Einer R. Elhauge

Carroll and Milton Petrie Professor of Law

Biography

Einer Elhauge is the Petrie Professor of Law at Harvard Law School and Founding Director of the Petrie-Flom Center for Health Law Policy, Biotechnology and Bioethics.  He served as Chairman of the Antitrust Advisory Committee to the Obama Campaign.  He teaches a gamut of courses ranging from Antitrust, Contracts, Corporations, Legislation, and Health Care Law.  Before coming to Harvard, he was a Professor of Law at the University of California at Berkeley, and clerked for Judge Norris on the 9th Circuit and Justice Brennan on the Supreme Court.  He received both his A.B. and his J.D. from Harvard, graduating first in his law school class.

He is an author of numerous pieces on range of topics even broader than he teaches, including antitrust, public law, corporate law, patents, the legal profession, and health law policy.  His most recent books include: Obamacare on Trial (2012), available at www.amazon.com; Research Handbook on the Economics of Antitrust Law (Edward Elgar Publishing Ltd. 2013); The Fragmentation of U.S. Health Care: Causes and Solutions (Oxford University Press 2010); Statutory Default Rules (Harvard University Press 2008); U.S. Antitrust Law and Economics (Foundation Press 2011); Global. Antitrust Law and Economics (Foundation Press 2011); and Global Competition Law and Economics (Hart Publishing 2011). For his website and publications, see http://www.law.harvard.edu/faculty/elhauge/.

Areas of Interest

Einer R. Elhauge, Contrived Threats v. Uncontrived Warnings: A General Solution to the Puzzles of Contractual Duress, Unconstitutional Conditions, and Blackmail, 83 U. Chi. L. Rev. 503 (2016).
Categories:
Banking & Finance
,
Health Care
,
Constitutional Law
Sub-Categories:
Contracts
,
Health Law & Policy
Type: Article
Abstract
Contractual duress, unconstitutional conditions, and blackmail have long been puzzling. The puzzle is why these doctrines sometimes condemn threatening lawful action to induce agreements but sometimes do not. This Article provides a general solution to this puzzle. Such threats are (and should be) deemed unlawfully coercive only when they are contrived, meaning that the threatened action would not have occurred if no threat could have been made. I show that such contrived threats can be credible because making the threat strongly influences whether the threatened action occurs. When such threats are uncontrived warnings, meaning that the threatened action would have occurred even if no threat could have been made, they are not coercive and can only benefit the agreeing parties. However, sometimes (as with blackmail) agreements produced by uncontrived warnings are also unlawful on the ground that they harm third parties. The contrived-threat test explains why the Medicaid-defunding threat in the Affordable Care Act was unconstitutional. It also explains why the recent King v Burwell conclusion—that the Affordable Care Act does not withhold tax credits from states that do not create insurance exchanges—would have been constitutionally required even if it had not been required by the statutory text.
Einer R. Elhauge, Horizontal Shareholding, 109 Harv. L. Rev. 1267 (2016).
Categories:
Corporate Law & Securities
Sub-Categories:
Antitrust & Competition Law
,
Securities Law & Regulation
,
Shareholders
Type: Article
Abstract
Horizontal shareholdings exist when a common set of investors own significant shares in corporations that are horizontal competitors in a product market. Economic models show that substantial horizontal shareholdings are likely to anticompetitively raise prices when the owned businesses compete in a concentrated market. Recent empirical work not only confirms this prediction, but also reveals that such horizontal shareholdings are omnipresent in our economy. I show that such horizontal shareholdings can help explain fundamental economic puzzles, including why corporate executives are rewarded for industry performance rather than individual corporate performance alone, why corporations have not used recent high profits to expand output and employment, and why economic inequality has risen in recent decades. I also show that stock acquisitions that create anticompetitive horizontal shareholdings are illegal under current antitrust law, and I recommend antitrust enforcement actions to undo them and their adverse economic effects.
Einer R. Elhauge, Statutory Default Rules: How to Interpret Unclear Legislation (Harv. Univ. Press 2008).
Categories:
Government & Politics
Sub-Categories:
Statutory Interpretation
Type: Book
Abstract
This book takes a fresh approach by focusing instead on what judges should do once the legal materials fail to resolve the interpretive question.
Thomas G. McGuire, Keith Drake, Einer R. Elhauge, Raymond S. Hartman & Martha Starr, Resolving Reverse-Payment Settlements with the Smoking Gun of Stock Price Movements, 81 Iowa L. Rev. 1581 (2016).
