Evolutionary Models of Legal Change and the Albrecht Rule

• DOI: 10.1177/0003603X8703200406
• Published date: 01 December 1987
• Author: Roger D. Blair,Carolyn D. Schafer
• Date: 01 December 1987
• Subject Matter: Economic

The Antitrust Bulletin/Winter 1987

Evolutionary models

of

legal change

and the Albrecht rule

BY ROGER D. BLAIR and CAROLYN D. SCHAFER*

I.

Introduction

989

A fascinating series

of

articles has improved our understanding

of

the common law's evolutionary process.' When legal rules are

economically inefficient, they impose deadweight losses upon one

Professor

of

Economics and Research Associate, respectively,

University

of

Florida, Gainesville, Florida.

AUTHORS' NOTE: The authors appreciatethe financial support provided

by the Department

of

Economics and the Public Policy Research Center

at the University

of

Florida. The views expressed are solely those

of

the

authors. Helpful comments and encouragement were provided by

Malcolm Burns, Herbert Hovenkamp, and some anonymous referees.

I The seminal piece was provided by Rubin, Why Is the Common

Law Efficient?, 6

JOURNAL

OF

LEGAL

STUDIES

51 (1977); which was re-

fined and extended by Priest, The Common Law Process and the Selec-

tion

of

Efficient Rules, 6

JOURNAL

OF

LEGAL

STUDIES

65 (1977);

Goodman,

An

Economic Theory

of

the Evolution

of

the Common Law,

7

JOURNAL

OF

LEGAL

STUDIES

393 (1978); Priest, Selective Characteristics

of

Litigation, 9

JOURNAL

OF

LEGAL

STUDIES

399 (1980); Blume &Rubin-

feld, The Dynamics

of

the Legal Process, 11

JOURNAL

OF

LEGAL

STUDIES

405 (1982); Priest &Klein, The Selection

of

Disputes

for

Litigation, 13

JOURNAL

OF

LEGAL

STUDIES

1 (1984); Heiner, Imperfect Decisions and the

Law: On the Evolution

of

Legal Precedent and Rules, 15

JOURNAL

OF

LEGAL

STUDIES

227 (1986).

©1988 by Federal Legal Publications, Inc.

990 The antitrust bulletin

of

the parties to a dispute. As a result, the value

of

an inefficient

rule to its beneficiary is less than the loss to the disadvantaged

party. This means that the disadvantaged party has more to gain

than the beneficiary has to lose by a change to an efficient rule.

If

the litigants have a continuing interest in precedent, they will

represent all future interests in the legal rule in question.' Under

these circumstances, there will be an incentive for the inefficient

rule to be litigated until precedent is changed and an efficient rule

emerges.

Although our antitrust law is based upon statutes (primarily

the Sherman Act

of

1890 and the Clayton Act

of

1914), the

statutory language does not drive the results. These statutes

contain vague prohibitions that require judicial interpretation in

the common-law tradition. One may argue, as we do in the next

section, that antitrust is simply a federal common law based upon

astatutory foundation. In his remarkable survey

of

antitrust,

Robert Bork found inefficient rules in nearly every area

of

the

law.' Aparticularly egregious example is provided by the eco-

nomically inefficient Albrecht rule prohibiting the imposition

of

maximum resale prices.' In spite

of

its inefficiency, we find that

the Albrecht rule is not litigated very often. We examine this rule

in an evolutionary context and offer some explanations for the

absence of litigation.

2 This issue is discussed more fully by Rubin, supra note 1.

3 R.

BORK,

THE

ANTITRUST

PARADOX:

A

POLICY

AT

WAR

WITH

ITSELF

(1978).

4 This rule was enunciated in Albrecht v. Herald Co., 390 U.S. 145

(1968). The Albrecht rule has been examined in some detail and found

wanting. See, e.g., Blair &Kaserman, The Albrecht Rule and Consumer

Welfare:

An

Economic Analysis, 33

UNIVERSITY

OF

FLORIDA

LAW

REVIEW

461 (1981); Easterbrook, Maximum Price Fixing, 48

UNIVERSITY

OF

CHI-

CAGO

LAW

REVIEW

886 (1981); Blair &Fesmire, Maximum Price Fixing

and the Goals

of

Antitrust, 37

SYRACUSE

LAW

REVIEW

43 (1986).