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http://ssrn.com/abstract=699601
 
 

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Vertical Antitrust Policy as a Problem of Inference


James C. Cooper


George Mason University School of Law - Law & Economics Center

Luke Froeb


Vanderbilt University - Strategy and Business Economics

Daniel P. O'Brien


Federal Trade Commission - Bureau of Economics

Michael Vita


U.S. Federal Trade Commission - Bureau of Economics

April 5, 2005

Vanderbilt Law and Economics Research Paper No. 05-12

Abstract:     
The legality of nonprice vertical practices in the U.S. is determined by their likely competitive effects. An optimal enforcement rule combines evidence with theory to update prior beliefs, and specifies a decision that minimizes the expected loss. Because the welfare effects of vertical practices are theoretically ambiguous, optimal decisions depend heavily on prior beliefs, which should be guided by empirical evidence. Empirically, vertical restraints appear to reduce price and/or increase output. Thus, absent a good natural experiment to evaluate a particular restraint's effect, an optimal policy places a heavy burden on plaintiffs to show that a restraint is anticompetitive.

Number of Pages in PDF File: 39

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Date posted: April 6, 2005  

Suggested Citation

Cooper, James C. and Froeb, Luke and O'Brien, Daniel P. and Vita, Michael, Vertical Antitrust Policy as a Problem of Inference (April 5, 2005). Vanderbilt Law and Economics Research Paper No. 05-12. Available at SSRN: http://ssrn.com/abstract=699601 or http://dx.doi.org/10.2139/ssrn.699601

Contact Information

James C. Cooper
George Mason University School of Law - Law & Economics Center ( email )
3301 Fairfax Drive
Arlington, VA 22201
United States
703-993-9582 (Phone)

George Mason Law School Logo

Luke M. Froeb (Contact Author)
Vanderbilt University - Strategy and Business Economics ( email )
Nashville, TN 37203
United States
615-322-9057 (Phone)
615-343-7177 (Fax)

Daniel P. O'Brien
Federal Trade Commission - Bureau of Economics ( email )
601 Pennsylvania Avenue, NW
Washington, DC 20580
United States
Michael Vita
U.S. Federal Trade Commission - Bureau of Economics ( email )
601 Pennsylvania Avenue, NW
Washington, DC 20580
United States
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