Categories:
Corporate Law & Securities
,
Property Law
Sub-Categories:
Antitrust & Competition Law
,
Intellectual Property - Patent & Trademark
Type: Article
Abstract
The Supreme Court recently held that in reverse-payment settlements of drug patent disputes, anticompetitive effects can be inferred if the reverse payment exceeds the patent holder’s anticipated litigation costs, absent some offsetting justification. Application of this standard is problematic because defendants usually: (1) obscure the amount of the reverse payment; and (2) claim their settlement was justified by risk aversion. Further, even if a net reverse payment can be proven, it is little help in estimating the period of delay or damages. This Essay offers another type of evidence that demonstrates and quantifies anticompetitive effects. An otherwise unexplained bump in the patent holder’s stock price shows that the settlement created new future profits by extending the period without generic competition beyond what the stock market expected. The stock market test has several advantages: it rebuts the risk aversion claim (which cannot explain the stock price rise); it more effectively (though still conservatively) captures damages than the magnitude of the reverse payment; and, finally, it relies on the behavior of objective traders rather than deal makers with well-understood incentives to obscure the presence of a payment. We conduct a stock market event study on one of the early instances of a reverse-payment settlement to illustrate how the method works.
Einer R. Elhauge, Rehabilitating Jefferson Parish: Why Ties Without a Substancial Foreclosure Share Should Not Be Per Se Legal, 80 Antitrust L.J. 463 (2016).
Categories:
Corporate Law & Securities
Sub-Categories:
Antitrust & Competition Law
Type: Article
Einer R. Elhauge & Abraham Wickelgren, Robust Exclusion and Market Division Through Loyalty Discounts, 43 Int'l J. Indus. Org. 111 (2015).
Categories:
Consumer Finance
,
Corporate Law & Securities
,
Banking & Finance
Sub-Categories:
Financial Markets & Institutions
,
Consumer Protection Law
,
Antitrust & Competition Law
Type: Article
Abstract
We show that loyalty discounts create an externality among buyers because each buyer who signs a loyalty discount contract softens competition and raises prices for all buyers. This externality can enable an incumbent to use loyalty discounts to effectively divide the market with its rival and raise prices. If loyalty discounts also include a buyer commitment to buy from the incumbent, then loyalty discounts can also deter entry under conditions in which ordinary exclusive dealing cannot. With or without buyer commitment, loyalty discounts will increase profits while reducing consumer welfare and total welfare as long as enough buyers exist and the entrant does not have too large a cost advantage. These propositions are true even if the entrant is more efficient and the loyalty discounts are above cost and cover less than half the market. We also prove that these propositions hold without assuming economies of scale, downstream competition, buyer switching costs, financial constraints, limits on rival expandability, or any intra-product bundle of contestable and incontestable demand.
Einer R. Elhauge, Obamacare and the Theory of the Firm, in The Future of Healthcare Reform in the United States 202 (Anup Malani & Michael H. Schill eds., Univ. Chicago Press 2015).
Categories:
Health Care
Sub-Categories:
Health Law & Policy
Type: Book
Abstract
Health care fragmentation today raises costs and worsens health outcomes. The theory of the firm indicates that cost and quality problems could be addressed by permitting greater vertical integration among complementary health care providers. The puzzle is why such integration does not occur. The answer is that a host of regulatory and payment laws create artificial obstacles to such integration. Various provisions in Obamacare could and should be used to lift these obstacles and allow health care integration that could potentially save tens of thousands of lives and hundreds of billions of dollars.
Einer R. Elhauge, Treating RAND Commitments Neutrally, 11 J. Competition L. & Pol'y 1 (2015).
Categories:
Corporate Law & Securities
,
Disciplinary Perspectives & Law
Sub-Categories:
Antitrust & Competition Law
,
Law & Economics
Type: Article
Abstract
This Article argues that the same legal standards should apply to RAND commitments whether they are made to standard-setting organizations or not. The arguments for concluding that RAND commitments should limit injunctive patent relief or trigger antitrust liability turn on whether the commitment reasonably induces lock-in that generates hold-up effects or market power when that commitment is breached. But RAND commitments can induce such lock-in effects when they are made outside of standard-setting organizations and do not always induce them when they are made to standard-setting organizations. Thus, any special legal rules for RAND commitments should turn on whether the commitments induced such lock-in, rather than on the institutional context. The arguments against using special legal rules for RAND commitments turn on the extent to which lock-in might fail to generate holdup problems, denying patent injunctions might generate reverse-holdup problems, and contract or promissory estoppel remedies might obviate the need for antirust liability. But those arguments likewise apply equally inside and outside of standard-setting organizations. Thus, however one resolves the arguments for and against applying special legal rules to RAND commitments, the resulting legal standards should be the same whether or not the commitment is made to a standard-setting organization.
