Organization, Control and the Single Entity Defense in Antitrust
Dean V. Williamson, EAG 06-4, January 2006
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Abstract:
Since at least the 1930's economists have puzzled over how to delineate the boundaries of
the firm. With the advent of antitrust legislation in 1890, courts have been pressed to
consider what constitute conspiracies between corporate entities to restrain commerce. By
the 1940's, courts started to characterize conspiracies by sorting out what they are not
specifically, by extending the status of "single entity" to certain types of business
arrangements. Both efforts in economics and in the law to sort out what constitutes a
"firm" or "single entity" have focused on "control." A difficulty is that neither the law nor
economics offer an operationally significant concept of control. Even so, both law and
economics contribute concepts other than control that provide a way of understanding
economic organization. These concepts control rights, adaptation, delegation, and
renegotiation suggests how one can subsume the sometimes confusing array of single
entity tests proposed in the case law within a two-stage sequence of tests.