Neoclassical Price Theory, Effects, or Judicial Narrowing in US Predation Law

Predation claims have become progressively more difficult for US plaintiffs to establish. I examine whether Neoclassical Price Theory (NPT) has caused this result. To identify the concept in the case law, I explain how market power, cost tests, and recoupment analysis derive from the NPT concepts of rationality, competition, and efficiency. Competition and efficiency refer to the state of the market in perfect competition relative to monopoly, and thus explicate how predation can harm consumers. Rationality refers to profitability, consumer harm, and the incentive to predate. The concepts create a conceptual framework through which the legal elements assist in predicting the effects of predation.I reviewed all published US federal appellate decisions considering predation from 1950 to 2014. I also examine on what effects judges have focused, whether such effects depart from NPT, and the relationship between effects and plaintiffs' success rate. Brooke Group defined effects as recoupment, and plaintiffs subsequently have won a single published case. Because the Supreme Court viewed predation as rarely successful and the claim itself as systemically inhibiting price-cuts, lower courts have interpreted cost and market power evidence within the confines of NPT, but strictly. Only the Court can alter this spin on the claim.World Competition published a subsequent version of this article