Research Handbook on the Economics of Antitrust Law

Research Handbook on the Economics of Antitrust Law

Research Handbooks in Law and Economics series

Edited by Einer R. Elhauge

One might mistakenly think that the long tradition of economic analysis in antitrust law would mean there is little new to say. Yet the field is surprisingly dynamic and changing. The specially commissioned chapters in this landmark volume offer a rigorous analysis of the field’s most current and contentious issues.

Chapter 10: Issues in Antitrust Enforcement

Abraham L. Wickelgren

Subjects: economics and finance, competition policy, law and economics, law - academic, competition and antitrust law, law and economics

Extract

Abraham L. Wickelgren I INTRODUCTION While the literature on what antitrust law should and should not prohibit is vast, the literature on how best to enforce these laws is much smaller. That said, in recent years, there have been some important developments in the literature on optimal antitrust enforcement. While far from a comprehensive survey, this chapter discusses the literature on several issues in antitrust enforcement. The next section in the chapter addresses the proper balance between public and private enforcement; that is, it examines the relative strengths of and weaknesses of public and private enforcement and attempts to shed some light on the circumstances in which one mode of enforcement is likely to be preferable to another. The following sections all discuss issues related to optimal enforcement by a public agency. Section III discusses the optimal welfare standard that a public antitrust enforcement agency (or a court) should use in evaluating potentially anticompetitive conduct. The two leading candidates are the total welfare standard (evaluating the effect on all players, including the benefits to the firms involved in the conduct), often advocated by economists, and the consumer welfare standard (only considering the effect of the conduct on consumers), which is most commonly used by regulators and courts. Section IV discusses the optimal timing of antitrust enforcement. An antitrust authority can either review and decide whether or not to prohibit conduct before it is undertaken (ex ante enforcement, commonly used in merger enforcement) or wait until after the conduct has occurred...

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