Price fixing among small-market-share firms should not be per se illegal

Evidence

Next, Director and Levi briefly turned to the application of the idea of collusion. With regard to collusion, Director and Levi focused primarily on the issue of price-fixing agreements. They acknowledged that when price fixing occurs among members of an industry that control a large market share in terms of sales, the adverse consequences for the market can be predicted with some certainty. However, when price fixing occurs among firms with an insignificant combined market share, “there is less foundation for [illegality]” (p. 295). — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 1145

Categorization

• DEFINE: Shows the early Chicago position that even collusion should be judged by market share, not by rule-based per se illegality.
• XREF: connects to: States tolerate or promote collusion when they capture a share of proceeds — Diego Gambetta, The Sicilian Mafia The Business of…, 512; Legal prohibitions create supervised illegal markets the state profits from — Michel Foucault, Discipline & Punish- The Birth of the…, 429; Predatory price cuts harm competition regardless of the seller’s intent — Henry M. Hart, Jr. and Albert M. Sacks, The Legal Process: Basic Problems in…, 564

Broader Connections

• States tolerate or promote collusion when they capture a share of proceeds #complicates (0.75) — Diego Gambetta, The Sicilian Mafia The Business of…, 512
• Legal prohibitions create supervised illegal markets the state profits from #complicates (0.72) — Michel Foucault, Discipline & Punish- The Birth of the…, 429