The First Principles Approach to Antitrust, Kodak, and Antitrust at the Millennium

25 Pages Posted: 16 Dec 1999  

Steven C. Salop

Georgetown University Law Center

Multiple version iconThere are 2 versions of this paper

Date Written: November 1999

Abstract

This short paper prepared for the Antitrust Law Journal's Symposium on Antitrust at the Millennium examines the contribution to antitrust reasoning and law of the Supreme Court's Kodak opinion. The main focus of the article involves the first principles approach to antitrust analysis. In this approach, analysis is centered on the evaluation of the competitive effects of the conduct. Market power and market definition have a role, but their role is part of and in reference to the main analysis of the alleged anticompetitive conduct and its likely market effects. Market power and market definition are not analyzed in a vacuum or in a threshold test, divorced from the conduct and effects allegations. Instead, analysis focuses on competitive effects, in some sense, the effects on the conduct on changes in market power. The competitive benchmark for analyzing both market effects and market power is the price that would prevail in the absence of the alleged anticompetitive conduct. This benchmark price often differs from both the current price and the perfectly competitive price. By following this first principles approach, logic and consistency are maintained and analytic traps and factual errors can be avoided. These traps include the well-known Cellophane Trap, but also the Marginal Cost, Price-Up, Threshold Test and Unilateral SSNIP Traps that are defined and discussed in the article. In addition, useless quibbling about the proper relevant market also sometimes may be avoided and replaced with evidence of market effects.

Notes: A revised version of this working paper is forthcoming in Antitrust Law Journal, Winter 2000.

Suggested Citation

Salop, Steven C., The First Principles Approach to Antitrust, Kodak, and Antitrust at the Millennium (November 1999). Georgetown University Law Center, Business, Economics, and Regulatory Law Working Paper No. 195490. Available at SSRN: https://ssrn.com/abstract=195490 or http://dx.doi.org/10.2139/ssrn.195490

Steven C. Salop (Contact Author)

Georgetown University Law Center ( email )

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