THE PUBLIC INTEREST CONCEPT IN LAW AND IN ECONOMICS

It is an interesting and perhaps important coincidence that only a year previous to the famous decision in Nebbia v. New York there appeared two volumes which together constitute an equally notable landmark in the development of economic doctrine, Professor Edward Chamberlin\u27s Theory of Monopolistic Competition and Mrs. Joan Robinson\u27s Economics of Imperfect Competition. While there is no evidence that the latter works influenced the outcome of the Nebbia case, the writer is of the opinion that these studies not only afford a rationale of that decision but also make desirable a re-examination of the concept of businesses affected with a public interest in the light of the historical development of that doctrine and parallel developments in business organization and economic theory. More specifically, it is believed that the theory of monopolistic competition affords a rational basis, and one which the Supreme Court was willing to accept in the latest leading case, for a much broader but more realistic and useful public interest concept than has hitherto prevailed

A NEW PHASE OF THE ANTITRUST LAW

The divergence between the economic and legal concepts of monopoly and the consequences thereof have been emphasized by various writers in recent years. Monopoly in economics means control of the market; that is, the ability of a seller by increasing or decreasing his output to affect the price of the product sold. Moreover, monopoly is recognized as being a matter of degree, depending upon the number of buyers and sellers of a commodity and the availability of adequate substitutes, ranging from pure monopoly through duopoly, oligopoly and monopolistic competition. By contrast, as Professor Mason has pointed out, The term monopoly as used in the law is not a tool of analysis but a standard of evaluation, by means of which public policy with respect to certain business practices might be developed. In law monopoly has largely meant the suppression of the freedom of an individual or firm to compete, by legal restraint, by agreement among competitors or by predatory tactics of rivals

THE DEMISE OF FAIR VALUE

Two years ago, in discussing the Natural Gas Pipeline Company case, the writer ventured the opinion that while it cannot be stated with certainty that the decision marks the demise of that hardy perennial--fair value--since the majority opinion did not explicitly repudiate that doctrine, there was language which indicated that such would nevertheless be the result of the decision. This prophecy now appears to be substantiated by the decision of the Supreme Court on January 3, 1944, in Federal Power Commission v. Hope Natural Gas Company. In the Pipeline Company case Chief Justice Stone stated significantly that the Constitution does not bind rate-making bodies to the service of any single formula or combination of formulas, and that if the Commission\u27s order, as applied to the facts before it and viewed in its entirety, produces no arbitrary result, our inquiry is at an end. This statement is not necessarily inconsistent with the Smyth v. Ames doctrine, however, and it was not clear in the Pipeline Company case whether the rate reduction ordered by the Federal Power Commission was sustained because the rate base and level of earnings allowed by the commission were higher than were required by the Smyth v. Ames test of confiscation, or whether the Court had substituted for that test the economic test of confiscation and had sustained the reduction because it did not prevent the company from operating profitably and successfully

THE PRESENT STATUS OF THE SHERMAN ACT

Two circumstances may be advanced by way of justification for the present addition to the voluminous literature dealing with the Sherman Anti-Trust Act. First, the Supreme Court has in recent months handed down two decisions involving the application of the Sherman Act to the oil industry, which are of great importance both because of their sweeping application to marketing practices in that industry and because of the directness with which they raise certain issues of economic theory and policy. Second, the fiftieth anniversary of the Sherman Act on July 2, 1940 provides an appropriate occasion for a review of the development and present status of that law in the light of these recent decisions. We turn first to an analysis of the latter and thence to a discussion of the fundamental legal and economic issues involved