THE OXFORD HANDBOOK OF I N T E R NAT I O NA L A N T I T RU S T E C O N O M I C S Volume 2 CONSULTING EDITORS Michael Szenberg Lubin School of Business, Pace University Lall Ramrattan University of California, Berkeley Extension THE OXFORD HANDBOOK OF INTERNATIONAL ANTITRUST ECONOMICS Volume 2 Edited by ROGER D. BLAIR and D. DANIEL SOKOL 1 3 Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto With offices in Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary Italy Japan Poland Portugal Singapore South Korea Switzerland Thailand Turkey Ukraine Vietnam Oxford is a registered trademark of Oxford University Press in the UK and certain other countries. Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016 © Oxford University Press 2015 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by license, or under terms agreed with the appropriate reproduction rights organization. Inquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above. You must not circulate this work in any other form and you must impose this same condition on any acquirer. CIP data is on file at the Library of Congress ISBN 978–0–19–938859–2 1 3 5 7 9 8 6 4 2 Printed in the United States of America on acid-free paper Contents List of Contributors ix Introduction xiii PART I MONOPOLIZATION: CONDUCT 1. A Framework for the Economic Analysis of Exclusionary Conduct 3 B. Douglas Bernheim and Randal Heeb 2. Predatory Pricing 40 Kenneth G. Elzinga and David E. Mills 3. Raising Rivals’ Costs 62 David T. Scheffman and Richard S. Higgins 4. Predatory Buying 72 John E. Lopatka 5. Competitive Discounts and Antitrust Policy 89 Kevin M. Murphy, Edward A. Snyder, and Robert H. Topel 6. Squeeze Claims: Refusals to Deal, Essentials Facilities, and Price Squeezes 120 Barak Orbach and Raphael Avraham 7. Innovation and Antitrust Policy 132 Thomas F. Cotter 8. Continental Drift in the Treatment of Dominant Firms: Article 102 TFEU in Contrast to Section 2 Sherman Act 153 Pierre Larouche and Maarten Pieter Schinkel 9. Treatments of Monopolization in Japan and China 188 Ping Lin and Hiroshi Ohashi vi CONTENTS 10. Monopolization in Developing Countries 234 Alberto Heimler and Kirtikumar Mehta 11. Business Strategy and Antitrust Policy 253 Michael J. Mazzeo and Ryan C. McDevitt PART II VERTICAL INTEGRATION AND CONTRACTUAL EQUIVALENTS 12. Resale Price Maintenance of Online Retailing 277 Benjamin Klein 13. Exclusive Dealing 304 Howard Marvel 14. Tying Arrangements 329 Erik Hovenkamp and Herbert Hovenkamp 15. Vertical Restraints across Jurisdictions 351 Edward M. Iacobucci and Ralph A. Winter 16. Franchising and Exclusive Distribution: Adaptation and Antitrust 387 Francine Lafontaine and Margaret E. Slade PART III COLLUSION AMONG OSTENSIBLE COMPETITORS 17. Cartels and Collusion: Economic Theory and Experimental Economics 415 Jay Pil Choi and Heiko Gerlach 18. Cartels and Collusion: Empirical Evidence 442 Margaret C. Levenstein and Valerie Y. Suslow 19. Tacit Collusion in Oligopoly 464 Edward J. Green, Robert C. Marshall, and Leslie M. Marx 20. Auctions and Bid Rigging 498 Ken Hendricks, R. Preston McAfee, and Michael A. Williams CONTENTS vii 21. Screening for Collusion as a Problem of Inference 523 Michael J. Doane, Luke M. Froeb, David S. Sibley, and Brijesh P. Pinto 22. Competition Policy for Industry Standards 554 Richard Gilbert 23. Antitrust Corporate Governance and Compliance 586 Rosa M. Abrantes-Metz and D. Daniel Sokol Index 619 List of Contributors Rosa M. Abrantes-Metz, Adjunct Associate Professor, Stern School of Business, New York University and Principal, Global Economics Group Raphael Avraham, Associate, Snell & Wilmer B. Douglas Bernheim, Edward Ames Edmunds Professor of Economics, Stanford University and Partner, Bates White Economic Consulting Roger D. Blair, Walter J. Matherly Professor and Chair, Department of Economics, Warrington College of Business, University of Florida Jay Pil Choi, Scientia Professor, School of Economics, Australian School of Business, University of New South Wales and Professor of Economics, Yonsei University Thomas F. Cotter, Briggs and Morgan Professor of Law, University of Minnesota Law School Michael J. Doane, Director, Competition Economics LLC Kenneth G. Elzinga, Robert C. Taylor Professor of Economics, University of Virginia Luke M. Froeb, William C. Oehmig Chair of Free Enterprise and Entrepreneurship, Owen Graduate School of Management, Vanderbilt University Heiko Gerlach, Associate Professor, School of Economics, University of Queensland Richard Gilbert, Emeritus Professor of Economics and Professor in the Graduate School, University of California, Berkeley Edward J. Green, Professor of Economics, Penn State University Randal Heeb, Partner, Bates White Economic Consulting Alberto Heimler, Professor of Economics, Italian School of Public Administration Ken Hendricks, Professor of Economics, University of Wisconsin Richard S. Higgins, Director, Berkeley Research Group Erik Hovenkamp, JD/PhD Candidate, Graduate School, Economics, Northwestern University Herbert Hovenkamp, Ben V. & Dorothy Willie Professor of Law, University of Iowa