Showing papers by "Oliver E. Williamson published in 1977"

Predatory Pricing: A Strategic and Welfare Analysis

Abstract: Until recently predatory pricing1 has been a relatively vague concept in antitrust law. This may be because emotive terms, such as predatory pricing, do not invite and sometimes defy analysis. But the lack of precision may also reflect a sense that the familiar tools of static economic analysis are ill-suited to cope with the issues posed by predatory pricing. As developed in this article, predatory pricing involves strategic behavior in which intertemporal considerations are central. Static economic models that fail to capture these attributes miss crucial features of the predatory pricing issue. Recently a remarkable degree of consensus in favor of cost-based rules has appeared in court opinions dealing with predatory pricing. 2 This judicial consensus may be a response to a series of articles addressed to predatory pricing issues, the most significant being commentary by Edward Cooper and studies by Richard Posner and by

Economies as an Antitrust Defense Revisited

Abstract: The merger of two firms is commonly viewed from an antitrust standpoint in terms of its anticompetitive effects on price. Sometimes, however, a merger will also result in real increases in efficiency which reduce the average cost of production of the combined entity below that of the two merging firms. The neglect, suppression, or even perverse interpretation of such economies was characteristic of antitrust enforcement in the early sixties and beyond. There are recent indications, however, that economies are now being valued more positively.

J. Michael Montias' The Structure of Economic Systems

Abstract: * J Michael Montias' book The Structure of Economic Systems is an ambitious and important contribution to the literature on comparative economic systems It also has ramifications for the study of industrial organization and, for that matter, of complex economic organizations quite generally Inasmuch as the distinctive approach which Montias takes involves a study of the "interface between organization theory and economics" (p 5), one might anticipate that this book would elicit wide interdisciplinary interest It draws, however, very selectively from the economics and organization theory literatures Unsurprisingly, the book relies extensively on Montias' earlier work (including his collaboration with Tjalling Koopmans) Other scholars upon whose work he greatly relies are Jacob Marschak and Roy Radner, Martin Weitzman, and Janos Kornai It is not accidental that these authors are all associated with mathematical modeling approaches to the study of organizations Montias observes that when "faced with a choice between a clear articulation of a simple relationship and a realistic description of a complex process, I have generally opted for the former" (p 6) This is consonant with prevailing preferences among economists for "hard analysis" over what is sometimes referred to as "story telling" This preference for mathematical modeling is traceable to what is often a justifiable sense that propositions which are derived less rigorously are inherently suspect Such a position on verbal versus mathematical argument has been expressed by Herbert Simon (1957) as follows: "The poverty of mathematics is an honest poverty that does not parade imaginary riches before the world When we cannot solve the system, we can at least be sure which questions we can answer and which we cannot and we are protected from reaching invalid conclusions whose error is concealed by the vagueness of a verbal formulation" The statement was written in 1957, when Simon still entertained hopes that much of social science could be reworked to advantage in the language of nonlinear differential equations Simon's interests have since gone off in different directions, however, and Simon's disciples and fellow travelers have failed to deliver on these aspirations Possibly the only alternative to "honest poverty" is disreputable (inflated, pretentious, or otherwise suspect) verbal analysis But inasmuch as the twenty years which have expired since Simon's pronouncement have brought only meager progress towards a full blown mathematical social science (by which I mean one that is not preoccupied with toy problems),' and since marking time until new