The Third Leg of the Antitrust Stool

Abstract

is president, American Antitrust Institute, an independent education, research, and advocacy organization (see www.antitrustinstitute.org). 1 The math of my example is simple. A 50% chance of tying and a 50% chance of winning in overtime yields a 25% probability of winning. A 33% chance of winning is better. A ntitrust policy is unbalanced. Like a two-legged stool, it wobbles in a state of disequilibrium. The two legs are law and neoclassical economics. Law comes at the relationship between the state and the private sector through objective rules and remediation for violating authoritative communal norms. Economics comes at it through the decentralized but objective interaction of supply and demand in the market. Missing is the focus on the subjective world of both the firm and the managers who make decisions within the firm and the consumers who purchase from the firm. By providing this perspective, business schools have the potential for making a major contribution to the evolution of antitrust policy. The disciplines of marketing and strategic management can be the third leg that gives the antitrust stool stability. First, business schools possess the ability to help antitrust move beyond neoclassical abstractions about economic man. Second, business schools have something important to say about dynamic economics, which is not captured by neoclassical assumptions. Going Beyond Homo Economicus It is the last game of the March Madness basketball season. The team you coach trails by 2 points, with time for one last shot. Do you go for 2 points to tie or 3 points to win? You know that a 2point shot succeeds about half the time and a 3-point shot about one-third of the time. Time out has been called. The players are clustered around you. How many people would instruct their team to go for a 2-pointer? A 3-pointer? Most coaches reportedly go for 2 points to tie. Why? Because it lowers the risk of sudden loss, and coaches, like most of us, psychologists say, do more to avoid losing than to win. This is not the objectively rational strategy, however. Because a 2-point shot will only tie the game (and force an overtime, in which a team has a 50-50 chance of winning), going for a 3-pointer is a superior strategy. 1 (See Lowenstein 2001.

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“…The arguments developed in this paper connect with Foer's (, ) call for management research to be incorporated into antitrust. In Foer's view, antitrust resembles a 3‐legged stool, which has been resting dangerously on only two legs: the Law School and Department of Economics.…”

Predatory Pricing and Marketing Theory: Applications in Business-to-Business Context and Beyond

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Antitrust and Marketing: A Primer and Call to Research

“…For antitrust, the complementary nature of marketing's emphasis on the actors provides a key basis for more fully understanding the nature of competitive conduct and the welfare of consumers. The insights provided by joining these disciplines can capture the dynamic efficiencies that characterize a vibrant, innovative economy (see also Foer 2002). …”