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Optimal Sequential Investigation Rules in Competition Law
Although both in US antitrust and European competition law there is a clear evolution to a much broader application of "rule of reason" (instead of per-se rules), there is also an increasing awareness of the problems of a case-by-case approach. The "error costs approach" (mini...
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| Published in: | MAGKS - Joint Discussion Paper Series in Economics (Band 16-2008) |
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| Main Authors: | , , |
| Format: | Work |
| Language: | English |
| Published: |
Philipps-Universität Marburg
2008
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| Subjects: | |
| Online Access: | PDF Full Text |
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| Summary: | Although both in US antitrust and European competition law there is a clear evolution
to a much broader application of "rule of reason" (instead of per-se rules), there is also an
increasing awareness of the problems of a case-by-case approach. The "error costs approach"
(minimizing the sum of welfare costs of decision errors and administrative costs) allows not only
to decide between these two extremes, but also to design optimally differentiated rules (with an
optimal depth of investigation) as intermediate solutions between simple per-se rules and a fullscale
rule of reason. In this paper we present a decision-theoretic model that can be used as an
instrument for deriving optimal rules for a sequential investigation process in competition law.
Such a sequential investigation can be interpreted as a step-by-step sorting process into ever
smaller subclasses of cases that help to discriminate better between pro- and anticompetitive
cases. We analyze both the problem of optimal stopping of the investigation and optimal
sequencing of the assessment criteria in an investigation. To illustrate, we show how a more
differentiated rule on resale price maintenance could be derived after the rejection of its per-se
prohibition by the US Supreme Court in the "Leegin" case 2007. |
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| ISSN: | 1867-3678 |
| DOI: | 10.17192/es2023.0203 |