toward a positive economic theory of antitrust most economists associate antitrust policy with the sherman and clayton acts nonetheless there is in england and america a much older body of antitrust law namely the common law of restraint of trade this regulation like language and markets evolved over a long period of time this article examines whether the rules that the common law courts developed can be explained by a hypothetical wish to maximize social wealth and concludes that many of them can be the last part of the article outlines a theory of legal evolution

lessons from the united states s antitrust history abstract the united states s antitrust policy spans more than 100 years for most of its history the united states has had the toughest antitrust laws and enforcement policies of any country in the world a shift to a more permissive attitude with regard to antitrust matters has occurred in recent years however this paper traces the changes in antitrust policy that have occurred and the concurrent shifts in thinking among economists on antitrust questions following this review the paper offers a critical appraisal of both the economic underpinning of the new learnings on antitrust matters and the changes in antitrust policy that have accompanied them it closes with a discussion of the implications of the analysis for european antitrust competition policy

on price taking equilibria in club economies with nonanonymous crowding abstract competitive equilibrium in a coalition production economy or a club economy typically does not exist when there is free entry for two reasons first there may be an integer problem as is familiar from club theory with anonymous crowding second optimal groups may have different compositions from the population and then even if there is no integer problem it may be impossible to partition the population into optimal groups i define a notion of approximate equilibrium and show that such an equilibrium always exists in a sufficiently large economy i focus on the optimal size of the economy rather than of clubs

an institutional analysis of the design and sequence of trade and investment policy reform countries vary in their political commitment to change and in the capability of their bureaucracies policies vary in their organizational and political demands these institutional variations can be incorporated into the design of trade and investment policy reform in virtually all countries the presumption should be for reforms to dismantlenot reconfigure restrictive entry rules and dysfunctional discretionary investment incentives but there is no single approach common across countries through which trade policy reform sbould proceed countries with weak administrative capabilities should push import liberalization to the limits but politically constrained countries with a stronger administrative capability might consider roundabout reforms that secure outward orientation without full scale prior import liberalization during the past decade it has become apparent that efforts to reform trade and investment policy in developing countries have had uneven results a number of studies have sought to account for this uneven record by going beyond the narrow concerns of the optimal design of economic policies one approach reviewed by paul 1990 has been to highlight problems in implementation as the source of weaknesses and to imply that these can be overcome by improving institutional capability a second approach exemplified by the burgeoning literature on neoclassical political economy colander 1984 rodrik 1992 has been to probe into the underlying political determinants of a country s ability and willingness to adopt and implement trade and investment policy reforms taken alone each of these approaches is too narrow countries vary both in their political commitment to change and in the organizational capability of public bureaucracies moreover policies vary significantly in their organizational as well as political demands it follows that the mix and sequence of reforms should be quite different in countries where the political commitment to policy reform is strong but organizational capabilities are relatively weak than in countries that have strong organizational capabilities but only limited political commitment to reform this article illustrates in some detail how these crosscountry variations in institutional capabilities can be most effectively incorporated into the design and sequencing of programs of trade and investment policy reform

valuation equilibrium with clubs abstract this paper considers model worlds in which there is a continuum of individuals who form finite sized associations to undertake joint activities we show how through a suitable choice of commodity space restrictions on the composition of feasible groups can be incorporated into the specification of the consumption and production sets of the economy we also show that if there are a finite number of types then the classical results from the competitive analysis of convex finite agent economies can be reinterpreted to apply journal of economic literatureclassification numbers d51 h41

competitive equilibrium and the core in club economies with anonymous crowding in club economies with anonymous crowding competitive equilibrium states of the economy are efficient and coincide with the core when there is only one private good anonymous admission prices permit consumers with different tastes to share facilities consumers might do so when their demands for facility size and crowding coincide in which case sharing is efficient thus similarity of demands is the relevant consideration for efficiently grouping consumers with different tastes

antitrust and competition historically considered although antitrust laws enjoy wide support among economists there was almost no such support during the early years of the sherman act one reason for this transformation is a change in the theory of competition until the 1920s most economists viewed competition as a dynamic rivalrous process that would be stifled by antitrust laws once the perfect competition model which largely ignores rivalry was accepted economists opinions of antitrust grew more favorable to the extent that antitrust interferes with rivalry and enterprise the competitive model has very likely misdirected the profession at least as far as antitrust policy is concerned

physician price fixing under the sherman act an indirect test of the maricopa issues the expression price fixing usually indicates an attempt by competitors to put a floor under the minimum price they will charge but a recent decision of the supreme court arizona v maricopa county suggests that attempts to fix maximum prices are equally economically objectionable in this paper i propose an explanation of simultaneous minimum and maximum price fixing i also investigate empirically the distribution of physicians fees in a closely related instance of alleged physician price fixing the data reject any inference of successful price fixing and instead conform to the usual predictions of the economics of costly market information

