Harvard University
Department of Economics
Economics 970: Economics of Antitrust
Spring 2005
Term Paper
The term paper is designed to allow students to apply economic analysis of antitrust law to a topic of their choosing. Students are expected to turn in a draft version, a copy of which will be given to a fellow student to critique. Students will be graded on their initial draft, the quality of their constructive criticisms of their peer’s draft, and the final version of their paper.
Administrative Details
The term paper accounts for a total of 40% of your grade in the class.
Draft (14-20 pages, 10%)
Critique of Another Students Draft (3-5 pages, 10%)
Final Version (14-20 pages, 20%)
Due Dates:
Draft: Thursday, April 28
Critique: Thursday, May 5
Final version: Friday, May 13, 5pm
The first two parts are to be turned in at the beginning of class. The final paper should either be emailed to me, or dropped of in my mailbox on the second floor of Littauer.
Types of Papers
The term paper is an open-ended assignment designed to allow you to explore a topic in antitrust economics that interests you. The only firm requirements:
1. The topic must be relevant to the material covered in the course.
2. The paper must include a detailed discussion of at least one actual antitrust case.
3. The paper must take an economic approach to the topic.
4. The paper cannot duplicate what you’ve already done in your short paper. You may use the same case, but only if you approach from a sufficiently different perspective to avoid duplication.
5. The paper must involve research beyond the readings assigned in the syllabus.
I encourage you to talk with me about you topic idea, either in person or via email.
Since this is a rather vague assignment, the following suggested paper types should be helpful in clarifying the sorts of papers that would be appropriate.
1. A detailed case study: Use a format similar to either the short paper or the case studies in Kwoka & White. Consider one or more economic theories that might explain the facts of the case, and examine how well the assumptions underlying these theories fit the facts of the case. Critique the court’s decision on the basis of your analysis.
2. Comparison of cases: Pick two or more closely related cases, and analyze the similarities and differences using one or more economic models. Should the courts’ decisions be the same in both cases? If so, what is the common underlying economic rationale for the common decision? If not, what economic theory justifies treating the cases differently?
3. An econometrics paper: Attempt to quantitatively evaluate an antitrust decision, perhaps using techniques similar to those used in the empirical exercise. This option will require you to find a relevant data set, which can be tricky (talk to me for advice on how to find data).
4. A nearly pure theory paper: Extend an existing theoretical model of some antitrust issue to better reflect the details of a particular case. As you saw in writing your short papers, theoretical models rarely have assumptions that exactly correspond to the realities of an actual case. Now is your chance to fix that. Pick a case and a theory that almost fits the facts of the case. Point out the theoretical assumptions that are contradicted by the case. Change the assumptions so that this is fixed, and solve the modified model. Report whether the results of the original model are overturned or contradicted, and draw the appropriate policy conclusions. Note that you probably won’t be able to solve the modified model at the same level of generality as the papers we’ve read, so you’ll have to make even more simplifying assumptions.
I expect that most of you will write something along the lines of #1 or #2, but the more ambitious of you might want to try your hand at #3 or #4. Of course, this list is not meant to be exhaustive, so feel free to be creative!
Topic Ideas
Where should you look for topic ideas? Here are some places where you can look for information about antitrust cases that cold serve as paper topics.
The websites of the DOJ, the FTC, and the European Commission are very helpful. They contain press releases, legal filings, and the text of speeches made by antitrust officials. These are great places to find out about current cases and topics of interest in antitrust.
The Antitrust Section of the American Bar Association also contains useful ideas, mostly in the form of official section commentaries on various antitrust issues.
If you’re interested in important legal precedents, as opposed to current antitrust cases, then you might want to turn to various legal textbooks and reference books. The Breit & Elzinga casebook includes most of the major antitrust precedent-setting cases. The Areeda and Kaplow treatise contains comprehensive analysis of most antitrust precedents. For a quicker summary analysis of the precedents, something simple like Antitrust Law and Economics in a Nutshell might be appropriate. All of these are available through Harvard’s libraries, and complete references can be found at the end of this handout.
Finally, antitrust law review articles can be a great way to learn about interesting cases. I’d suggest browsing through a few issues of a law review like the Antitrust Law Review to get some good ideas.
Research Suggestions
Once you’ve figured out what type of paper you want to write, and what case(s) you would like to write about, you’ll need to research the topic.
For the basic economic theory underlying your topic, I’d suggest looking at textbooks. Viscusi et al is a good starting place. Carlton and Perloff is a bit more advanced, and Tirole is more advanced still. For the basic legal background, you should look to some of the legal reference works mentioned in the previous section.
You should search LexisNexis for the full text law reviews and court opinions relevant to your paper. Similarly, you should search EconLit and the Social Science Research Network for economics papers relevant to your topic. Links can be found in the “WWW Links” section of the course web page.
