Sidak Analyzes Predation by Public Enterprises

J. Gregory Sidak published a review essay in the winter 2000 issue of the University of Chicago Law Review entitled, "Are Public Enterprises the Only Credible Predators?" (co-authored with David E.M. Sappington). An increasingly frequent theme sounded in competition policy throughout the world's developed economies is that public enterprises are engaged in anticompetitive behavior aimed at private enterprises. In their review of John Lott's new book, Are Predatory Commitments Credible?, Sappington and Sidak underscore the importance of long-run profit maximization as an assumption in the analysis of predatory pricing. When one drops that assumption, as should be done in the case of a public enterprise, the plausibility of predation grows and presents a paradox: the firms that may most deserve the government's scrutiny with respect to predation are the government's own enterprises.