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Abstract: In a recent symposium issue of the George Mason Law Review, Steven Salop and R. Craig Romaine use the Microsoft litigation as a focus for discussion of antitrust law. Salop and Romaine argue that each of the allegations against Microsoft could constitute evidence of a design by Microsoft to reduce competition and to preserve or extend monopoly power. They argue as well that the right legal standard to apply in monopolization cases is a "competitive effects" test that balances the benefits and harms of the monopolist's conduct. This article exposes problems with their approach, explains why it departs from current antitrust standards, and urges an approach consistent with current standards.
Abstract: Many legal rules turn on a party's state of mind or intent with respect to some action or consequence. Legal scholars have long debated the contours of such requirements and the sorts of proof required for them. Intent has been an especially controversial issue in antitrust law. This paper provides a theory of legal standards that explains the role of intent analysis in antitrust and in other areas of the law. We argue that intent requirements, and many other legal rules, can be understood by focusing on the goal of minimizing the expected costs from legal errors. After developing a positive theory of intent standards, we apply the theory to antitrust to show that it explains both the allocation of and proof requirements for the specific intent standards in antitrust doctrine. We then use the Microsoft case as a concrete study of the function of intent rules in antitrust.
Abstract: Property rights - rights to control, use, or transfer things (broadly conceived) - though not readily distinguished from other rights, comprise a category of rights that both strongly benefit from clear and well-designed legal rules and often are subject to "chiseling" from failures to follow legal rules or from ex post alterations of the rules. Governance systems that limit official discretion to impair property rights, that have institutions and rules that provide clear definition to property rights and that provide predictable and consistent applications of those rights, will accord with the rule of law and generally will also advance social welfare. Some systems will depart quite evidently from this pattern, to the detriment of those societies, allowing too ready changes in law at the discretion of too few officials, too unconstrained by law, as the example of Zimbabwe illustrates. But differences between the good and the bad will not be drawn along simple, discrete lines, a point made by comparing the Zimbabwe example with the United States. The systems most consistent with the rule of law will not be able effectively to bar all changes in the law or to eliminate official discretion. Instead, those systems will limit the avenues for change and the ambit of discretion in ways that make property more secure and impositions on it more predictable without reference to the identity of the individual official enforcing the law or the individual property owners subject to it.
rule of law, law and development, land reform, property rights
Abstract: One prong of the antitrust litigation against Microsoft Corporation challenges the terms under which Microsoft has licensed its Windows operating system to computer manufacturers (OEMs). Plaintiffs complain that the license agreements' requirement that the first screen to appear when customers initially turn on ("boot up") a computer display certain features common across all Windows-based platforms (the "first screen provision"), though seemingly within the ambit of normal copyright license agreements, violates the antitrust laws. This paper examines the first screen provision in the context of the law and practice respecting computer software licensing. The first section provides background on copyright. The second section explores the considerations relevant to licensing contracts. The third section addresses the intersection between antitrust and copyright licensing. The fourth section directly considers the first screen provision -- what it does, what interests it serves, and what efficiencies it generates. A concluding section argues that, while the provision should pass antitrust muster, the process of examining such licensing provisions under the antitrust laws may do more harm than good. Although Microsoft (not unique among profit-seeking enterprises) no doubt seeks advantages in competing with rivals, the first screen provision assists Microsoft's efforts to define its copyrighted product, to reduced training costs to consumers, and to guard against degradation of its product or free riding by licensees. Principal-agent contracts -- including licensing contracts -- presumptively advance joint interests of the principal and agent, and the first screen provision can be seen in context as one component of a contract that (taken as a whole) efficiently responds to differences between interests that a licensor internalizes and those that motivate licensees. Antitrust analysis of principal-agent contracts, however, requires parties to parse particular contract terms in order to assess the efficiency effects (and the other effects on the market for software) of one or more particular contract terms. That analysis necessarily entails an artificial assignment of effects among contract terms that are not divorced from other parts of the principal-agent contract and is likely to be distorted from the considerations informing parties to the contracts. The paper discusses risks attending such analysis in the context of copyright licensing.
