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To: Daniel Schuh who wrote (20109)	6/19/1998 2:25:00 PM
From: almaxel	Respond to of 24154

From MS Investor Site: investor.msn.com have fun reading! Ralf

To: Daniel Schuh who wrote (20109)	6/21/1998 2:11:00 PM
From: Gerald R. Lampton	Read Replies (1) \| Respond to of 24154

Dan, this is one of the best posts you've ever made. You are absolutely correct that, since Bork's book came out, it has been one of the main preoccupations of academic antitrust economics to try to prove that Bork is wrong and that (a) predation can be successful and (b) predation is a lot more common than Bork and the other Chicago folks believe. I can only refer you to the article I posted a while back by Frank Easterbrook where he takes on some of these new theories. I do not have the article in front of me, but his basic points are two: 1. None of these new theories have been around long enough to withstand the test of time. Anyone with a PC and the right software can create a model which will produce a given outcome if certain assumptions are made. Whether, in the real world, the assumptions are valid, or the model correct assuming they are valid, is another matter. For example, as one of your quote snippets points out, it is extremely difficult, perhaps impossible in some cases, to distinguish genuinely predatory behavior from behavior which is simply super-competitive or competitive in some new and innovative way. Easterbrook argues, correctly in my view, that our understanding of markets is imperfect at best and we should be extremely cautious about adopting new economic models and theories to govern the course of public policy. We need to make sure they are true before we use them to gum up the operation of the naturally- and spontaneously-created market and risk unintended, potentially harmful consequences. In any case where there is any doubt, the tie should go to the defendant, as he says, and we certainly do not want to adopt a theory one year, just to have a bunch of revised research come out the next year and say the theory we just adopted is all wrong. In other words, if we are going to adopt these theories, let's make sure we are right before using Microsoft as a laboratory mouse for some experiment in social engineering. 2. Even if the theories are right, Easterbrook says they are too complex for judges and juries to understand and implement. Let's remember that judges are little more than educated laymen when it comes to economics, for whom science in general and mathematics in particular are not their strong areas of expertise. Jurors, some would say, are not even educated. So you don't want to have legal/economic theories which are too complicated and difficult for these well-meaning but technically challenged lay persons to understand and administer. We could solve this problem by turning antitrust law and management of the economy over to the economists and other experts to run, since they presumably do understand these theories. A court could do that, for example, by deferring to the expertise of an expert witness in making its findings and concocting its remedy. I don't know what you think, but I think a world run by economists and experts would be an awful place. Related to these is the point, made by both Bork and Easterbrook, that the truest and most insightful points in economics are usually the ones that are simple, easy to understand and do not require the use of complex mathematics or computer models. I have certainly not proven that "raising rivals costs" and the other recent antitrust economics scholarship you have cited to is wrong. I'm not qualified to do so. However, I think I have provided some very good reasons to be cautious and think twice before going down that path, reasons which have a long and distinguished pedigree in Western thought about political economy.