A recent wave of large vertical mergers presents a challenge to established theories of vertical integration. The large mergers that have occurred in the pharmaceutical industry between drug manufacturers and companies that manage drug insurance benefits (such as Merck's acquisition of Medco)...

The recent Findings of Fact in United States v. Microsoft Corp. paint a vivid picture of a monopolist abusing its dominant position. Even if one accepts the court's description of Microsoft‘s conduct, however, the fundamental antitrust economics question posed by the case remains to be...

Incomplete contracts cannot be explained by focusing solely on the direct incentive effects of contract terms. The role of contract terms in facilitating self-enforcement must also be considered. Transactors avoid the costs of increased contractual specification, including the rigidity of...

After working well for more than 5 years, the Fisher Body - General Motors (GM) contract for the supply of automobile bodies broke down when GM's demand for Fisher's bodies unexpectedly increased dramatically. This pushed the imperfect contractual arrangement between the parties outside the...

This paper uses the block‐booking film exhibition contracts that were the subject of Paramount to examine the role of contract terms in facilitating self‐enforcing relationships. Because of the large uncertainty in film value at the time of contracting, it is difficult to fully specify...

Standard economics provides a well-understood framework of the competitive determinants of market prices that is now widely accepted for antitrust analysis. In “two-sidedmarkets,” where firms supply products demanded by two interrelated groups of consumers, these competitive forces operate...

The relationship between price discrimination and market power is clarified by distinguishing between market power as defined in economics in terms of a firm's elasticity of demand and market power as defined in antitrust law in terms of a firm's ability to influence market outcomes. Price...