Exclusionary Vertical Restraints and Antitrust: Experimental Law and Economics Contributions
Claudia M. Landeo
University of Alberta - Department of Economics
July 30, 2014
Kathryn Zeiler and Joshua Teitelbaum (eds.), The Research Handbook on Behavioral Law and Economics, Edward Elgar Publishing, Forthcoming
Vertical restraints, such as vertical integration, exclusive dealing contracts, and tying and bundling practices, have been subject of lively policy and academic discussions. Scholars associated with the Chicago School challenged early foreclosure doctrines by arguing that vertical restraints primarily reflected efficiency considerations. More recently, industrial organization economists have used the tools of game theory and information economics to show that these business practices might actually serve anticompetitive purposes. The complexity of the theoretical frameworks and the scarcity of empirical evidence have limited the influence of these new economic theories on antitrust law and policies.
We argue that experimental law and economics might strengthen the contributions of economic theories of vertical restrains to the design and implementation of antitrust institutions. First, experimental law and economics provides empirical evidence of the robustness of economic theories of antitrust. Second, the combination of economic theory and experimental work represents the application of scientific research methods. As a result, the likelihood of admissibility in court of economic expert testimony might be strengthened. Third, experimental law and economics studies of antitrust involve the replication of complex and abstract economic theories using simple environments. These settings might facilitate policy-makers' understanding of economic theories of antitrust.
We start our analysis by characterizing the legal environment in which vertical restraints operate. We then outline the main components of the methods of experimental economics applied to the study of law, and discuss the contributions of experimental law and economics. Finally, we assess the validity of our claims regarding the contributions of experimental law and economics by investigating the methodological characteristics of seminal experimental work on vertical restraints and the outcomes produced by these studies. Although the experimental literature on exclusionary vertical restraints is relatively recent, our analysis of this work provides support to our claims.
Number of Pages in PDF File: 59
Keywords: Vertical Restraints, Experimental Law and Economics, Antitrust, Vertical Integration, Exclusive Dealing Contracts; Bundling; Tying; Communication; Intentionality, Fairness, Reciprocity, Discrimination, Endogenous Payoffs, Coordination Games, Equilibrium Selection, Economic Expert Testimony
JEL Classification: K21, K41, C72, C90, L12, L40, C72, C91, D62, D86, K12, K21, K41, L42Accepted Paper Series
Date posted: October 21, 2012 ; Last revised: August 18, 2014
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