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http://ssrn.com/abstract=1091171
 
 

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Predatory Price Cutting and Standard Oil: A Re-Examination of the Trial Record


James A. Dalton


Boston College

Louis Esposito


University of Massachusetts Dartmouth


Research in Law and Economics, Vol. 22, pp. 155-205, 2007

Abstract:     
John McGee's 1958 paper, Predatory Price Cutting: The Standard Oil (NJ) Case, has had an astonishing influence on both antitrust policy in the United States and economic lore. McGee argued that predatory pricing is irrational and his analysis of the Standard Oil Company Matter, decided in 1911, led him to conclude that the Record in this case does not show that Standard Oil engaged in predatory pricing. This single publication appears to serve as a foundation of the U.S. Supreme Court's position on the issue of predatory pricing, as well as the assertion by many economists that predatory pricing is irrational and rarely occurs.

Numerous arguments have been advanced during the past 25 years that predatory pricing can be a rational strategy. As to McGee's empirical findings, there has been no re-examination of the Record of the Standard Oil case to determine the validity of his finding that the trial Record does not support the claim that Standard Oil engaged in predatory pricing.

We examined this Record and have found that the trial Record contains considerable evidence of predatory pricing by Standard Oil. Therefore, the Record does not support McGee's conclusion that Standard Oil did not engage in predatory pricing. Thus, the decisions of the Supreme Court in recent years, as well as the opinions of many economists, concerning predatory pricing are not consistent with either current theory or the empirical record.

Keywords: predatory pricing, Standard Oil, trial record

JEL Classification: D4, K21, L41

Accepted Paper Series





Not Available For Download

Date posted: February 12, 2008  

Suggested Citation

Dalton, James A. and Esposito, Louis, Predatory Price Cutting and Standard Oil: A Re-Examination of the Trial Record. Research in Law and Economics, Vol. 22, pp. 155-205, 2007. Available at SSRN: http://ssrn.com/abstract=1091171

Contact Information

James A. Dalton
Boston College ( email )
140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States
Louis Esposito (Contact Author)
University of Massachusetts Dartmouth ( email )
285 Old Westport Road
North Dartmouth, MA 02747
United States
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