Working Papers

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Bound print copies of George Mason School of Law’s working paper series on law and economics are available in the Law Library. The bound set often includes initial drafts of papers. Search Mason’s Classic Catalog to locate a working paper.

Recent Working Papers:

Bruno Leoni’s Legacy and Continued Relevance

Abstract:

In his famous book, Freedom and the Law, originally published in 1961, Italian lawyer-economist Bruno Leoni posed the question of whether over the long run a society and legal system premised primarily on legislative law-making could sustain a system of individual liberty, or whether such a system required a common law-style foundation to support it. In this article I evaluate Leoni’s challenge and find that his predictions about the nature of a legislative-centered legal system not only are more relevant than ever, but that recent tendencies toward extreme and arbitrary law-making by executive edict are consistent with the trends and intellectual principles that Leoni identified over 50 years ago. By identifying the underlying jurisprudential theories that generated the current state of affairs, Leoni’s warnings are even more relevant today than ever before.

Fixing Fuller's Record: The Green Bag and the U.S. Reports

By: Ross Davies

Date Posted: 2014

No.: 14-48

Full text (most current version) on SSRN

Abstract:

Melville Fuller, Chief Justice of the United States from 1888 to 1910, had a notably “self-effacing nature.” Perhaps that is why he did not always push hard to correct errors about himself that appeared in published reports. In retrospect, this seems admirably modest in some contexts and disturbingly irresponsible in others. This article deals first with an example Fuller’s admirable modesty, which it overcomes for the benefit of modern readers. Second, this article examines an instance of Fuller’s converse irresponsibility, and suggests that the Supreme Court can and should officially correct Fuller’s error.

Welcome to New Columbia: The Fiscal, Economic and Political Consequences of Statehood for D.C.

Abstract:

This Essay sketches some of the long-term economic and political consequences of making Washington D.C. the 51st State. The statehood debate has overwhelmingly focused on the same set of issues: the impact of statehood on the federal government’s structure. But if D.C. becomes a state, the most impactful change in its citizens’ lives would not be their new ability to elect members of Congress; it would be the dramatic shift in economics and politics that would come with the transition to having a state rather than city government. On the day “New Columbia” enters the Union, it would bear a constellation of features unprecedented in the nation: the only state wholly part of one metropolitan region, the only state without local governments, and the only wholly urban state. These features have deep implications for the advisability of statehood when compared to the alternatives of retrocession or the stateless status quo and also furnish a blueprint for steps to mitigate the risks and exploit the benefits that statehood would offer.

Part I of the Essay will discuss the special fiscal and economic conditions that New Columbia would face. On one hand, statehood would better allow D.C. to take advantage of periods of economic success. In particular, a state of New Columbia would likely be free of the restrictive confines of the Height of Buildings Act, allowing for greater growth when demand for living in D.C. is high. Moreover, the District would likely also gain greater taxing power (although it would lose some forms of generous federal funding). Yet such benefits come at a price: as a single-city state, New Columbia would face drastic risks in times of downturn. The fact that New Columbia would be entirely in one economic region, and the fact that it would exclusively be the center city of that region, would mean almost necessarily that the state would face substantial financial risks in the case of regional and urban-form related shocks. This pro-cyclical effect makes the case for retrocession stronger, and also suggests reforms like a mandatory rainy day fund if statehood is achieved.

Part II discusses the implications of New Columbia’s unique internal politics. As noted, New Columbia would be the only state without local governments. The absence of separate spheres for local and state elections would have at least two major implications for New Columbia’s politics and policy. First, as a state composed of an overwhelmingly single-party city, New Columbia’s elections would likely be decidedly uncompetitive. Even in the status quo, this absence of party-level electoral competition is a likely cause of many of the pathologies in D.C. politics, from excessive restrictions on growth to its persistent problems with corruption. To ensure the state of New Columbia does not share these defects, any move towards statehood should include reforms aimed at introducing more political competition. Second, and more optimistically, the unprecedented marriage of a city and a state government offers a powerful change for innovation. Historically, the relatively circumscribed legal power of cities has prevented them from pursuing a number of effective policies because such powers are the exclusive province of states. Further, big cities are often losers in state political fights. In this context, New Columbia’s fusion of city and state would provide many opportunities for policy flexibility and discovery unavailable to most big cities.

