The legality of nonprice vertical practices in the U.S. is determined by their likely competitive effects. An optimal enforcement rule combines evidence with theory to update prior beliefs, and specifies a decision that minimizes the expected loss. Because the welfare effects of vertical...

The legality of nonprice vertical practices in the U.S. is determined by their likely competitive effects. An optimal enforcement rule combines evidence with theory to update prior beliefs, and specifies a decision that minimizes the expected loss. Because the welfare effects of vertical...

Theories of vertical restraints have shown that vertical practices have the potential to harm competition. Although (or because) they are based on more realistic market structures and account explicitly for strategic interactions among competitions, the predictions of these models are...