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By Robert W. Hahn

Antitrust legislations is meant to guard shopper welfare and foster festival. at the start look, besides the fact that, it is usually doubtful no matter if yes company practices have optimistic or unsafe results. a few actions that seem anticompetitive can truly end up worthy to shoppers. In Antitrust coverage and Vertical Restraints top legislations and economics students take a troublesome examine how vertical restraints restrict the stipulations below which agencies may possibly buy, promote, or resell a superb or provider.

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Ct. 872, 882 (2004). 42. LePage’s, Inc. v. 3d 141, 177 (3d Cir. 2003), note 35. 43. Other courts have considered antitrust harm based on similar theoretical arguments but have 3391-7 Hahn 5/25/06 12:51 PM Page 25 application of antitrust law to bundled discounts 25 have to show that it was an equally efficient competitor, nor would it have to prove that the bundled rebates in question would have, in fact, excluded a hypothetical equally efficient competitor. As a result the LePage’s case has generated much uncertainty over the legality of a ubiquitous practice.

The problem with such an approach is that there is no consensus, in theory or in practice, on how to 66. As depicted in figure 2-2, the feasible set is the area between the forty-five-degree line and the curve through the points LBGEI. 67. Areeda and Hovenkamp (2005, p. 182, note 59). 3391-7 Hahn 5/25/06 34 12:51 PM Page 34 bruce h. kobayashi make such allocations. 68 Unless this is done in an arbitrary fashion (for example, through a pro rata rule), such a task is likely to be an administrative nightmare for the courts.

Starting in the 1950s, a number of authors typically associated with the Chicago School argued that a monopolist of a primary good would never have an incentive to tie a complementary good for exclusionary reasons because all the potential monopoly profits could be captured through the 1. United States v. A. 98-1232 (2000). See Gilbert and Katz (2001) and Whinston (2001) for discussions of this case. 38 3391-7 Hahn 5/25/06 12:51 PM Page 39 why tie an essential good? 39 primary good monopoly. 2 In particular, he finds that the Chicago School argument is correct when the monopolist’s primary good is essential, that is, it is required for all uses of the complementary good.

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