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48 U. Chi. L. Rev. 263 (1981)
Predatory Strategies and Counterstrategies

handle is hein.journals/uclr48 and id is 279 raw text is: Predatory Strategies and Counterstrategies Frank H. Easterbrookt There is a highly competitive market for predatory pricing theories. Scholars have produced a blizzard of rules defining un- lawful predatory practices.1 Some of the rules depend on the rela- tionship between price and cost,2 some on the relationship between price and time,s some on the relationship between quantity sold and time.4 One approach eschews rules altogether and suggests that courts examine the totality of the circumstances.5 The propo- t Assistant Professor of Law, The University of Chicago. Douglas G. Baird, Gary S. Becker, Lea Brilmayer, Dennis W. Carlton, Richard A. Epstein, Douglas H. Ginsburg, Wil- liam M. Landes, Sam Peltzman, Richard A. Posner, Robert B. Reich, Steven C. Salop, Mat- thew L. Spitzer, George J. Stigler, and Lester Telser made helpful comments on an earlier draft of this article. The Law and Economics Program of the University of Chicago provided support for the research and writing. 1 The current round of writing on predatory pricing can be dated from Areeda & Tur- ner, Predatory Pricing and Related Practices Under Section 2 of the Sherman Act, 88 HARv. L. REv. 697 (1975). They summarize their position and their responses to critics in 3 P. AREEDA & D. TURNER, ANTITRUST LAW 11 711-722 (1978). Some of the more prominent expositions of the competing positions include Baumol, Quasi-Permanence of Price Reduc- tions: A Policy for Prevention of Predatory Pricing, 89 YALE L.J. 1 (1979); R. BORK, THE ANTITRUST PARADox 144-60 (1978); Hay, A Confused Lawyer's Guide to the Predatory Pric- ing Literature, in STRATROIC PREDATION AND ANTITRUST ANALYSIS (S. Salop ed. 1981) (forth- coming); Joskow & Klevorick, A Framework for Analyzing Predatory Pricing Policy, 89 YALE L.J. 213 (1979); McGee, Predatory Pricing Revisited, 23 J.L. & ECON. 289 (1980); NA- TIONAL COMMISSION FOR THE REVIEW OF ANTITRUST LAws AND PROCEDURES, REPORT TO THE PRESIDENT AND THE ATTORNEY GENERAL 149-51 (1979); Ordover & Willig, An Economic Defi- nition of Predatory Product Innovation, in STRATEGIC PREDATION AND ANTITRUST ANALYSIS, supra; R. POSNER, ANTITRUST LAW: AN ECONOMIC PERSPECTIVE 84-96 (1976); Posner, The Chicago School of Antitrust Analysis, 127 U. PA. L. REv. 925, 939-44 (1979); Scherer, Pred- atory Pricing and the Sherman Act: A Comment, 89 HARv. L. REv. 869 (1976); Scherer, Some Last Words on Predatory Pricing, 89 HARv. L. REv. 901 (1976); Williamson, Preda- tory Pricing: A Strategic and Welfare Analysis, 87 YALE L.J. 284 (1977); Williamson, Wil- liamson on Predatory Pricing II, 88 YALE L.J. 1183 (1979). Some of my own views on preda- tion have previously appeared in R. POSNER & F. EASTERBROOK, ANTITRUST: CASES, ECONOMIC NOTES, AND OTHER MATERIALS 553, 680-89 (2d ed. 1981); Easterbrook, Predatory Pricing and Innovations: A Comment, in STRATEGIC PREDATION AND ANTITRUST ANALYSIS, supra. 2 See, e.g., 3 P. AREEDA & D. TURNER, supra note 1, 11 711-722; R. POSNER, supra note 1; Joskow & Klevorick, supra note 1; McGee, supra note 1; Ordover & Willig, supra note 1. 3 See, e.g., Baumol, supra note 1. See, e.g., Williamson, Predatory Pricing, supra note 1. ' See, e.g., Scherer, Comment, supra note 1.