collusion in ocean shipping a test of monopoly and empty core models in markets with avoidable fixed costs the core may be empty i argue that a reason for collusion is to impose an equilibrium where none exists i set up a framework for deriving testable implications from the model and compare those implications with those of a cartel model i compare the two models empirically with data from liner shipping conferences legal collusive agreements that have been in force for over a century and i conclude that the evidence supports the theory of the core

approaches to economic equilibrium abstract we study mechanisms that help to explain why and how equilibrium may eventually be attained in many economic settings examples include competitive markets and many noncooperative games the main object is an adaptive process reflecting repeated adjustment of individual strategies which under monotonicity conditions leads to equilibrium environmental uncertainty is accommodated but agents need neither know the probability law nor invoke any statistical learning theory nor compute mean values in fact everyone can act perhaps without precedent maybe among strangers within unidentified frames nonetheless we show under reasonable conditions that individual optimality and system equilibrium obtains in the long run

the genesis of the trusts rationalization in empty core markets motivated by a desire to understand the origin of the great consolidation movement at the turn of the last century this paper examines the unique history of the american trusts and proposes a new interpretation of the motives and consequences of these consolidations it is hypothesized that the same demand and supply conditions that made multiplant organization more efficient in these industries also made it impossible to obtain in a competitive environment the theory of the core as applied to small numbers situations is used to show why competition had to be restricted before efficient industry configurations could be achieved and supportive historical data are presented

birgit grodal a friend to her friends it was much too soon we knew it could happen she participated in the proceedings of the conference in her honor held in copenhagen in september 2002 with a display of her usual acumen and vigor but we left worried i do not know if the time ever comes for anyone but it had not come for her it is hard to accept with the passing of birgit grodal the european economic association loses its 2005 president the community of european economists one of its shapers and leading figures the worldwide community of economic theorists and mathematical economists an outstanding general equilibrium theorist and her many friends a friend

privatization possible lessons from the hungarian case abstract hungary was the first eastern european country to tackle the problem of economic reform initially in piecemeal fashion then by introducing broad sets of measures aimed at establishing a market based economic system this paper reviews the hungarian experience with privatization policies and presents some general conclusions regarding the design of successful privatization schemes that might serve as rough guidelines for other countries trying to reduce a vastly overextended public sector

the weak axiom of revealed preference in a productive economy we consider an economy with pure factors of production private ownership of endowments and constant returns to scale in production typically in such an economy the weak axiom of revealed preference for market demand does not hold the main reason for this is that the income distribution in such a private ownership economy depends too sensitively on the price system

an application of core theory to the analysis of ocean shipping markets he theory of the core implies that competition is frequently unstable and inefficient under some fairly common cost and demand conditions in particular when costs are characterized by indivisibilities for example avoidable costs and demand is finely divisible the core may be empty in other words a competitive equilibrium frequently fails to exist and as a consequence competitive interactions between firms cannot generate an efficient allocation of resources there are various means of addressing the empty core problem collusion between producers for example can limit competition efficiently thus cartelization may be an efficient response to the cost and demand conditions that preclude the existence of a competitive equilibrium in this article i test the ability of the theory to explain the organization of ocean shipping markets an examination of these markets reveals that the theory works well firms in liner shipping markets where costs are indivisible while demand is finely divisible have colluded consistently since the industry s birth in the mid nineteenth century conversely bulk shipping markets where demand is indivisible and hence empty core problems are not a serious concern have always been organized competitively this evidence is consistent with the theory s predictions

obstacles to developing indigenous small and medium enterprises an empirical assessment the article reports the results of field surveys conducted in sri lanka s leather industry and tanzania s furniture industry it outlines an approach to learning how small and medium enterprises smes perceive the impact of financial regulatory technical marketing and other input constraints and to evaluating the results in relation to other empirical indicators lack of access to finance emerges as the binding constraint for smaller less established firms in sri lanka and for all of tanzania s smes not only is informal financing limited for tanzania s firms even firms of adequate size and experience have difficulty borrowing from banks and if they do borrow have difficult relations with their lenders in tanzania regulatory and tax constraints appear largest for the smallest firms declining somewhat as firms grow because enforcement is comprehensive the bureaucratic burden of negotiating with government officials is greatest for small firms by contrast in sri lanka the regulatory burden rises with firm size because enforcement is more stringent for the larger and more visible firms constraints on physical inputs continue to inhibit sri lankan smes a legacy of excessive vertical integration by parastatals technical constraints are appraised as most significant by relatively educated entrepreneurs with some involvement in high quality market niches

