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ECONOMIC RATIONALITY AND THE AREEDA-TURNER RULE
No full textThe Areeda-Turner rule in U.S. antitrust jurisprudence limits successful predatory pricing cases to circumstances where prices can be shown to have been set below marginal costs. While not cast so, the rule reflects the view that predatory pricing is rarely attempted; and even where attempted is rarely successful; and even where attempted and successful, is difficult to identify. In this paper, we examine the theoretical and empirical foundations of this rule, and conclude that it is time to demote the Areeda-Turner analysis from the status of a rule to that of a potentially useful form of inquiry in predatory pricing litigation, but one which is neither necessary nor dispositive
Predatory Pricing under the Areeda-Turner Test
No full textFew works of legal scholarship have had the impact enjoyed by Areeda and Turner\u27s 1975 article on predatory pricing. Proof of predatory pricing under the Areeda-Turner test requires two things. The plaintiff must show a market structure such that the predator could rationally foresee recouping the losses through higher profits earned in the absence of competition. This requirement, typically called recoupment, requires the plaintiff to show that, looking from the beginning of the predation campaign, the predator can reasonably anticipate that the costs of predation will be more than offset by the present value of a future period of monopoly profits, making the strategy a sound investment. Second, the plaintiff must show that the defendant\u27s prices over substantial sales were below a relevant measure of cost, presumptively average variable cost (AVC) or, in some cases, marginal costs over a relatively short run.The effects of Areeda and Turner\u27s predation test occurred in two waves, both devastating for plaintiffs. For the first fifteen years the courts focused overwhelmingly on price-cost relationship, and it quickly became clear that proving predatory pricing under an AVC test is extremely difficult. The second wave occurred after the Supreme Court\u27s formulation of the recoupment requirement in the Brooke Group case. Few plaintiffs have won a case, and the incidence of classical predatory pricing claims has declined dramatically.That so many courts embraced the Areeda-Turner AVC test might seem surprising, given that contemporary assessments from economists were quite negative. The criticisms can be grouped into three categories. Even assuming that short run marginal cost is a useful legal test for predatory pricing, AVC is a reasonable surrogate for marginal cost only in equilibrium. Classic predatory pricing is not an equilibrium strategy, however, but rather a nonsustainable high output strategy. In this range AVC and MC diverge, making the Areeda-Turner test a defendant\u27s paradise. The AVC test is particularly underdeterrent in markets characterized by high fixed costs, which are also the markets that are most conducive to predation. Because strictly defined AVC excludes fixed costs, many nonsustainable pricing strategies are identified as legal, even though many of these might be considered anticompetitive under a more holistic approach.The most fundamental critique of the Areeda-Turner test is that, whether or not AVC is a workable surrogate for short run marginal cost, short-run measures are deficient because they exclude other types of strategic pricing behavior. Longer run strategies may involve fully sustainable pricing.Most recent antitrust complaints about exclusionary pricing have sought to avoid Areeda-Turner by focusing on more complex pricing strategies, such as market share or bundled discounts. Plaintiffs have had some but limited success in convincing courts to analogize these practices to exclusive dealing or tying rather than pricing as such. This permits condemnation even on prices above cost. But these cases also present serious problems of complexity that the courts have not yet addressed, particularly when more than two goods are in a bundle or they can be used in varying proportions.What the Areeda-Turner test promised in exchange for its deficiencies was a query that narrowed the fact finder\u27s focus and was easier to administer. While the test largely succeeded on the first of these, ease of administration has proven elusive. The test nonetheless survives. First, it tends to keep predatory pricing cases out of court and away from juries, two properties that make it attractive to judges. Second, no one has produced something better. A superior test would have to correct for Areeda-Turner’s false negatives without going too far in the other direction. Second, it would have to be administrable by the full range of tribunals authorized to hear predatory pricing cases, which today includes jury trials
Areeda-Turner in Two-Sided Markets
