Complexity science permeates the policy spectrum but not antitrust. This is unfortunate. Complexity science provides a high-resolution screen on the empirical realities of markets. And it enables a rich understanding of competition, beyond the reductionist descriptions of markets and firms proposed by neoclassical models and their contemporary neo-Brandeisian critique. New insights arise from the key teachings of complexity science, like feedback loops and the role of uncertainty. The present article lays down the building blocks of a complexity-minded antitrust method.
2. Bigger is Not Better: Preventing Monopolies in the National Cannabis Market
by Shaleen Title
Ohio State Legal Studies Research Paper No. 678 (1.303 downloads)
It is a crucial and vulnerable moment for the future of the cannabis market. While states are making historic progress creating paths for small businesses and disenfranchised groups, larger companies are expanding, consolidating, and lobbying for licensing rules to create or maintain oligopolies. Federal legalization will only accelerate the power grab already happening with new, larger conglomerates openly expressing interest. Left unchecked, this scramble for market share threatens to undermine public health and safety and undo bold state-level efforts to build an equitable cannabis marketplace. This paper argues for intentionally applying well-developed antitrust principles to federal cannabis reform now, before monopolization of the market takes place, and offers eight concrete policy recommendations.
Antitrust laws are concerned with controlling market power. In the course of history, the development of antitrust systems of market power control in the US and in the European Union (EU) has not followed a straight path. Legal practice, political ideology, and developments in economics have shaped an overcomplicated and undertheorized body of doctrine in relation to market power. Substantial ambiguity surrounds the definition, proof, and prevention of market power that deserves to be subject to antitrust law. By comparison and historical analysis, the present study seeks to shed some clarity on the issue.
4. The Political Economy of the Decline in Antitrust Enforcement in the United States
by Filippo Lancieri, Eric A. Posner & Luigi Zingales
Forthcoming (1.152 downloads)
Antitrust enforcement in the United States has declined since the 1960s. Building on several new datasets, we argue that this decline did not reflect a popular demand for weaker enforcement or any other kind of democratic sanction. The decline was engineered by unelected regulators and judges who, with a few exceptions, did not express skepticism about antitrust law in confirmation hearings. We find little evidence that academic ideas played an important role in the decline of antitrust enforcement except where they coincided with the interests of big business, which appears to have exercised influence behind the scenes.
Computational antitrust promises not only to help antitrust agencies preside over increasingly complex and dynamic markets, but also to provide companies with the tools to assess and enforce compliance with antitrust laws. If research in the space has been primarily dedicated to supporting antitrust agencies, this article fills the gap by offering an innovative solution for companies. Specifically, this article serves as a proof of concept whose aim is to guide antitrust agencies in creating a decision-trees-based antitrust compliance API intended for market players. It includes an open access prototype that automates compliance with Article 102 TFEU, discusses its limitations and lessons to be learned.
We are at the dawn of a new age of Open Finance. Open Finance seeks to harness the potential of new platform technology to enhance customer data access, sharing, portability, and interoperability—thereby leveling the informational playing field and fostering greater competition between incumbent financial institutions and a new breed of fintech disruptors. According to its proponents, this competition will yield a radical restructuring of the financial services industry: offering more and better choices for consumers looking to make fast payments, borrow money, invest their savings, manage household budgets, and compare financial products and services. The promise of Open Finance is very real. Yet its proponents have largely ignored the economics driving the development of the key players at the heart of this new infrastructure: data aggregators.
7. The Adoption of Computational Antitrust by Agencies: 2021 Report
by Thibault Schrepel & Teodora Groza
Stanford Computational Antitrust (944 downloads)
In the first quarter of 2022, the Stanford Computational Antitrust project team invited the partnering antitrust agencies to share their advances in implementing computational tools. Here are the results of the survey.
Compelled interoperability can be a useful judicial or statutory remedy for dominant firms, including digital platforms with significant market power in a product or service. They can address competition concerns without interfering unnecessarily with the structures that make digital platforms attractive and that have contributed so much to economic growth.
This is a comparative examination of the slogans and goals most advocated for antitrust law today – namely, that antitrust should be concerned with “bigness,” that it should intervene when actions undermine the “competitive process,” or that it should be concerned about promoting some conception of welfare. “Bigness” as an antitrust concern targets firms based on absolute size rather than share of a market, as antitrust traditionally has done. Over history, bigness has been a significant concern of populist antitrust movements. The bigness approach entails that antitrust cannot be concerned about low prices, or the welfare of consumers and labor. Nondominant firms could not sustain very high prices or cause significant reductions in market output. Concerns about bigness as such invariably translate into protection of small business, or of firms dedicated to older distribution methods of technologies. These firms can be injured by even nondominant rivals who have lower costs or more innovative supply.
Mergers involving nascent competition are a hot topic in antitrust circles, especially in light of the pending FTC case against Facebook; but the thinking about the topic is nascent, too. This paper is intended to contribute to that thinking and to discuss a variety of questions that have not previously been discussed together. It explains that, while the vast majority of such mergers are likely to be benign or procompetitive, some might be very harmful to competition and economic welfare. It argues that the latter can in principle be prohibited under existing Section 2 law, suggests criteria for doing so, and addresses policy concerns about merger efficiencies, error costs, the impact of heighted scrutiny of such mergers on venture capital investment, and post-acquisition challenges to such mergers.