Market Failure and Non-Standard Contracting: How the Ghost of Perfect Competition Still Haunts Antitrust

Modern antitrust policy has a ‘love hate’ relationshipwith non-standard contracts that can overcome market failure.On the one hand, courts have abandoned various per se rulesthat once condemned such agreements outright, concluding thatmany non-standard contracts may produce benefits that are cognizableunder the antitrust laws.¹ The prospect of such benefits, itis said, compels courts to analyze these agreements under theRule of Reason, under which the tribunal determines whethera given restraint enhances or destroys competition.² At thesame time, courts, scholars, and the enforcement agencies haveembraced methods of rule of reason analysis that are undulyhostile to such agreements.³ In particular, courts and othersare too quick to view such agreements and the market outcomesthey produce as manifestations of market power. This articleseeks to explain why these agreements are still the object ofundue hostility.     

White Paper Prepared for The Secretary of Defense Task Force on DoD Nuclear Weapons Management: Tradeoffs and Paradoxes: Terrorism,Deterrence and Nuclear Weapons

This article was written at the request of the Secretary of Defense Task Force on DoD Nuclear Weapons Management. While this analysis suggests that certain types of terrorists can be deterred from certain types of attacks, it is less optimistic about the use of nuclear weapons in a terrorist deterrent strategy. A broad approach to deterrence may be effective against certain types of terrorist groups and attacks, making it crucially important to disaggregate the terrorist threat when setting policy. The article goes on to address two types of terrorist groups with a “global reach” that pose a serious threat to the United States: non-state actors driven by doctrines permitting catastrophic attacks and state-sponsored groups capable of carrying out catastrophic attacks. The analysis reveals a number of previously unappreciated tradeoffs and paradoxes associated with the deterrence of terrorists.