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Abstract:
This article contends that government-imposed smoking bans cannot be justified as responses to market failure, as means of shaping preferences, or on risk-reduction grounds. Smoking bans reduce public welfare by preventing an optimal allocation of nonsmoking and smoking-permitted public places. A laissez-faire approach better accommodates heterogeneous preferences regarding public smoking.

the case against smoking bans, thomas a. lambert, smoking bans, government regulations, negative externality, environmental tobacco smoke, secondhand smoke, rights violations, public costs, preference-shaping arguement, risk argument,

Abstract:
In recent months, numerous localities and states have banned smoking in public places (i.e., privately owned places to which members of the public are invited). Such sweeping bans are typically justified on grounds that they alleviate externalities, shape individuals' preferences in a desirable manner, and reduce risks. This essay rebuts the externality, preference-shaping, and risk-reduction arguments for smoking bans and contends that such bans are unnecessary and, on the whole, utility-reducing.

smoking, smoking bans, externalities, risk regulation, health and safety regulation, endogenous preferences, preference-shaping

Abstract:
The Third Circuit's decision in Lepage's v. 3M created a great deal of uncertainty about the legality of so-called bundled discounts - i.e., discounts (or rebates) conditioned upon purchasing multiple products from disparate product markets. This paper, prepared for a joint Department of Justice/Federal Trade Commission hearing on single-firm exclusionary conduct, describes the competitive risk bundled discounts present, summarizes and critiques the six leading approaches courts and commentators have proposed for evaluating the legality of such discounts, and proposes an alternative evaluative approach.

bundling, bundled discounts, loyalty discounts, loyalty rebates, monopolization, antitrust, sherman act

Abstract:
Bundled discounts - discounts conditioned upon purchasing products from multiple product markets - present a dilemma for antitrust scholars: on the one hand, they result in lower prices and therefore provide immediate benefits to consumers; on the other hand, even above-cost (i.e., non-predatory) bundled discounts may cause long-run consumer harm by foreclosing competitors that are as efficient as the discounter but do not sell as broad a line of products. Courts therefore need an evaluative approach that would identify and condemn only those bundled discounts likely to cause long-term consumer harm by driving out efficient rivals. The approach must also be easily administrable so as to avoid chilling procompetitive discounting behavior. This article identifies and critiques five attempts courts and commentators have made at articulating such an evaluative approach and, finding each approach lacking, proposes an alternative evaluative approach. The proposed approach would presume the legality of above-cost bundled discounts but would permit that presumption to be rebutted by a plaintiff that proved certain facts demonstrating that it had fully exhausted its competitive options and was, or was likely to become, as efficient as the discounter. The recommended approach would be easily administrable and would include clear safe harbors to ensure that procompetitive bundled discounting is not discouraged.

Abstract:
In Leegin Creative Leather Prods., Inc. v. PSKS, Inc., decided in 2007, the U.S. Supreme Court overruled its 1911 precedent declaring vertical minimum resale price maintenance (RPM) to be per se illegal. The Leegin Court held that the practice should instead be examined on a case-by-case basis under antitrust's rule of reason. The Court further exhorted the lower courts to craft a "structured" rule of reason for evaluating RPM. This article critiques six approaches that have been proposed for evaluating minimum RPM and offers an alternative approach. The six approaches critiqued are (1) the Brandeisian, unstructured rule of reason; (2) Judge Posner's rule of per se legality; (3) the approach advocated by 27 states in the recent Nine West case; (4) the approach adopted by the Federal Trade Commission in that case; (5) the approach advocated by economists William Comanor and F.M. Scherer; and (6) the approach proposed in the Areeda & Hovenkamp Antitrust Law treatise. Finding each of these approaches deficient, the article proposes an alternative evaluative approach that harnesses economic learning and allocates proof burdens in a manner that minimizes the sum of decision and error costs, thereby maximizing the net social benefits of RPM regulation.

antitrust, Dr. Miles, Leegin, resale price maintenance, rule of reason, vertical price restraints, vertical restraints, vertical-price fixing

Abstract:
A general definition of exclusionary conduct has become a sort of Holy Grail for antitrust scholars. At present, four proposed definitions appear most promising: (1) conduct that could exclude an equally efficient rival; (2) conduct that raises rivals' costs unjustifiably; (3) conduct that, on balance, impairs consumer welfare by creating market power without providing countervailing consumer benefits; and (4) conduct that makes no economic sense but for its exclusionary effect on rivals.

In Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., 127 S. Ct. 1069 (2007), the U.S. Supreme Court implicitly weighed in on this debate over a generalized exclusionary conduct test. The issue before the Weyerhaeuser Court - should the legal standards governing predatory pricing similarly apply in predatory bidding cases? - appears on first glance to be rather narrow. In resolving that seemingly narrow issue, though, the Court seems implicitly to have rejected the second, third, and fourth definitions of exclusionary conduct (i.e., the raising rivals' costs approach, the consumer welfare effects test, and the no economic sense test). The Court's holding and reasoning are consistent with only the equally efficient rival approach.

This article asserts two primary claims, one descriptive and one normative. As a descriptive matter, the article asserts that the Supreme Court has implicitly rejected all the proposed exclusionary conduct definitions except for the equally efficient rival approach. As a normative matter, the article argues that this is a salutary development - that the equally efficient rival test, while somewhat underdeterrent, is the best of the proposed generalized definitions.

exclusionary conduct, exclusion, Weyerhaeuser, predation, predatory bidding, predatory pricing, antitrust, bundled discounts, loyalty discounts, loyalty rebates, Sherman Act, monopolization

Abstract:
On October 5, 2007, a group of antitrust scholars convened on Chicago's Near North Side to discuss monopolization law. In the course of their freewheeling but fascinating conversation, a number of broad themes emerged. Those themes can best be understood in contrast to a body of antitrust scholarship that was born six miles to the south, at the University of Chicago. Most notably, the North Side discussants demonstrate a hearty confidence in the antitrust enterprise - a confidence that is not shared by Chicago School scholars, who generally advocate a more modest antitrust. As scholars who are more sympathetic to Chicago School views, we are somewhat skeptical. While we applaud many the of the insights and inquiries raised during the conversation, and certainly this sort of discussion in general, our task in this article is to draft a critical analysis of the October 5 conversation. In particular, we critique the North Side discussants' vision of a big antitrust that would place equal emphasis on Sections 1 and 2 of the Sherman Act and would expand private enforcement of Section 2.

Abstract:
This article examines the recent district court decision rejecting a Federal Trade Commission (FTC) challenge to the proposed merger of organic grocers Whole Foods and Wild Oats. The article contends that the district court was right to reject the FTC's challenge and identifies four principles that should guide future merger investigations: (1) "hot documents" defining the market, demonstrating apparent motivation, or predicting effects should be ignored; (2) unique distribution channels should not be deemed "markets" unless they significantly reduce transaction costs; (3) merger analysis should better account for business trends and productive efficiencies; and (4) the deck should not be stacked so heavily in the favor of the FTC.

Whole Foods, Federal Trade Commission, FTC, regulation, mergers, policy, anticompetitive, productive efficiencies

Abstract:
The Executive Committee of the Association of American Law Schools has adopted a "Statement of Good Practices" that purports to limit the times when law schools may make offers to hire faculty members at other schools. Schools are generally not to make offers for indefinite appointments to professors on other faculties after March 1, subject to extension for two months with the consent of the incumbent's dean. They also are not to make offers contemplating resignation from a current faculty position more than two weeks following those deadlines.

Proceeding on the assumption that the AALS policy, whose express terms are precatory, speaks to what is in fact an agreement among law schools, this essay concludes this policy memorializes an understanding in violation of Federal antitrust law.

antitrust, horizontal, buyer's cartel, law school, education, faculty, professor, AALS

Abstract:
The Executive Committee of the Association of American Law Schools has adopted a Statement of Good Practices that purports to limit the times when law schools may make offers to hire faculty members at other schools. Schools are generally not to make offers for indefinite appointments to professors on other faculties after March 1, subject to extension for two months with the consent of the incumbent's dean. They also are not to make offers contemplating resignation from a current faculty position more than two weeks following those deadlines.

Proceeding on the assumption that the AALS policy, whose express terms are precatory, speaks to what is in fact an agreement among law schools, this essay concludes this policy memorializes an understanding in violation of Federal antitrust law.

