Comments on: Hovenkamp on the Indirect Purchaser Rule http://truthonthemarket.com/2006/08/14/hovenkamp-on-the-indirect-purchaser-rule/ Academic commentary on law, business, economics and more Thu, 24 May 2012 02:37:46 +0000 hourly 1 http://wordpress.com/ By: Lindsay Bower http://truthonthemarket.com/2006/08/14/hovenkamp-on-the-indirect-purchaser-rule/#comment-6133 Fri, 08 Sep 2006 04:32:10 +0000 http://www.truthonthemarket.com/2006/08/14/hovenkamp-on-the-indirect-purchaser-rule/#comment-6133 A very interesting issue, one of the strongest lines of division
between Posner and Hovenkamp. Posner favors retention of Illinois Brick (and
Hanover Shoe), while Hovenkamp would replace its fairly clear, although
highly controversial, measure of damages with an amalgam of lost profit
and overcharge remedies available to final and intermediate customers.
It’s clear that deadweight losses are very difficult to measure, but it
seems to me that the circumstances under which they can be excluded as
a theoretical component of optimal damages are very narrow.

The problem with excluding deadweight losses is that consumers do not
necessarily anticipate full recovery even for the naked violations you
discuss. Landes touches on the “theoretical reason� for excluding them
in his paper on “Optimal Sanctions for Antitrust Violations.� 50
U.Chi.L.Rev. 652. As he notes on page 676, if consumers anticipate full
recovery, they will not reduce their purchases below the original
competitive level. No purchase reductions; no deadweight losses. (Thus, the
cartel faces a perfectly inelastic demand curve at the competitive
output level. Landes, 677.) Full recovery will not be anticipated,
however, unless the probability of detection and the probability of successful
prosecution (given detection) are both equal to one. In other
circumstances, at least some buyers will reduce their purchases and deadweight
losses will arise. I might be able to accept the assumption that all
naked practices will be detected, but the idea that all of them will be
successfully prosecuted is something else.

]]> By: TRUTH ON THE MARKET » Hovenkamp on Slotting, Discounts, and Competition for Distribution http://truthonthemarket.com/2006/08/14/hovenkamp-on-the-indirect-purchaser-rule/#comment-6132 Sun, 20 Aug 2006 23:52:34 +0000 http://www.truthonthemarket.com/2006/08/14/hovenkamp-on-the-indirect-purchaser-rule/#comment-6132 [...] Beth Young on Stock Options, Exec. Comp., etc..Beth Young on Stock Options, Exec. Comp., etc..Antitrust Review » A Post For Major Antitrust Nerds on Hovenkamp on the Indirect Purchaser Rule.Bill Gates » Does Mel Karmazin Realize That XM Isn’t The Only Competition on Sirius/XM: An Antitrust Problem?.Michael Guttentag on MoneyLaw Hits the Blogosphere.Josh Wright on MoneyLaw Hits the Blogosphere.Michael Guttentag on MoneyLaw Hits the Blogosphere.PK on Economists’ Indifference, Straw Men, and the Costs of Regulating Inequality.Geoffrey Manne on Economists’ Indifference, Straw Men, and the Costs of Regulating Inequality.TRUTH ON THE MARKET » Update on the Costs of Regulating Inequality on Economists’ Indifference, Straw Men, and the Costs of Regulating Inequality. [...]

]]> By: Antitrust Review » A Post For Major Antitrust Nerds http://truthonthemarket.com/2006/08/14/hovenkamp-on-the-indirect-purchaser-rule/#comment-6131 Tue, 15 Aug 2006 23:35:14 +0000 http://www.truthonthemarket.com/2006/08/14/hovenkamp-on-the-indirect-purchaser-rule/#comment-6131 [...] Over at Truth on the Market, Thom Lambert has a lengthy and technical post on why Herbert “Hovenkamp’s proposal to abandon the indirect purchaser rule is a bad idea.”  If you are an antitrust nerd (i.e., you listened to this), check it out. You can also bookmark this on del.icio.us or check the cosmos [...]

]]>