Lectures on Antitrust Economics

by Michael D. Whinston

Antitrust law regulates economic activity but differs in its operation from what is traditionally considered "regulation." Where regulation is often industry-specific and involves the direct setting of prices, product characteristics, or entry, antitrust law focuses more broadly on maintaining certain basic rules of competition. In these lectures Michael Whinston offers an accessible and lucid account of the economics behind antitrust law, looking at some of the most recent developments in antitrust economics and highlighting areas that require further research. He focuses on three price fixing, in which competitors agree to restrict output or raise price; horizontal mergers, in which competitors agree to merge their operations; and exclusionary vertical contracts, in which a competitor seeks to exclude a rival. Antitrust commentators widely regard the prohibition on price fixing as the most settled and economically sound area of antitrust. Whinston's discussion seeks to unsettle this view, suggesting that some fundamental issues in this area are, in fact, not well understood. In his discussion of horizontal mergers, Whinston describes the substantial advances in recent theoretical and empirical work and suggests fruitful directions for further research. The complex area of exclusionary vertical contracts is perhaps the most controversial in antitrust. The influential "Chicago School" cast doubt on arguments that vertical contracts could be profitably used to exclude rivals. Recent theoretical work, to which Whinston has made important contributions, instead shows that such contracts can be profitable tools for exclusion. Whinston's discussion sheds light on the controversy in this area and the nature of those recent theoretical contributions. Sponsored by the Universidad Torcuato Di Tella

Genres: Economics

264 pages, Paperback

First published July 7, 2006

Reviews

[Quinton · Rating 5 out of 5]

An excellent introduction to antitrust policy for an advanced undergraduate or beginning graduate student

[Jason Furman · Rating 4 out of 5]

Lectures on Antitrust Economics is a good introduction to the issue written at the level of someone with a graduate level background in economics if not in antitrust. It covers a combination of theoretical models and empirical evidence on the major topics: price fixing, horizontal mergers and vertical arrangements with a balanced focus that is more on holes calling out for future research than ideas that are sufficiently well understood to justify new directions for public policy.

[Marks54 · Rating 4 out of 5]

This is a reread for me. I read through this wonderful set of economics lectures on topics in antitrust earlier this year. They are clear, well written, and without too much math or logic statements. They were clearly targeted towards readers who enjoy or make use of economic topics but who are not professional economists. These lectures cover some basic topics including price fixing, horizontal mergers, and exclusionary vertical contracts. It does not have the most recent research literature, although if you follow through to the sources you can find subsequent developments. The lectures provide a good introduction to help make sense of the myriad reasons proposed for every new merger, acquisition, or joint venture. There are sufficient references to follow-up on if interested.

This is a helpful and accessible book for anyone who closely follows mergers in the news - and they have continued to be announced. Numerous reasons are announced for mergers, often many more than could possibly be relevant to a given deal. Readers be careful, however. This is a set of academic lectures by a top academic economist. It requires attention and is not for the faint of heart. It is also based on lots of research and the lecture have considerable material about how merger research happens and is best interpreted. Again, this is not for everyone, but if you have an interest in economic research, this book is a good volume to read.

I am moving into my own summer project season, and rereading this will help kick off some database studies on mergers, acquisitions, and joint ventures.