Antitrust, horizontal, buyer's cartel, law school, education, faculty, professor, AALS

Abstract:
The forty-year debate over whether insider trading should be regulated has generally proceeded in all-or-nothing terms: Either all insider trading should be permitted (subject only to private restrictions imposed by issuers themselves), or none should. This Article argues for an asymmetric insider trading policy under which insider trading that decreases the price of an overvalued stock is generally permitted, but insider trading that increases the price of an undervalued stock is generally prohibited. Concluding that the net investor benefits of price-decreasing insider trading exceed those of price-enhancing insider trading, the Article argues that an asymmetric insider trading regime likely represents the bargain that shareholders and corporate managers would strike if they were legally and practically able to negotiate an insider trading policy. Current insider trading doctrine would permit regulators to impose such an asymmetric insider trading policy as the default rule.

insider trading, stock mispricing, overvalued equity, overvaluation, securities law, behavioral finance, stock markets, agency costs

Abstract:
This Essay reviews Herbert Hovenkamp's book, "The Antitrust Enterprise: Principle and Execution" (Cambridge, MA: Harvard University Press, 2005). Hovenkamp documents a remarkable transformation in antitrust doctrine in the three decades since Robert Bork and Richard Posner authored scathing critiques (in 1978 and 1976, respectively) of then-prevailing antitrust rules. Rejoicing that contemporary antitrust has redefined competition in a manner that focuses not on the number of firms in a market but on the degree to which the market generates low prices, high output, and innovation, Hovenkamp offers a number of suggestions for improving antitrust implementation. This Essay evaluates Hovenkamp's suggestions, concluding that most are sound, that a few might be slightly revised to enhance their effectiveness or administrability, and that a couple are downright unwise. In particular, the Essay criticizes Hovenkamp's call for abandonment of the indirect purchaser rule and his proposed test for identifying exclusionary conduct under Section 2 of the Sherman Act.

antitrust, Hovenkamp, Posner, Bork, competition, monopoly, indirect purchaser, exclusionary, Sherman Act

Abstract:
Participants in the forty-year debate over whether insider trading should be liberalized have generally treated insider sales the same as insider purchases - they have argued that all such insider transactions should be either regulated or liberalized. This article contends that there is a principled basis for treating price-decreasing insider trading (e.g., insider sales) more leniently than price-increasing insider trading (e.g., insider purchases). Because equity overvaluation is more likely than equity undervaluation to occur and persist and is more likely to occasion harm to the corporate enterprise when it does occur, corporate constituents (managers and shareholders) would likely value a policy that permits price-decreasing insider trading more than a policy that permits price-increasing insider trading. Thus, the majoritarian default rule may be an asymmetric policy under which price-decreasing insider trading is generally permitted while price-increasing insider trading is generally forbidden.

insider trading, equity overvaluation, overvaluation, mispricing, stock market efficiency, Rule 10b-5, securities regulation

Abstract:
In its 2007 Leegin decision, the U.S. Supreme Court reversed a 96 year-old precedent declaring vertical minimum resale price maintenance (RPM) to be per se illegal. The Court held that RPM should henceforward be evaluated under antitrust’s more lenient rule of reason, and it directed the lower courts to craft a structured liability analysis that will separate pro- from anticompetitive instances of the practice. Thus far, courts, regulators, and commentators have proposed four types of approaches for evaluating instances of RPM: (1) approaches focused on the effects on consumer prices; (2) approaches focused on the identity of the party initiating the RPM (i.e., manufacturer or dealer(s)?); (3) approaches focused on whether the product at issue is sold along with dealer services that are susceptible to free-riding; and (4) an approach, favored by the Federal Trade Commission, that mechanically applies factors the Leegin Court deemed to be relevant to the liability question.

Reasoning from a decision-theoretic perspective that seeks to minimize the sum of the error costs and decision costs expected to result from a proposed liability rule, this Article critiques these four sets of proposed approaches. Finding each deficient, the Article sets forth an alternative evaluative approach that would minimize the sum of decision and error costs, thereby maximizing the net social benefits of RPM regulation.

antitrust, Dr. Miles, Leegin, resale price maintenance, rule of reason, vertical price restraints, vertical restraints, vertical-price fixing, Sherman Act