clubs and the market this paper defines a general equilibrium model with exchange and club formation agents trade multiple private goods widely in the market can belong to several clubs and care about the characteristics of the other members of their clubs the space of agents is a continuum but clubs are finite it is shown that i competitive equilibria exist and ii the core coincides with the set of equilibrium states the central subtlety is in modeling club memberships and expressing the notion that membership choices are consistent across the population

avoidable cost ride a double auction roller coaster the double auction trading institution has been highly efficient across diverse marginal cost market structures whether human subjects or zero intelligence robots populated those markets accordingly many researchers suspect that double auction performance transcends market structure and agent strategy but the authors show that large avoidable costs undermine the efficiency and stability of human subject double auctions and these low human efficiencies are simultaneously well above zero intelligence efficiencies their results dramatically illustrate the potential havoc wrought by highly competitive institutions when they must cope with nonconvex technologies copyright 1996 by american economic association

institutional barriers to policy reform in egypt the case of the agricultural machinery industry abstract economic reform has been on the egyptian policy agenda since the mid 1970s but progress has been slow in part due to strong regulatory and institutional obstacles the experience of the agricultural machinery manufacturing industry displays this problem an economic analysis of manufacturing threshers shows that while the impact of price policies was about neutral institutional barriers effectively taxed the industry 15 22 the greatest obstacle was access to marketing credit from the state owned principal bank for development and agricultural credit access to materials and difficulties with tax authorities also hampered the industry

a theory of gradual coalition formation we study noncooperative multilateral bargaining games based on underlying tu games in which coalitions can renegotiate their agreements we distinguish between models in which players continue to bargain after implementing agreements reversible actions and models in which players who implement agreements must leave the game irreversible actions we show that renegotiation always results in formation of the grand coalition if actions are reversible but that the process may otherwise end with smaller coalitions on the other hand we show that the grand coalition cannot form in one step if the core of the game is empty irrespective of the reversibility of actions agreements between players form the basis of much that game theory seeks to explain there are obviously many useful ways to categorize such agreements in multilateral negotiations that is with more than two participants it seems natural to distinguish between cases in which the coalition forms in one step and those in which the coalition grows to its eventual size by attracting new members thus recipients of marshall aid collectively agreed to american terms at the ceec in 1947 whereas a strict subset of these countries agreed to the schuman plan in 1950 with the other current members joining the eu over time similarly negotiations on climate change culminated in universal agreement at rio in 1992 whereas india and china only agreed to reduce cfc emissions in london in 1990 after other countries had signed up to the montreal protocol finally un security council resolution 242 urged that a multilateral conference be set up to establish a comprehensive settlement in the middle east whereas the process initiated by the oslo agreements and arguably camp david has consisted of a sequence of agreements between israel and its neighbours we will refer to cases in which the grand coalition forms in one step as involving immediate coalition formation or icf for short and cases in which a coalition grows as involving gradual coalition formation

multiplicity of equilibria and comparative statics conditions that guarantee the uniqueness of equilibrium in models of economic competition are crucial to applications of these models in exercises of comparative statics until now most of the attention given to the uniqueness question has been focused on pure exchange economies in this paper we use a topological index theorem to derive necessary and sufficient conditions for the uniqueness of equilibrium in economies with production unfortunately conditions that imply uniqueness appear to be too restrictive to have much applicability we argue for example that the only economically interpretable restrictions that imply uniqueness are either that the demand side of an economy behaves like a single consumer or that the supply side is an input output system our results suggest a need for reformulation of the comparative statics method

the political economy of dilatory reform egypt in the 1980s abstract the paper explores the political economy of egypt s failure to implement policy reforms during the 1980s despite mounting problems of international indebtedness macroeconomics imbalances microdistortions lack of employment creation and the need for poverty alleviation after reviewing the size and origins of these problems the causes of reform failure are analyzed these causes lie in domestic blockages particularly the role of interest groups and especially in strategic rents the egyptian government s skillful exploitation of its political role in the region to extract unique favors from the united states and with us influence from the international monetary fund imf the paper concludes with an interpretation of the may 1991 agreement with the imf reached after the gulf war

how the client effect moderates price competition why is unregulated competition supposed to drive price down to ruinous levels in some high fixed cost low marginal cost industries e g railroads but not in others e g hotels we argue that price competition is moderated in high fixed cost low marginal cost industries when the value one consumer realizes from the service is affected by the characterics of other consumers we develop a simple model of this client effect using the example of the demand for hotels and then generalize the implications of our model to other industries