Abstract: One prong of the antitrust litigation against Microsoft Corporation challenges the terms under which Microsoft has licensed its Windows operating system to computer manufacturers (OEMs). Plaintiffs complain that the license agreements' requirement that the first screen to appear when customers initially turn on ("boot up") a computer display certain features common across all Windows-based platforms (the "first screen provision"), though seemingly within the ambit of normal copyright license agreements, violates the antitrust laws. This paper examines the first screen provision in the context of the law and practice respecting computer software licensing. The first section provides background on copyright. The second section explores the considerations relevant to licensing contracts. The third section addresses the intersection between antitrust and copyright licensing. The fourth section directly considers the first screen provision--what it does, what interests it serves, and what efficiencies it generates. A concluding section argues that, while the provision should pass antitrust muster, the process of examining such licensing provisions under the antitrust laws may do more harm than good. Although Microsoft (not unique among profit-seeking enterprises) no doubt seeks advantages in competing with rivals, the first screen provision assists Microsoft's efforts to define its copyrighted product, to reduced training costs to consumers, and to guard against degradation of its product or free riding by licensees. Principal-agent contracts--including licensing contracts--presumptively advance joint interests of the principal and agent, and the first screen provision can be seen in context as one component of a contract that (taken as a whole) efficiently responds to differences between interests that a licensor internalizes and those that motivate licensees. Antitrust analysis of principal-agent contracts, however, requires parties to parse particular contract terms in order to assess the efficiency effects (and the other effects on the market for software) of one or more particular contract terms. That analysis necessarily entails an artificial assignment of effects among contract terms that are not divorced from other parts of the principal-agent contract and is likely to be distorted from the considerations informing parties to the contracts. The paper discusses risks attending such analysis in the context of copyright licensing.
Abstract: This paper examines the effects of international trade on domestic regulation, illustrating general points through discussion of recent experience in telecommunications regulation and export control regimes. Critics of international trade assert that trade undermines a nation's ability to maintain an independent national regulatory structure that would be chosen under democratic-representative processes, promoting instead a "race to the bottom" in protection of public interests. The race-to-the-bottom metaphor builds on economic writings suggesting that, at least under certain conditions, open trade in goods leads to factor price equalization with reduced returns to factors (e.g., low-skilled labor) that are relatively abundant in other nations. Although the conditions from which factor-price-equalization was deduced seldom occur, the transmission of competitive effects from trade resembles the effects predicted by the race-to-the-bottom metaphor. Unlike that metaphor, however, trade's competitive effects generally benefit both national economic welfare and individual liberty. That is generally true of trade's effects, including reduction of the scope or bite of domestic regulation: trade-induced changes in such regulation most often will enhance national welfare by allowing increased competition and diminishing economic rents protected by regulatory intervention. Trade can produce a diminution of national welfare in some instances, where trade undermines the ability of a nation to deal with certain negative externalities of production, but this will be the exceptional case. Trade's tendency to diminish regulatory rents will be inimical to the interests of many politicians and politically influential groups, which will face higher costs to maintaining favored regulatory policies. These individuals and groups have incentives to argue that particular instances of open trade fit the limited circumstances in which trade reduces national economic welfare. They will claim as well that trade reduces the ability of national polities to design regulation favored by each nation's citizens. If all processes governing regulation in the absence of trade are taken as part of the calculus of what a nation's citizens favor, this claim is a tautology. If, however, citizens' views are abstracted from current political-decisional processes, trade is seen to serve (under most conditions) to counteract antidemocratic tendencies in domestic governance, protecting individual liberty in a world of diverse tastes.
Abstract: This entry describes the development and operation of antidumping laws. It surveys and analyzes the economic literature evaluating why dumping occurs, assesses the merits of an antidumping mechanism, and explains why such mechanisms persist. The entry also discusses the current international regime regulating national antidumping laws and the administration of these laws in different countries, with particular attention to the United States.
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