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Featuring the Three Tenors in La Triviata

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  • Goldberg Victor P.

    (School of Law, Columbia University)

Abstract

In the "Three Tenors" case the FTC found an agreement to be an antitrust violation despite the fact that there was no way it could be anticompetitive. The Commission failed to heed the lessons of Coase's classic paper on the nature of the firm, making a sharp distinction between activities within a firm (legal) and across firm boundaries (not legal). Analytically, there should be no distinction. The decision to integrate activities by contract rather than ownership is a matter of relative transactions costs. Since the boundaries of the firm are, ultimately, an economic decision reflecting the costs and benefits of the alternative arrangements, there is no economic justification for making the legality of any act contingent upon whether it was on the proper side of that boundary. Nor is there any particular virtue in using antitrust rules to alter the relative costs so as to shift that boundary to favor bringing activities within the firm. The paper proposes a "quick look" approach. The first thing to look for is some indication of market power. If antitrust harm is not credible, as in this case, because there was no market power, stop looking.

Suggested Citation

  • Goldberg Victor P., 2005. "Featuring the Three Tenors in La Triviata," Review of Law & Economics, De Gruyter, vol. 1(1), pages 55-64, April.
    • Handle: RePEc:bpj:rlecon:v:1:y:2005:i:1:n:3
    DOI: 10.2202/1555-5879.1009
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    Citations

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    Cited by:

    1. Muris Timothy J, 2006. "Discordant Notes: A Reply to Professor Wright," Review of Law & Economics, De Gruyter, vol. 1(3), pages 415-419, January.
    2. Muris Tim, 2005. "A Response to Professor Goldberg: An Anticompetitive Restraint by Any Other Name . . ," Review of Law & Economics, De Gruyter, vol. 1(1), pages 65-70, April.
    3. Witness Simbanegavi, 2009. "Informative Advertising: Competition Or Cooperation?," Journal of Industrial Economics, Wiley Blackwell, vol. 57(1), pages 147-166, March.
    4. Witness Simbanegavi, 2006. "Informative Advertising: Competition or Cooperation?," Working Papers 033, Economic Research Southern Africa.
    5. Wright Joshua D, 2006. "Singing Along: A Comment On Goldberg & Muris On the Three Tenors," Review of Law & Economics, De Gruyter, vol. 1(3), pages 399-414, January.

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