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Journal of Competition Law and Economics Advance Access originally published online on October 11, 2007
Journal of Competition Law and Economics 2008 4(1):129-153; doi:10.1093/joclec/nhm023
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© The Author (2007). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org

ECONOMIC ANALYSIS AND "BRIGHT-LINE" TESTS

Franklin M. Fisher *

Economists testifying in antitrust cases often encounter the demand by attorneys and judges for "bright-line" tests – simple rules supposedly based on economic analysis. This paper argues that, although such tests can have their uses, they are very likely to lead to error without a clear understanding of the purposes of the tests and the economics behind them. Issues discussed include: market definition, market share, the role of profits, and, especially, anti-competitive conduct (including the Areeda-Turner) test for predatory pricing. Examples are drawn from actual court cases (mostly in the U.S.), in many of which the author was an expert witness. The best known of these was the U.S. case against Microsoft, but there are many others.

* Jane Berkowitz Carlton and Dennis William Carlton Professor of Microeconomics, Emeritus, Massachusetts Institute of Technology. Email: fmfisher{at}mit.edu. I am indebted to Daniel Jonas for assistance and to Evan S. Schouten and Maarten Pieter Schinkel for comments and criticism. I retain responsibility for error.


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