Relaxing antitrust during economic downturns: A real options analysis of Appalachian Coals and the failing firm defense
Shubha Ghosh
Abstract
Antitrust's first century ended with a boom, not only in the U.S. economy, but also in increased antitrust enforcement activity. But if the economic bubble bursts, should antitrust scrutiny of horizontal agreements be relaxed? In Appalachian Coals v. United States1 the Supreme Court seemingly answered this question in the affirmative by applying a rule of reason analysis to a crisis cartel, an agreement among competitors to stimulate business during an economic crisis. In addition, the availability of the failing firm defense2 against claims of anticompetitive mergers suggests that the answer should (at least sometimes) be yes when the downturn is specific to a particular firm. In this essay, I review this question using the methodology of real options theory, an approach that has received little attention among antitrust scholars, but one, I hope, that will be of increased importance in antitrust's second century.
Evidence weight
Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40
| F · citation impact | 0.00 × 0.4 = 0.00 |
| M · momentum | 0.20 × 0.15 = 0.03 |
| V · venue signal | 0.50 × 0.05 = 0.03 |
| R · text relevance † | 0.50 × 0.4 = 0.20 |
† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.