An Assessment of Behavioral Law and Economics Contentions and What We Know Empirically about Credit Card Use by Consumers

By: Thomas A. DurkinGregory Elliehausen Todd Zywicki

Date Posted: 2014

No.: 14-46

Full text (most current version) on SSRN

Abstract:

“Behavioral Law and Economics” (BLE) is a specialized component of the legal literature that purports to base its conclusions on a branch of economic analysis known as behavioral economics. The central claim of BLE is that by applying findings of behavioral economics to the real world it can provide more accurate assumptions about individual behavior and decision making than neoclassical economics and thus better and more effective policy prescriptions where needed. To date, however, BLE’s claims have been almost entirely a priori, taking certain suggested biases identified in the laboratory experiments by behavioral economists and claiming that they extend significantly to actual consumer behavior and the need for regulation. Yet it is well-accepted that the proper test of the scientific validity of an economic theory is the accuracy of its predictions relative to empirically testable hypotheses, not a priori reasoning or hypothetical extensions. This paper focuses on an area where BLE has been particularly active and even influential—the analysis of consumer use of credit cards. Comparison of the claims of BLE against hypotheses of the traditional neoclassical model of consumer credit use developed over the past century finds that available empirical evidence uniformly rejects BLE’s hypotheses for consumer credit. In short, while behavioral considerations are an important component of economic analysis, its BLE extension to policy in the consumer credit area has not yet proven to be useful.

Commentary on CFPB Report: Data Point: Checking Account Overdraft

By: G. Michael Flores Todd Zywicki

Date Posted: 2014

No.: 14-45

Full text (most current version) on SSRN

Abstract:

The Consumer Financial Protection Bureau (CFPB) released a data point update of its ongoing analyses of overdrafts. We review the report and provide commentary on its findings, methodology and the inferences of this update, specifically the potential to further restrict debit card overdrafts. We suggest metrics the CFPB should use in its future analyses to help provide a more thorough assessment of the costs and benefits of overdrafts. To this end, we cite findings from our previous and other third-party analyses. Finally, we recap the larger policy questions of access to credit, alternative sources of credit, and the economic benefit attained by the use of overdrafts. We hope to add positive feedback to the CFPB as they work toward potential regulations of overdrafts. As with the CFPB’s prior efforts, this report provides no basis for additional regulation of bank overdraft protection. Further research, however, is warranted.

Foreword to The Rise of ISIS: A Threat We Can't Ignore by Jay Sekulow

Abstract:

Responding to the fact that murderous forces have been unleashed in the Middle East, and provoked by the prospect that such forces and their allies seek to expand their territory by directly encroaching on the West, this book serves to alert Americans to the risks that ISIS poses. The failure to face the facts richly addressed by the authors of The Rise of ISIS: A Threat We Can’t Ignore, exposes democratic nations to the rising danger that they will capitulate to the prospect of appeasement, disaster and death.

Navigating Conflicts in Cyberspace: Legal Lessons from the History of War at Sea

By: Jeremy RabkinAriel Rabkin

Date Posted: 2014

No.: 14-43

Full text (most current version) on SSRN

Abstract:

Despite mounting concern about cyber attacks, the United States has been hesitant to embrace retaliatory cyber strikes in its overall defense strategy. Part of the hesitation seems to reflect concerns about limits imposed by the law of armed conflict. But analysts who invoke today’s law of armed conflict forget that war on the seas has always followed different rules. The historic practice of naval war is a much better guide to reasonable tactics and necessary limits for conflict in cyberspace. Cyber conflict should be open—as naval war has been—to hostile measures short of war, to attacks on enemy commerce, to contributions from private auxiliaries. To keep such measures within safe bounds, we should consider special legal constraints, analogous to those traditionally enforced by prize courts.

Thanks for the Thanks: An Appreciation of the Author Note

By: Ross Davies

Date Posted: 2014

No.: 14-42

Full text (most current version) on SSRN

Abstract:

Legal scholars’ public expressions of gratitude – those thank-yous that fill law review author notes and law book prefaces – have inspired a good deal of legal scholarly commentary in recent years. Much of that commentary deals with the theory that authors write those thank-yous with an eye more to the future than to the past. This work – “prospective thank-you theory” might be a good name – has numerous variations and complexities, and occasional hilarities. One thread involves the idea that some authors curry favor with great (or at least powerful or rich or famous) legal figures and institutions by thanking as many of them as possible for their support, no matter how slight their connections may be to an author’s work. The result, such an author hopes, is that the thanked great ones will think kindly of him or her and bestow favors in the future. But is it true? Does this aspect of prospective thank-you theory match reality? Discovering the truth might be both difficult and uncomfortable. There may, however, be a sunnier side to the study of schmoozing via author note, a side that might show that expansively grateful authors of author notes can make the world a happier place at no cost to anyone other than themselves. But could that be true? I suspect the answer is mostly Yes. And I even have a little bit of antique, but concrete, evidence.

