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.     

THE MARKET FOR INDUSTRY: WHERE ANGELS FEAR TO TREAD?

This paper investigates one of the perennial mysteries in the area of state and local finance, the provision of tax and other subsidies to business by federal, state and local governments in the face of solid evidence that such incentives do little to nothing to influence business location or job creation. The paper looks at the upsurge in such governmental aid in the last decade and considers whether this upsurge has occurred because such aid is more efficacious than it used to be or whether it has occurred for political reasons unrelated to its effectiveness.