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Preventing Anticompetitive Conduct Directly and Indirectly: Accuracy vs. Predictability

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This essay argues that economic evaluations of optimal antitrust rules ought to fully recognize antitrust predictability as a relevant factor. It discusses the differences between the direct and indirect mechanism of preventing anticompetitive conduct, and between the roles assumed by accuracy and predictability of antitrust adjudication within these mechanisms. While operation of the direct mechanism depends only on accuracy, the indirect mechanism in addition requires predictability to work well. Since a great majority of anticompetitive conduct is prevented indirectly rather than directly, predictability is indispensable for the overall effectiveness of antitrust. Consequently, economic evaluations of optimal antitrust rules need to search for the most effective attainable combination of accuracy and predictability, inevitably sacrificing some of the former for the sake of the latter in the process.