A Brief History of Software Patents (and Why They're Valid)

Abstract:

Today, there is a vigorous and sometimes caustic debate over whether computer software is a patentable invention. Unfortunately, these arguments are rife with confusion about the technology and the law, and courts are proving to be equally confused. As opposed to continuing the entirely doctrinal and policy debate in the literature, this essay fills a gap in the scholarship by detailing the historical evolution of computer software and showing how intellectual property (IP) law played a key role in its technological development. This historical account contributes to the debates in two ways. First, it reveals that opposition to IP protection for software is not new. There was vociferous opposition in the 1960s to extending copyright protection to software code, just as there is strident opposition today to extending patent protection to software programs. Second, and more important, it reveals why courts extended patent protection to software programs in the 1990s, which followed from the evolution of computer technology itself. Legal doctrines evolve in response to developments in new technology, and the patent system exemplifies this operating principle. The patent system secured to innovators the new technological inventions in the Industrial Revolution and it secures to innovators the new technological inventions in the Digital Revolution today. Understanding the history of computer software and its evolving protections under the IP laws confirms that software programs today are inventions that, if they are new, useful, nonobvious and properly disclosed in a patent application, are rightly eligible for patent protection.

Supreme Court Sluggers: James Iredell

By: Ross Davies

Date Posted: 2014

No.: 14-40

Full text (most current version) on SSRN

Abstract:

The Supreme Court existed for about a dozen years before John Marshall became Chief Justice in 1801. Until recently, in some instances quite recently, scholars tended to neglect those early years and the judges who served on the Court during them. That is why Supreme Court Sluggers cards of the early Court are good vehicles for saluting – if only partially and imperfectly – some great baseball players who also were neglected until recently (and who suffered treatment worse than neglect in their playing days). Sluggers cards of the original pre-Marshall Court – Chief Justice John Jay and Justices John Rutledge, William Cushing, James Wilson, John Blair, and James Iredell – will be based on negro league stars who were denied (for most of their careers, at least) opportunities to play in the major leagues due to race discrimination. The first Sluggers card of a member of the founding-era Court – the card featured in this little article – portrays Justice Iredell in the batting stance of longtime Homestead Grays first baseman Walter “Buck” Leonard. (The nickname came courtesy of a young sibling who tried to call him “Buddy” but pronounced it “Bucky,” and it stuck for life as “Buck.”) On the statistical side, the Iredell card reflects another similarity between the early Justices and the players on whom their portraits are modeled: the sources of job performance data are fragmentary (as well as being sometimes hard to parse), at least compared to those for modern Justices and major leaguers.

The Tax Lawyer as Gatekeeper

Abstract:

The modern tax lawyer has many different roles. She serves as advisor, advocate, engineer, endorser, insurer, and, at times, even adversary. In addition, as concerns about tax abuse and an eroding tax base have grown, legislators and the Internal Revenue Service have increasingly relied on tax lawyers to provide various quasi-gatekeeping functions. As constructed, however, this role is neither precise nor consistent. In many respects it muddles the roles of the tax lawyer, causes undue client conflicts, and merely serves as an obstacle to the sound and efficient provision of legal advice while failing to deter significant amounts of wrongdoing. This Article argues that in the prelitigation phase of a tax lawyer’s representation, the tax lawyer is well suited to perform a gatekeeping function and should do so.

The current legal rules governing taxpayers and their advisors comprise a labyrinth of procedures and controls that ineffectively regulate the modern tax system. Although the tax lawyer is certainly vested with a number of quasi-gatekeeper responsibilities, her duties often either over-effect or under-effect an ideal gatekeeper model. Within the proper framework, however, the tax lawyer is well positioned to perform the gatekeeping tasks of guidance, compliance monitoring, and misconduct prevention. These gatekeeping functions are consistent with the long-standing professional responsibilities of a lawyer, and a sound gatekeeping system could also help reconcile the otherwise conflicting duties tax lawyers face. 

