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Freedom to Trade and the Competitive Process

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  • Edlin, Aaron
  • Jennings, Richard
  • Farrell, Joseph

Abstract

Although antitrust courts sometimes stress the competitive process, they have not deeply explored what that process is. Inspired by the theory of the core, we explore the idea that the competitive process is the process of sellers and buyers forming improving coalitions. Much of antitrust can be seen as prohibiting firms’ attempts to restrain improving trade between their rivals and customers. In this way, antitrust protects firms’ and customers’ freedom to trade to their mutual betterment.

Suggested Citation

  • Edlin, Aaron & Jennings, Richard & Farrell, Joseph, 2011. "Freedom to Trade and the Competitive Process," Department of Economics, Working Paper Series qt5gx9n3tf, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    • Handle: RePEc:cdl:econwp:qt5gx9n3tf
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    References listed on IDEAS

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    1. Roman Inderst & Greg Shaffer, 2010. "Market‐share contracts as facilitating practices," RAND Journal of Economics, RAND Corporation, vol. 41(4), pages 709-729, December.
    2. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
    3. Sjostrom, William, 1989. "Collusion in Ocean Shipping: A Test of Monopoly and Empty Core Model s," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1160-1179, October.
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    Cited by:

    1. Christian G. Asmussen & Kirsten Foss & Nicolai J. Foss & Peter G. Klein, 2021. "Economizing and strategizing: How coalitions and transaction costs shape value creation and appropriation," Strategic Management Journal, Wiley Blackwell, vol. 42(2), pages 413-434, February.

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    More about this item

    Keywords

    Antitrust; Industrial Organization; Competition Policy; Law and Economics; Trade Regulation; Trade Restraints; Monopoly JEL Class: D2; 4; K2; L2; 4; 5; M2.; Law; Business; Other Business;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • K2 - Law and Economics - - Regulation and Business Law
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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