Corporate & Securities Law

Three From Professor Elhauge on Antitrust

2008 has been a busy year for Harvard Professor Einer Elhauge so far from the looks of his SSRN page (not to mention advising Senator Obama on legal policies). He’s posted three new working papers covering a diverse set of antitrust topics:

• Loyalty Discounts and Naked Exclusion (purporting to “prove that loyalty discounts create anticompetitive effects, not only because they can impair rival efficiency, but because loyalty discounts perversely discourage discounting even when they have no effect on rival efficiency.”  The paper contains a very ambitious claim. Elhauge claims that his model demonstrates that loyalty discounts generate anticompetitive effects, previously ignored by the economics literature on the topic over the past several decades, which persist even when discounts are above cost, when rival firms also compete with loyalty discounts, and when there is no substantial foreclosure of rivals and therefore no “raising rivals’ costs” story)
• Disgorgement as an Antitrust Remedy (making the case for an expansive use of disgorgement as an antitrust remedy); and
• Correcting Current Models of Patent Holdup and Royalty Stacking (another in the long line of responses to Lemley and Shapiro’s important paper, this one reaching the provocative conclusion that “Royalty stacking does not lead to royalties that exceed the optimal rate, contrary to this literature, but in fact tends to produce royalties that are at or below the optimal rate.”).
  

I will have something to say about the first paper and its provocative (but ultimately mistaken, I will argue) claim about the anticompetitive effects of loyalty discounts as early as later on this week if I can manage. But for now, I wanted to highlight the papers and recommend them. Elhauge is one of the few must-read authors out there when it comes to antitrust analysis! Indeed, I’ve been the beneficiary of the high demand for his work previously, free-riding on his analysis of the Roberts Court’s antitrust jurisprudence (arguing that the Court has embraced Harvard and not Chicago School positions) to get a few extra readers to take a look at my analysis arguing the opposite position.

Full post as published by Truth on the Market on June 11, 2008 (boomark / email).