This Article explores various modifications and refinements that must be made to the legislative and regulatory regime governing the behaviors of tax lawyers and taxpayers in order to fully realize the benefits of the tax lawyer‘s gatekeeping potential. Specifically, the proposed gatekeeping structure seeks to eliminate some of the ineffective and overly adversarial elements of the system, raise the standards for tax legality and penalty protection between tax lawyers and taxpayers, and augment the tax lawyer’s due diligence responsibilities.

Deconstructing the Rules of Corporate Tax

Abstract:

The U.S. corporate tax system is failing to keep pace with the evolving global economic landscape. The overwhelmingly complex regime rewards aggressive tax planning and creates incentives for corporations to move their capital and tax homes offshore. Calls for fundamental reform are escalating as the current system succumbs to the pressures of declining revenues, ever-emerging loopholes, and the perpetuation of one of the highest national statutory rates in the world. Indeed, President Obama and members Congress have acknowledged these shortcomings and affirmed their commitment to significantly overhaul the corporate tax system. Academics, practitioners, and the White House have proposed any number of reform measures to deal with the problems plaguing the U.S. corporate tax regime, including moving from a worldwide to a territorial-based regime, eliminating deferral, and lowering the statutory rate. However, these solutions involve varying structural and statutory changes, which are in fact extrinsic to the form of the underlying rules themselves.

In contrast, this Article argues for an innate form of change to the U.S. corporate tax rules, which would fundamentally affect the way in which tax lawmakers actually draft tax rules and regulations. In particular, it argues that a systemic focus and commitment by lawmakers to a more principles-based approach to regulation would significantly mitigate many of the challenges currently encumbering the U.S. tax regime. Generally speaking, as used herein, principles-based rules are rules in which the principle underlying the rule is actually stated on the face of the rule. In contrast, prescriptive rules are rules for which the lawmaker ex ante prescribes an outcome for a set of anticipated factual situations by applying, but not stating directly, the underlying principle. Unlike the present system, which relies almost exclusively on a complex entanglement of bright-line prescriptive rules, a principles-focused corporate tax regime would help significantly simplify tax provisions, close loopholes, make the system more responsive to a dynamic marketplace, and serve as a gateway to lowering the U.S. corporate tax rate. Thus, the implementation of more principles-based rules should be given consideration in any contemplated tax reform proposals.

Even Republics Must Sometimes Strike Back

Abstract:

Advocates for a literal view of the UN Charter hold that armed force can only be deployed with approval of the Security Council or in self-defense against an “armed attack.” They then tend to think that, in the latter case, force can only be deployed against the attackers. While it may seem logical, this approach is at odds with traditional understandings of what international law permits. It is at odds with more recent practice of states. And it is at odds with reasonable policy concerns, such as deterring future attacks and responding to limited, but repeated attacks. A more robust approach to self-defense can embrace a range of retaliatory measures without thereby disdaining humanitarian restraint.

Keynote Address: Is There a George Mason School of Law and Economics?

Abstract:

This article is the edited transcript of remarks provided in November 2013 on the occasion of the 40th Anniversary of the George Mason Law and Economics Center and the 10th Anniversary of the founding of the George Mason Journal of Law, Economics & Policy. The title of the conference was “The Unique Contributions of Armen Alchian, Robert Bork, and James Buchanan to the George Mason University School of Law.” In it I pose the question: “Is there a George Mason School of Law and Economics?” and I answer in the affirmative. I argue that the George Mason tradition of law and economics is a synthesis of multiple complementary schools of law and economics—Austrian, Chicago, UCLA, Virginia, and Washington—focused on spontaneous order, private ordering, dynamic market processes, and property rights. Given the subject of the conference, these remarks focus specifically on UCLA (Alchian), Chicago (Bork), and Virginia (Buchanan), but are not meant to discount the equally important influences of these complementary traditions.

Off the Track or Just Down the Line? From Erie Railroad to Global Governance

Abstract:

Prior to the Supreme Court’s 2012 Kiobel ruling, federal courts had, for three decades, agreed to hear human rights claims by foreign nationals, concerning abuses by foreign governments in their own territories. Some of the same commentators who applauded these cases also endorsed judicial rulings closing American courts to claims against foreign governments for expropriation of property – even when the property was in the United States or owned by Americans. Court rulings on the “federal common law of foreign relations” have zig-zagged since the 1930s. That confusion reflects the displacement of basic principles of common law ordering, which earlier generations identified with natural law. Erie v. Tompkins gave great momentum to that distorting impulse in modern jurisprudence.

