The application of empirical economic methods in antitrust can and should play an important, even central, role in the development of sound competition policy.Â For example, former FTC Chairman Tim Muris explicitly made the case that empirical examination of the economic foundations of antitrust could improve antitrust policy making and undertook efforts to make such an examination a fundamental part of the FTC’s research agenda:
Economics tells us that monopoly can be “bad,” but that is the “easy” part. How do we know when we have a monopoly? How do we know which conduct by a monopolist is “bad?” Even when we know it is “bad,” what can we do about it? The efficient administration of statutes against monopolies, or trusts, requires presumptions, preferably ones with sound empirical support. The contribution of economics in this regard is improving. Especially over the past few decades, economics had a critical role in correctly characterizing the state of competition in the U.S. economy and therefore in guiding the presumptions used in antitrust policy and litigation.
I am a firm believer in the importance of empirical work to the antitrust mission.Â In that light, I was extremely pleased to be a part of the symposium featured in the newest issue of the Antitrust Law Journal (Volume 74, Issue 2) on The Application of Empirical Economics to Antitrust.Â The symposium was organized by Keith Hylton and I think the final product is well worth reading (with many thanks to the ALJ editors!).
The symposium features the following articles:
- Keith N. Hylton & Fei Deng, Antitrust Around the World: An Empirical Analysis of the Scope of Competition Laws and Their Effects
- Margaret C. Levinson and Valerie Y. Suslow, The Economic Impact of the U.S. Export Trading Company Act
- Jerry A. Hausman and J. Gregory Sidak, Evaluating Market Power Using Competitive Benchmark Prices Rather than the Herfindahl-Hirschman Index
- Roger D. Blair, James Mak and Carl Bonham, Collusive Duopoly: The Economic Effects of the Aloha and Hawaiian Airlines’ Agreement to Reduce Capacity
- My own article on Slotting Contracts and Consumer WelfareÂ
I’ve linked to the SSRN versions of these pieces where I could find them for those interested.