Legal at a Price

The second category of post-Areeda-Turner proposals sought to directly assess strategic behavior by combining one or more economic indicators, usually including cost and market structure, often combined with an assessment of the company`s purpose or intent. For example, in the most comprehensive of proposals, Joskow-Klevorick would identify suspect prices through evidence of a monopolistic market structure, below-cost prices, reversal of price reductions, and the documented social objective of raising prices after elimination of competition.52 Other important proposals were put forward by Posner, Joskow-Klevorick, Scherer, Baumol (Baumol II) and Ordover-Willig.53 These rules are closer to our approach, but none of them adequately confront the fact that predation is not a uniform phenomenon, but involves a variety of predatory strategies that require different legal approaches. Therefore, critics have not attempted to describe and rank the various predatory strategies and develop an approach based on an identified predatory strategy, as we propose in this article.54 At the end of the three-month promotion, Tasty Frozen increases its price. Consumers remain loyal and appreciate the improved taste of the new pizza. Although the manufacturer suffered significant losses during the three-month promotional period, the company reaped significant profits from its higher prices and economies of scale from that point on. Projected sales suggest that Tasty-Frozen will be profitable within a year. In addition, the company has no incentive to further deteriorate the quality of its product, for example: by mixing the new cheese with cheaper standard cheese, as consumers would notice the change and would no longer be willing to pay a premium. The higher quality of the new pizza has prompted many customers to switch to cheaper brands, and the change persists even after Tasty-Frozen raises prices. In fact, the new pizza was so successful that many of Tasty-Frozen`s low-cost competitors lost and exited the market. If you`re charging a few hundred dollars for a consultation, we recommend setting a flat fee for a certain period of time to give clients price predictability and reassurance. (ii) No less restrictive alternative. The success of the new pizza depends on informing consumers about its superior qualities.

Sales at a loss prompted consumers to try the new product, convincing them that its improved taste justifies a higher price. Other ways to get consumers to experience the product, such as in-store sampling, are expensive and inefficient. The three-month period for below-cost advertising prices shall not be longer than reasonably necessary to inform consumers about the characteristics of the products. Therefore, no less restrictive alternative seems reasonably available to successfully bring the new product to market. Setting fees for legal services is obviously an important issue to consider not only when you start your practice, but throughout the life of your law firm. There are several ways to assess your fees. Some methods require thorough calculations, while others simply require you to look at the market to determine your fees. Even if the Koller study correctly concluded that predatory pricing is rare in litigation cases, this would hardly be surprising given the populist legal norm that prevailed in the period before 1969 after the passage of the Robinson-Patman Act in 1936. Strikingly, only six of the 23 cases in Koller`s sample occurred before 1936, including two of the four cases in which Koller found actual raids.32 At the time of widespread application of the Robinson-Patman Act, discriminatory price reductions by a large intergovernmental corporation harming a small local competitor, accompanied by evidence of hostility or simply persistent price reductions, was virtually illegal in itself. This is certainly what lawyers advised their clients,33 and it seems more than likely that such a comprehensive rule of law would have deterred most predatory pricing.

Of course, this would not indicate that predation would be rare under a less comprehensive legal standard.34 Since transaction costs exist and can vary by market and geographic region, prices for the same product may also vary from market to market. If transaction costs, such as the cost of finding an appropriate counterparty or the cost of negotiating and executing a contract, are higher, the price of a commodity will tend to be higher there than in other markets with lower transaction costs. State laws govern how tax sales can be conducted. Usually, the sale is open to the public to ensure that a fair price is obtained for the property on the open market. However, a private sale is valid if authorized by law. A strategic vision of repair would fill the void in predatory pricing due to the neglect of modern analysis. In Brooke`s analysis, the Court did not consider any policy factors such as potential gains from discouraging aggressive pricing in future periods or in other cigarette markets, such as branded cigarettes. The court also ignored the counterfactual event of what might have happened without the price war – the decrease in profits that the predator would have made if it had not forced the prey to stop the price reductions. On the other hand, as part of a strategic approach, counsel could have attempted to demonstrate that a reputational effect or other predatory theory, such as the exploitation of financial markets, allowed for a likely remedy.

Whatever the end result, that is the question that should have been put to the courts. The key is to set the legal fees that make sense and that your clients are willing to pay. When you listen to your customers, communicate with them, and develop a deep empathy for their needs, you set legal rates that put them at ease. Price predictability and no sticker shock are also part of the customer experience, so good pricing for law firms creates even more value for your clients in some ways. Displaying prices on your law firm`s website is also helpful in this regard. The law of one price is an economic concept that states that the price of an identical asset or commodity has the same price worldwide, regardless of its location, when certain factors are taken into account. A second type of exclusionary effect is rival discipline. In this case, competitors are not excluded from the market, but their competitive behaviour is inhibited.

Although some authors define predatory pricing solely in terms of crowding out competitors,113 competitor discipline is a generally accepted anti-competitive effect, particularly by judicial authorities.114 In fact, competitor discipline is itself exclusive, since it is intended to exclude the growth and expansion of loot or the entry of loot into new markets. Evidence of a disciplinary effect requires the plaintiff to demonstrate (1) that the victim is a competing business whose competition threatens or potentially endangers the predator`s profits, (2) that the victim has increased its prices, has become less aggressive, or has otherwise restricted its competitive behaviour after the below-cost price period, or that loss-based pricing is appropriate. was to achieve this outcome, and (3) below-cost prices were an important factor in these seizures.115 We received valuable feedback from participants in the Boston University School of Law, Harvard Law School, and Yale Law School; and participants in the Antitrust Division Business Workshop, United States. Ministry of Justice, European Centre for Advanced Research in Economics (ECARE), European Summer Symposium on Economic Theory in Gerzensee, N.Y.U. School of Management, New Zealand Institute for Antitrust Law and Economics, Princeton University and Tilburg University Centre for Economic Research. We also received insightful feedback from many people, including Lucien Bebchuk, Mathias Dewatripont, An Elhauge, Vic Khanna, Louis Kaplow, Alvin Klevorick, Barry Nalebuff, Jim Meeks, Patrick Rey, Alan Schwartz, Marius Schwartz, Dan Vincent and Bobby Willig. We thank LeeAnne Baker, Jeremy Bartell, Gretchen Elizabeth Joyce and Chad Porter for their dedicated and imaginative support of the research. In order to calculate your legal fees, you must first consider the value you offer to the client. If a customer thinks your price isn`t reasonable, they`ll be dissatisfied with your services, resulting in fewer referrals, fewer reviews, and less business. At the same time, if you don`t calculate based on the value of the experience your customer gets, you could leave money on the table. In the face of these difficulties, most courts have refused to adopt a rule per se, instead adding other factors, including assumptions based on cost, intent and market structure, to Areeda-Turner`s formulation.

Although there are differences between judicial districts, courts have most often ruled that a price below the average variable cost is likely illegal, while a price above the average total cost is definitely legal.