this approach has never gained attention in the courtroom. It is argued that, despite their mathematical rigor, the sophisticated stories told by strategic models to demonstrate the actual viability of predatory behavior fail to satisfy the criteria guiding court's decisions, in particular their preference for easy-to-apply rules. Predation cases are still governed by a peculiar alliance between Chicago-style price theory--which, contrary to game theory, considers predatory behavior almost always irrational--and a Harvard-style attention to the operational side of antitrust enforcement.

Suggested Citation

  • Nicola Giocoli, 2013. "Games judges don't play: predatory pricing and strategic reasoning in US antitrust," Supreme Court Economic Review, University of Chicago Press, vol. 21(1), pages 271-330.
    • Handle: RePEc:ucp:scerev:doi:10.1086/675271
    DOI: 10.1086/675271
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    Cited by:

    1. Valentiny, Pál, 2019. "Közgazdaságtan a jogalkalmazásban [Forensic economics]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 134-162.
    2. Aldo Montesano, 2012. "Price collusion with free entry: the parasitic competition," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 59(1), pages 41-65, March.
    3. Signorino, Rodolfo, 2012. "Old lady charm: a comment," MPRA Paper 39211, University Library of Munich, Germany.
    4. Neri Salvadori & Rodolfo Signorino, 2016. "Competition," Chapters, in: Gilbert Faccarello & Heinz D. Kurz (ed.), Handbook on the History of Economic Analysis Volume III, chapter 6, pages 70-81, Edward Elgar Publishing.
      • Salvadori, Neri & Signorino, Rodolfo, 2011. "Competition," MPRA Paper 38387, University Library of Munich, Germany.
    5. Michael Funk & Christian Jaag, 2018. "The More Economic Approach To Predatory Pricing," Journal of Competition Law and Economics, Oxford University Press, vol. 14(2), pages 292-310.
    6. Nicola Giocoli, 2015. "Old lady charm: explaining the persistent appeal of Chicago antitrust," Journal of Economic Methodology, Taylor & Francis Journals, vol. 22(1), pages 96-122, March.

    More about this item

    JEL classification:

    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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