Forcing Cooperation: A Strategy for Improving Tax Compliance

Abstract:

The current U.S. deterrence-based tax enforcement regime is failing, particularly with respect to large multinational corporations. Despite the continual passage of new penalties and reporting requirements, large businesses remain able to keep much of their income out of the reach of the federal treasury. While the IRS has struggled with the decreasing effectiveness of its enforcement efforts, jurisdictions such as Australia have been able to achieve increased compliance rates as a result of transitioning to a cooperative tax model. This type of regime focuses on resolving emerging taxpayer issues in real-time, providing taxpayers with helpful, readily available guidance, and creating positive incentives for compliant taxpayers, such as the ability to book tax benefits more quickly and lower compliance costs.

This Article argues for an adoption of a cooperative tax regime in the U.S., and more importantly proposes a framework for its implementation. Because many businesses are already able to successfully game the current system, they may be reluctant to voluntarily cooperate with the IRS based on the mere expectation of cooperation-based benefits. In order to combat this resistance, I argue that the IRS will have to delineate sharper compliance choices for taxpayers by broadening the spectrum of applicable compliance standards.

This Article proposes that the IRS implement a system in which non-cooperation is met with strict liability and heightened compliance standards, while cooperation is rewarded with expanded pre-filing programs, decreased liability standards, and lower compliance costs. When faced with these two choices, most taxpayers should, over time, choose to cooperate. Those who do not, however, will be met with more targeted enforcement. By widening the gap between the two enforcement regimes, taxpayers will be forced to signal their cooperative intentions to the IRS. The IRS can then dynamically use this information to make its post-filing efforts more effective and “force” more taxpayers onto the path of compliance.

Salience and Sin: Designing Taxes in the New Sin Era

Abstract:

Tax salience reflects the extent to which consumers take into account the after-tax cost of a good or service prior to making their consumption decision.  Recent empirical work on tax salience has revealed something that is perhaps intuitive, but nevertheless important to the design of sin taxes.  Taxpayers are more likely to make consumption decisions based on pre-tax rather than post-tax prices when the salience, or visibility, of a tax is diminished.  Thus, consumers are less likely to change their demand for a particular product if shelf prices are tax-exclusive rather than tax-inclusive.  Economically, this makes low salience taxes mimic some of the benefits of taxes on inelastically demanded goods.  Because a taxpayer’s demand change in response to a tax increase is diminished, the deadweight loss generated by the imposition of the tax can be reduced. Notwithstanding the potential for efficiency gains, politicians and academics alike have expressed various fairness, distributional, and normative concerns regarding the use of low salience taxes.  In fact, a number of countries already require tax-inclusive pricing for consumer products in order to purportedly preserve consumer awareness and transparency.

In contrast, I argue that lawmakers should not rush to reject tax-exclusive pricing outright and should continue to explore the benefits of low salience taxes in select situations.  To the extent lawmakers are able to minimize economic distortions the concerns that have been expressed are not always fatal.  I develop a new analytical rubric for tax salience, and determine that the appropriate use of salience for any particular tax is dependent on a number of factors.  These factors include the price elasticity of demand, the potential for countervailing income effects, and whether the tax is intended to raise revenue or modify taxpayer behavior.  As a normative matter, I find that selectively implemented low salience taxes can be beneficial.  However, I do not believe they should be universally implemented in sin tax design.  In fact, in another expansion on the current literature, I argue that in certain situations lawmakers may best benefit from high salience taxes.  I propose that these taxes may have efficiency benefits when lawmakers are seeking to influence taxpayer behavior.  Ultimately, while it is difficult to draw definitive conclusions regarding the optimal use of tax salience given that many empirical and theoretical aspects of salience have yet to be developed, the empirical work done to-date suggests that the impact of tax salience on tax design may be significant and is worth exploring.

