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The rule of reason is a legal doctrine used to interpret the Sherman Antitrust Act, one of the cornerstones of United States antitrust law.While some actions like price-fixing are considered illegal per se, other actions, such as possession of a monopoly, must be analyzed under the rule of reason and are only considered illegal when their effect is to unreasonably restrain trade.
The consumer welfare standard gradually replaced the rule of reason principle as the dominant legal theory behind antitrust enforcement by the 1980s. The consumer welfare standard was influenced by microeconomic theory and is related to the economic theories of the Chicago school of economics . [ 5 ]
The Court endorsed the rule of reason enunciated by William Howard Taft in Addyston Pipe and Steel Company v. United States (1899), [5] written when Taft had been Chief Judge of the United States Court of Appeals for the Sixth Circuit. The Court concluded, however, that the behavior of the Standard Oil Company went beyond the limitations of ...
United States, 246 U.S. 231 (1918), was a case in which the Supreme Court of the United States applied the "rule of reason" to the internal trading rules of a commodity market. Section 1 of the Sherman Act flatly states: "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the ...
One of the key criticisms focuses on Bork's use of the term "consumer welfare", which became the stated goal of American antitrust law. Bork argues that Congress enacted the Sherman Act as a "consumer welfare prescription". [4] The Supreme Court embraced this view in Reiter v. Sonotone Corp., 442 U.S. 330 (1979) and in all subsequent decisions.
There are no externalities and each actor has perfect information. Firms and consumers take prices as given (no economic actor or group of actors has market power). The theorem is sometimes seen as an analytical confirmation of Adam Smith's "invisible hand" principle, namely that competitive markets ensure an efficient allocation of resources.
Rule utilitarianism is a form of utilitarianism that says an action is right as it conforms to a rule that leads to the greatest good, or that "the rightness or wrongness of a particular action is a function of the correctness of the rule of which it is an instance". [1]
The Pareto principle is the basis for the Pareto chart, one of the key tools used in total quality control and Six Sigma techniques. The Pareto principle serves as a baseline for ABC-analysis and XYZ-analysis, widely used in logistics and procurement for the purpose of optimizing stock of goods, as well as costs of keeping and replenishing that ...