Calling all former students! If you will be in DC for the ABA antitrust meeting and want to come to a reunion, let us know at [email protected]
Fiona Scott Morton
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Antitrust/competition and health economics. Professor at Yale SOM.
To stop controversy over abortion pills, Walgreens could divide itself into two corporations or brands, a red chain of stores and a blue one. I had a great original idea: name the red brand “Rite Aid”! Maybe that would increase competition!
American Express….A decision that is widely viewed to have some of the worst economics in recent memory. The decision protects American Express's tactics that shield itself from competing on its merchant fees. Through the channel of the antitrust laws, the court significantly increased economic inequality in America
https://www.nytimes.com/2023/03/04/opinion/credit-card-rewards-points-poor-interchange-fees.html?smid=nytcore-ios-share&referringSource=articleShare Great piece in the Times Opinion section today for antitrust enthusiasts. It carefully describes the harm to ordinary consumers - the giant transfer from the middle class to the rich - that the Supreme Court celebrated and protected in their American Express decision. 1/2
The news on the bird site says that Caremark used the arrival of the first Humira biosimilar to extract large discounts from the brand and therefore prefer the brand and not the generic. Entry is doing what we expected: creating competition and driving down prices. But without sales, entrants cannot cover the cost of entry and will learn not to enter (because they are providing a public good - benefits to consumers rather than themselves). What is the right policy solution here?
N: The FTC’s arguments in support of the proposed rule are striking in their reliance on serious economic theory and empirical work published by mainstream academic economists (which I think is an excellent approach). The FTC today, far from deprivileging economics as called for by many NBs, is relying on it in very important settings such as reinvigorating its rule-making authority. END
N-1: The FTC’s recent proposed ban on noncompete clauses contains a thorough and sophisticated exposition of the results in the economic literature of the ways in which noncompetes harm workers. These numerous and strong results demonstrate that such restrictions on future employment cause workers significant harm in the form of lost wages and mobility.
n/5. … They further argued that major changes are not yet called for even in areas where popular concern has been voiced such as claims of increasing markups, competitive effects from increased cross ownership, monopsony power in labor markets, and coordinated effects.” These positions are much more centrist than both those of the FTC Chair and many other progressive economists. Of course, it remains to be seen if Professor Nevo will be influential in FTC policy.
n/5. The new chief economist’s policy positions are also less progressive than NB positions. For example, the description of his public comments on the Merger Guidelines written by colleagues from Cornerstone Research (consulting firm) says “In their 2022 RFI comments, Professor Nevo and colleagues cautioned that the mainstream economic literature does not call for major changes to the Guidelines. Rather the 2010 Horizontal Merger Guidelines in particular have “largely stood the test of time” …
4/5 Many NB journalists and thinktank members have argued that the reason antitrust enforcement was insufficient to protect competition during the last Democratic administration was the fault of Obama-era enforcers. In December, the FTC announced the appointment of a new chief economist, Professor Aviv Nevo, a well-known and eminent research economist who served as chief economist at DOJ in the Obama administration. The choice of appointment is therefore a marked change.