No full textAreeda and Turner (1975) were the first to argue that a price below marginal costs should be considered a sign of predation. Recognizing that marginal cost data were typically unavailable, the authors concluded that a price below average variable cost should be presumed unlawful. This socalled Areeda-Turner Rule has become the standard to assess claims of predation. We first show that in two-sided markets price cost margins on the two-sides of the market are interrelated and that a monopolist, even in the absence of actual or potential competition, may find it optimal to charge a price below marginal cost on one side of the market. As a result, showing that the price is below average variable cost on one side of the market cannot be considered a sign of predation in such markets. This is in contrast to a recent decision of the Commercial Court of Paris that sanctioned Google for giving away for free its online mapping services. We thus extend the Areeda-Turner rule to two-sided markets. We argue that one should apply the rule by taking into account revenues and costs from both sides of the market. As applications, we analyse three alleged cases of predatory behaviour in the market for daily newspapers. Our examples highlight that applying a one-sided Areeda-Turner rule may lead to assess a perfectly legitimate profit maximizing pricing policy as a predatory attempt
Games judges don't play: predatory pricing and strategic reasoning in US antitrust
No full textThe paper analyzes the last three decades of debates on predatory pricing in US antitrust law, starting from the literature which followed Areeda & Turner 1975 and ending with the early years of the new century, after the Brooke decision. Special emphasis is given to the game-theoretic approach to predation and to the reasons why this approach has never gained attention in courtrooms. It is argued that, despite their mathematical rigor, the sophisticated stories told by strategic models in order to demonstrate the actual viability of predatory behavior fail to satisfy the criteria which guide the decisions of antitrust courts, in particular their preference for easy-to-apply rules. Therefore predation cases are still governed by a peculiar alliance between Chicago-style price theory – which, contrary to game theory, considers predatory behavior almost always irrational – and a Harvard-style attention for the operational side of antitrust enforcement.Antitrust law; predatory pricing; Chicago School; Harvard; game theory
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Antitrust law ::an analysis of antitrust principles and their application.
No full textBy Phillip E. Areeda and Herbert Hovenkamp. The authoritative antitrust resource covers mergers and acquisitions, intellectual property and antitrust, predatory pricing, antitrust issues in healthcare, media, and other areas, monopolizing conduct, "substantial" market power, market share and buyer concentration, interlocking directors, refusals to deal, territorial customer limitation, product tying, contractual arbitration provisions. It has been cited in more than 2200 cases, including more than 50 times by the Supreme Court and more than 50 times by the FTC
Going Beyond Counting First Authors in Author Co-citation Analysis
No full textThe present study examines one of the fundamental aspects of author co-citation analysis (ACA) - the way co-citation
counts are defined. Co-citation counting provides the data on which all subsequent statistical analyses and mappings
are based, and we compare ACA results based on two different types of co-citation counting - the traditional type that
only counts the first one among a cited work's authors on the one hand and a non-traditional type that takes into
account the first 5 authors of a cited work on the other hand. Results indicate that the picture produced through this non-traditional author co-citation counting contains more coherent author groups and is therefore considerably clearer. However, this picture represents fewer specialties in the research field being studied than that produced through the traditional first-author co-citation counting when the same number of top-ranked authors is selected and analyzed. Reasons for these effects are discussed
Variations on the Author
No full text“Variations on the Author” discusses two of Eduardo Coutinho’s recent films (Um Dia na Vida, from 2010, and Últimas Conversas, posthumously released in 2015) and their contribution to the general question of documentary authorship. The director’s filmography is characterized by a consistent yet self-effacing form of authorial self-inscription: Coutinho often features as an interviewer that rather than express opinions propels discourses; an interviewer that is good at listening. This mode of self-inscription characterizes him as an author who is not expressive but who is nonetheless markedly present on the screen. In Um Dia na Vida, however, Coutinho is completely absent form the image, while Últimas Conversas, on the contrary, includes a confessional prologue that moves the director from the margins to the center of his films. This article examines the ways in which these works stand out in the filmography of a director who offers new insights into the notion of cinematic authorship
Appropriate Similarity Measures for Author Cocitation Analysis
No full textWe provide a number of new insights into the methodological discussion about author cocitation analysis. We first argue that the use of the Pearson correlation for measuring the similarity between authors’ cocitation profiles is not very satisfactory. We then discuss what kind of similarity measures may be used as an alternative to the Pearson correlation. We consider three similarity measures in particular. One is the well-known cosine. The other two similarity measures have not been used before in the bibliometric literature. Finally, we show by means of an example that our findings have a high practical relevance.information science;Pearson correlation;cosine;similarity measure;author cocitation analysis
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