There are two useful books written by Bork and Posner, respectively. Each book addresses both legal and economic issues, and contains extensive discussion of many important cases. These are the classic “Chicago School” texts, written in the 1970s, which have been fairly influential on subsequent legal and economic developments. Both books generally argue that much antitrust intervention is unjustified. The economics in these books is a bit more basic and easier to understand than what you’ll find in economics journal articles or in an advanced textbook like Tirole.
Grading Guidelines
The following guidelines are only intended to give you a rough idea of the relative importance of various aspects of your paper, and should not be interpreted as rigid rules that I will follow in assigning your grades. Note that the grading criteria for the draft and the final paper are very similar. This is because good drafts tend to lead to good papers. The main difference is that the criteria for the draft place more emphasis on the research, while the criteria for the paper place more emphasis on the response to the critique and the quality of the writing. Also note that the final paper will be held to a higher standard than the draft paper. Thus, even where the wording of the criteria is the same for the draft and for the paper, you will have to improve the draft in order to earn the same grade for the final paper.
Draft
Research (20%): The draft should develop a solid base of research. It should show that you’ve identified, read, and understood a variety of different materials relevant to your paper topic. You should research and discuss both the legal analysis (i.e., the precedents, rules, and tests used by courts and legal scholars to determine whether an antitrust violation has occurred) and the economic analysis (i.e., the results of economic models and econometric studies that shed light on the optimal antitrust policy).
Background (10%): The draft should provide enough factual background of the industry and the case(s) so that reader unfamiliar with them could understand the issues and analysis in the paper.
Legal analysis (15%): The draft should explain the legal precedents in the relevant area of antitrust law, as well as any applicable rules or tests used by the courts to determine whether the law has been broken. The draft should apply the precedents, rules, and tests to the case(s) under consideration.
Economic literature (20%): The draft should provide an overview of the relevant theoretical and empirical economic papers dealing with the topic, explaining the assumptions, the results, and the intuition of the papers.
Application of economics to the case(s) (25%): The draft should apply the economic literature to the case(s) under consideration, explaining which assumptions are met, which ones are violated, and what the optimal antitrust policy should be in this case.
Writing/Organization (10%): The draft should be comprehensible, well-organized, and clear. It need not be polished (i.e., it may ramble a bit in places, contain some grammatical errors, and even contain unfinished paragraphs, with a note explaining what you plan to do to finish the argument).
Critique
Demonstrate that you read and understood the arguments being made in the draft (10%)
Identify strengths of the draft that the author should attempt to preserve in the revision process. (15%)
Identify areas of weakness in the draft, especially ones that may be non-obvious to the author (20%)
Provide helpful and realistic suggestions for improving the draft (25%)
Provide some suggestion as to the relative priority that the author should place on fixing each weakness. (15%)
Be polite, well-written, clear, concise, and grammatically correct (15%)
Final
Background (10%): The paper should provide enough factual background of the industry and the case(s) so that reader unfamiliar with them could understand the issues and analysis in the paper.
Legal analysis (15%): The paper should explain the legal precedents in the relevant area of antitrust law, as well as any applicable rules or tests used by the courts to determine whether the law has been broken. The draft should apply the precedents, rules, and tests to the case(s) under consideration.
Economic literature (20%): The paper should provide an overview of the relevant theoretical and empirical economic papers dealing with the topic, explaining the assumptions, the results, and the intuition of the papers.
Application of economic analysis to the case(s) (30%): The paper should apply the economic literature to the case(s) under consideration, explaining which assumptions are met, which ones are violated, and what the optimal antitrust policy should be in this case.
Writing/Organization: The paper should be well-written, well-organized, clear, concise, and free of grammatical and spelling errors (15%)
Response to concerns raised by the critique (10%, although addressing these concerns should also raise your grade via the other parts of these grading guidelines): The paper should incorporate the suggestions made by their peer’s critique of the draft.
References
Phillip Areeda and Louis Kaplow, Antitrust Analysis: Problems, Text, Cases, 5th edition, New York: Aspen Law & Business, 1997.
Robert H. Bork, The Antitrust Paradox, New York: Basic Books, 1978.
William Breit and Kenneth G. Elzinga, The Antitrust Casebook: Milestones in Economic Regulation, 3rd edition, Ft. Worth: Dryden Press, 1996.
Dennis Carleton and J. Perloff, Modern Industrial Organization, New York: Addison Wesley Longman, 2000.
Ernest Gellhorn and William E. Kovacic, Antitrust Law and Economics in a Nutshell, 4th edition, St. Paul, Minn.: West Publishing Company, 1994.
Richard A. Posner, Antitrust Law: An Economic Perspective, Chicago: University of Chicago Press, 1976.
Jean Tirole, The Theory of Industrial Organization, Cambridge, Mass.: MIT Press, 1988.
W. Kip Viscusi, John M. Vernon, and Joseph E. Harrington, Jr., Economics of Regulation and Antitrust, 3rd edition, Cambridge, Mass.: MIT Press 2000, Chapters 3-9.