Chicago School theorists have argued that tying cannot create anticompetitive effects because there is only a single monopoly profit. Some Harvard School theorists have argued that tying doctrine’s quasi—per se rule is misguided because tying cannot create anticompetitive effects without foreclosing a substantial share of the tied market. This Article shows that both positions are mistaken. Even without a substantial foreclosure share, tying by a firm with market power generally increases monopoly profits and harms consumer and total welfare, absent offsetting efficiencies. The quasi—per se rule is thus correct to require tying market power and a lack of offsetting efficiencies, but not a substantial tied foreclosure share. However, the quasi—per se rule should have an exception for products with a fixed ratio that lack separate utility, because those conditions generally negate anticompetitive effects absent a substantial foreclosure share. Cases meeting this exception should instead be governed by a traditional rule of reason that requires a substantial foreclosure share or effect.
Bundled discounts can produce the same anticompetitive effects as tying without substantial tied foreclosure, but only when the unbundled price exceeds the but-for price. Thus, when the unbundled price exceeds the but-for price, bundled discounts should be condemned based on market power absent offsetting efficiencies, with the same exception for products with a fixed ratio that lack separate utility. When the unbundled price does not exceed the but-for price or this exception applies, bundled discounts should be condemned only when a substantial foreclosure share or effect exists. Alternative tests for judging bundled discounts, such as comparing the effective price to cost, are not only underinclusive, but perversely exempt the bundled discounts with the worst anticompetitive effects.
December 18, 2009
Vol. 123 No. 2 December 2009 This Article examines local efforts to regulate mobile capital. Despite the conventional wisdom that subnational governments cannot effectively control or redistribute capital, cities have increasingly sought to do just that. This Article describes these efforts, which include putting conditions on the entry of development dollars through contract, excluding capital through anti—chain and anti—big box store laws, and redistributing from capital to labor through local minimum wage laws and other labor-friendly legislation. The Article describes the economic and political factors that have given rise to these local regulatory efforts and assesses the viability of local regulation of mobile capital.
Copyright © 1887-2024 Harvard Law Review. All Rights Reserved. Accessibility