Einer Elhauge, How Italian Colors Guts Private Antitrust Enforcement by Replacing it with Ineffective Forms of Arbitration, 38 Fordham Int’l L.J. 771 (2015).
Categories:
Corporate Law & Securities
,
International, Foreign & Comparative Law
Sub-Categories:
Antitrust & Competition Law
,
European Law
,
International Arbitration
Type: Article
Abstract
The United States is becoming more like Europe, and not in a good way. For a long time, the central difference between antitrust enforcement in the United States and Europe has been that the United States features not only public enforcement, but a vigorous system of private antitrust enforcement, while in Europe, public agencies have had an effective monopoly on antitrust enforcement. But that difference is on the verge of collapsing. We are achieving a form of convergence; but contrary to expectations, this convergence is not coming from recent European efforts to facilitate private enforcement, which have not yet overcome some serious obstacles on discovery and class actions. Instead, it is coming from the recent US Supreme Court decision in American Express v. Italian Colors Restaurant, which threatens to gut private antitrust enforcement in the United States by replacing it with ineffective forms of arbitration.
Einer R. Elhauge, I’m Not Quite Dead Yet—And Other Health Care Observations, 49 Tulsa L. Rev. 607 (2014).
Categories:
Health Care
Sub-Categories:
Health Law & Policy
Type: Article
Einer R. Elhauge, & Alex Krueger, Solving the Patent Settlement Puzzle, 91 Tex. L. Rev. 283 (2012).
Categories:
Civil Practice & Procedure
,
Corporate Law & Securities
,
Property Law
Sub-Categories:
Antitrust & Competition Law
,
Litigation & Settlement
,
Intellectual Property - Patent & Trademark
Type: Article
Abstract
Courts and commentators are sharply divided about how to assess “reverse payment” patent settlements under antitrust law. The essential problem is that a PTO-issued patent provides only a probabilistic indication that courts would hold that the patent is actually valid and infringed, and parties have incentives to structure reverse payment settlements to exclude entry for longer than this patent probability would merit. Some favor comparing the settlement exclusion period to the expected litigation exclusion period, but this requires difficult case-by-case assessments of the probabilities of patent victory. Others instead favor a formal “scope of the patent” test that allows such settlements for nonsham patents if the settlement does not delay entry beyond the patent term, preclude noninfringing products, or delay nonsettling entrants. However, the formal scope of the patent test excludes entry for longer than merited by the patent strength, and it provides no solution when there is either a significant dispute about infringement or a bottleneck issue delaying other entrants. This Article provides a way out of this dilemma. It proves that when the reverse payment amount exceeds the patent holder’s anticipated litigation costs, then under standard conditions the settlement will, according to the patent holder’s own probability estimate, exclude entry for longer than both the expected litigation exclusion period and the optimal patent exclusion period, and thus will both harm consumer welfare and undermine optimal innovation incentives. Further, whenever a reverse payment is necessary for settlement, it will also have those same anticompetitive effects according to the entrant’s probability estimate. This proof thus provides an easily administrable way to determine when a reverse payment settlement is necessarily anticompetitive, without requiring any probabilistic inquiry into the patent merits. We also show that, contrary to conventional wisdom, patent settlements without any reverse payment usually (but not always) exceed both the expected litigation exclusion period and the optimal patent exclusion period, and we suggest a procedural solution to resolve such cases.
Einer R. Elhauge, The Irrelevance of the Broccoli Argument, 366 New Eng. J. Med., Dec. 21, 2011, at e1.
Categories:
Health Care
,
Government & Politics
,
Constitutional Law
Sub-Categories:
Supreme Court of the United States
,
Health Law & Policy
Type: Article
Einer R. Elhauge, Introduction and Overview to Current Issues in Antitrust Economics, in Research Handbook on the Economics of Antitrust Law 1 (Einer Elhauge ed., Edward Elgar Pub. 2012).
Categories:
Corporate Law & Securities
Sub-Categories:
Antitrust & Competition Law
Type: Book
Abstract
Yet the field is surprisingly dynamic and changing. The specially commissioned chapters in this landmark volume offer a rigorous analysis of the field's most current and contentious issues.
Einer R. Elhauge, Obamacare on Trial (Smashwords 2012).
Categories:
Health Care
,
Government & Politics
Sub-Categories:
Supreme Court of the United States
,
Health Law & Policy
Type: Book
Abstract
This short book analyzes the Obamacare case — focusing on many points the Supreme Court was never told about — including the fact that the constitutional framers themselves had approved mandates to buy health insurance!
Research Handbook On The Economics Of Antitrust Law (Einer R. Elhauge ed., Edward Elgar Pub. 2013).
