Per Se in Itself: How Bans Reduce Error in Antitrust
64 Pages Posted: 11 Jan 2017 Last revised: 1 Mar 2017
Date Written: January 9, 2017
In recent decades, antitrust courts in the United States, concerned with reducing error costs, have replaced many bans with case-by-case review of conduct for consumer harm under the rule of reason. I identify three ways in which bans are sometimes necessary to minimize error costs, even when they condemn good conduct. Two arise because enforcers have constrained budgets. I show that even when a constrained budget is large enough to pay for a rule of reason, error costs may be reduced by replacing part of the rule of reason with a ban. This is because bans free up resources that may be invested in more careful rule of reason treatment. I show that effective antitrust enforcement budgets in the United States peaked in the 1940s, creating a budget constraint, and that several United States Supreme Court cases may have had counterintuitive error cost effects due to this constraint.
Keywords: antitrust, error costs, false positives, false negaltives, per se rule, rule of reason, adjudication, legal error, law and economics
JEL Classification: D02, D81, K21, K42
Suggested Citation: Suggested Citation