City Replanning

By: Roderick Hills David Schleicher

Date Posted: 2014

No.: 14-32

Full text (most current version) on SSRN

Abstract:

In this paper we provide a new defense for one of the most criticized ideas in land use law, that city plans should constitute settled deals about the proper uses of land that should be sticky against subsequent zoning amendments. In the middle of the last century, several prominent scholars argued that courts should find zoning amendments that were contrary to city plans ultra vires. But this idea was largely rejected by courts and scholars alike, with leading figures like Carol Rose, Robert Nelson and Bill Fischel arguing that parcel-specific zoning amendments provide space for the give-and-take of democracy and lead to the efficient amount of development by encouraging negotiations between developers and residents over externalities from new building projects. Their case against plans and in favor of deals suggested that zoning authorities act either as arbiters in land use disputes or as agents for existing residents to encourage negotiated solutions.

We argue, by contrast, that the dismissal of plans was shortsighted and has helped contribute to the excessive strictness of zoning in our richest and most productive cities and regions, which has driven up housing prices excessively and produced outcomes that are economically inefficient and distributively unattractive. In contrast with both planning’s critics and supporters, we argue that plans and comprehensive remappings are best understood as deals. Plans and remappings facilitate trades between city councilmembers who understand the need for new development but refuse to have their neighborhoods be dumping grounds for all new construction. Further, by setting forth what can be constructed as of right, plans reduce the information costs borne by purchasers of land and developers, broadening the market for new construction. We argue that land use law should embrace a version of plans as a procedural tool that packages together policies and sets of zoning changes in a number of neighborhoods simultaneously through procedures that make such packages difficult to unwind.

We conclude by arguing that modern property law scholarship has failed to recognize that real property law is now substantially a public law subject and should be studied using the tools of public law. Leading scholars, most notably Tom Merrill and Henry Smith, have developed sophisticated tools for analyzing the ways in which the common law of property is designed to reduce information costs, which we employ here. But the field has ignored the fact that the common law of property is far less important than it once was as a method for regulating real property ownership and use. Legislatures and administrative agencies at a variety of levels determine most of the rules governing how real property is used and purchased. In order to understand how today’s property law increases or reduces the information costs facing owners, users, potential purchasers and third-parties to property, the field must make an “institutional turn,” studying the likely effects on policy of different institutional arrangements and procedures.

Intellectual Property and Property Rights

Abstract:

This essay is the introductory chapter to Intellectual Property and Property Rights (Edward Elgar, 2013), which contains some of the leading articles published in recent years on the nature of patents, copyrights, trademarks and trade secrets as property rights. But this essay does not merely review the articles. For the first time in a single essay, it presents the three basic analytical frameworks in which intellectual property rights are defined or justified as property rights – historical, conceptual, and normative.

Drawing upon the substantive content of the articles in the volume and beyond, the essay first reviews the two descriptive framings of intellectual property rights, explaining that intellectual property rights historically have been defined and justified as property rights since the eighteenth century and that there are serious analytical reasons why intellectual property is defined conceptually in this way. The essay then explains how these two descriptive bases – the historical account and conceptual definition – provide a foundation for the two normative justifications for intellectual property as property – the utilitarian and labor-desert theories. Ultimately, the essay summarizes the substantive theoretical case for intellectual property as property, and it also briefly summarizes the critique of intellectual property from the perspective of property rights advocates.

Does Price Discrimination Intensify Competition? Implications for Antitrust

By: James C. CooperLuke FroebDaniel O'BrienSteven Tschantz

Date Posted: 2014

No.: 14-30

Full text (most current version) on SSRN

Abstract:

As a general proposition, antitrust law is hostile to price discrimination. This hostility appears to derive from a comparison of perfect competition (with no price discrimination) to monopoly (with price discrimination). Importantly, economists have known for some time that some forms of price discrimination by oligopolists yield different welfare outcomes than price discrimination by a monopolist. This article focuses on the antitrust implications of price discrimination based on consumer location by spatial competitors that, in contrast to monopoly price discrimination, lowers prices for all consumers. In an important class of spatial models and many real world markets, the consumers to whom one firm would like to raise price – its strong market – are another firm’s weak market to which it would like to lower price. When this “best-response asymmetry” exists, the equilibrium outcome of spatial competitors reacting to each other’s discriminatory price reductions may be lower prices for all consumers and lower profits for all firms, compared to an equilibrium in which all firms offer uniform pricing to all consumers. We identify three areas of antitrust that could benefit from this economic insight: mergers of spatial competitors; the use of price discrimination to infer market power; and Robinson-Patman enforcement.