TAKING THE ERROR OUT OF “ERROR COST” ANALYSIS: WHAT’S WRONG WITH ANTITRUST’S RIGHT

Today's antitrust conservatives' advocacy of further changes to antitrust rules is based on a series of erroneous assumptions about markets and institutions. These assumptions systematically overstate the incidence and significance of false positives, understate the incidence and significance of false negatives, and understate the net benefits of various rules by overstating their costs. Collectively, these errors inappropriately tilt the application of a neutral economic tool, decision theory, against antitrust intervention. In addition, some of the authors cited in this article might resist the conservative label, or take non-interventionist positions only with respect to some issues. This study suggests that the rule of reason did not deter anticompetitive uses of resale price maintenance that the per se rule deterred. The study's findings are consistent with the view that anticompetitive explanations for resale price maintenance tend to predominate over procompetitive explanations. This conclusion is at odds with the views of conservative commentators about the likely competitive effects of vertical practices, including resale price maintenance.