Categories:
Corporate Law & Securities
Sub-Categories:
Antitrust & Competition Law
Type: Book
Abstract
Yet the field is surprisingly dynamic and changing. The specially commissioned chapters in this landmark volume offer a rigorous analysis of the field's most current and contentious issues.
Einer R. Elhauge, & Damien Gera, Global Competition Law & Economics (Hart Pub. 2nd ed. 2011).
Categories:
Corporate Law & Securities
,
International, Foreign & Comparative Law
Sub-Categories:
Antitrust & Competition Law
,
International Law
Type: Book
Abstract
This is the second edition of the acclaimed text on global antitrust law.
Einer R. Elhauge, Corporate Manager's Operational Discretion to Sacrifice Corporate Profits in the Public Interest, in Environmental Protection and the Social Responsibility of Firms 13 (Bruce Hay, Robert Stavins & Richard Vietor eds., Resources for the Future 2005).
Categories:
Corporate Law & Securities
,
Discrimination & Civil Rights
Sub-Categories:
Corporate Law
,
Public Interest Law
Type: Book
Einer R. Elhauge, The Failed Resurrection of the Single Monopoly Profit Theory, 6 Competition Pol'y Int'l 155 (2010).
Categories:
Corporate Law & Securities
Sub-Categories:
Antitrust & Competition Law
Type: Article
Einer R. Elhauge, The Fragmentation of U.S. Health Care: Causes and Solutions (Oxford Univ. Press 2010).
Categories:
Health Care
Sub-Categories:
Health Law & Policy
Type: Book
Einer R. Elhauge, Why We Should Care about Health Care Fragmentation and How to Fix It, in The Fragmentation of U.S. Health Care: Causes and Solutions 1 (Einer Elhauge ed., Oxford Univ. Press 2010).
Categories:
Health Care
Sub-Categories:
Health Law & Policy
Type: Book
Einer R. Elhauge, Tying, Bundled Discounts, and the Death of the Single Monopoly Profit Theory, 123 Harv. L. Rev. 397 (2009).
Categories:
Corporate Law & Securities
Sub-Categories:
Antitrust & Competition Law
Type: Article
Einer R. Elhauge, How Loyalty Discounts Can Perversely Discourage Discounting, 5 J. Competition L. & Econ. 189 (2009).
Categories:
Corporate Law & Securities
Sub-Categories:
Antitrust & Competition Law
Type: Article
Einer R. Elhauge, Disgorgement as an Antitrust Remedy, 76 Antitrust L.J. 79 (2009).
Categories:
Corporate Law & Securities
Sub-Categories:
Antitrust & Competition Law
Type: Article
Einer R. Elhauge, Do Patent Holdup and Royalty Stacking Lead to Systematically Excessive Royalties?, 4 J. Competition L. & Econ. 535 (2008).
Categories:
Property Law
,
Corporate Law & Securities
Sub-Categories:
Antitrust & Competition Law
,
Intellectual Property - Patent & Trademark
Type: Article
Einer R. Elhauge, How Should Competition Law Be Taught?, 4 Competition Pol'y Int'l 267 (2008).
Categories:
Corporate Law & Securities
,
Legal Profession
Sub-Categories:
Antitrust & Competition Law
,
Legal Education
Type: Article
Einer R. Elhauge, Sacrificing Corporate Profits in the Public Interest, 80 N.Y.U. L. Rev. 733 (2005).
Categories:
Corporate Law & Securities
,
Disciplinary Perspectives & Law
Sub-Categories:
Corporate Law
,
Shareholders
,
Mergers & Acquisitions
,
Law & Economics
Type: Article
Einer R. Elhauge, Defining Better Monopolization Standards, 56 Stan. L. Rev. 253 (2003).
Categories:
Banking & Finance
,
Corporate Law & Securities
Sub-Categories:
Financial Markets & Institutions
,
Antitrust & Competition Law
Type: Article
Einer R. Elhauge, Why Above-Cost Price Cuts to Drive out Entrants Do Not Signal Predation or Even Market Power -- and the Implications for Defining Costs, 112 Yale L.J. 681 (2003).
Categories:
Corporate Law & Securities
Sub-Categories:
Antitrust & Competition Law
Type: Article
Einer R. Elhauge, Preference-Estimating Statutory Default Rules, 102 Colum. L. Rev. 2027 (2002).
Categories:
Government & Politics
Sub-Categories:
Congress & Legislation
,
Statutory Interpretation
Type: Article
Abstract
It is commonly assumed that statutory indeterminancy must be resolved by judicial judgment. This Article argues that where hermeneutics gives out, statutory indeterminancy instead can, is, and should be resolved by default rules designed to minimize the expected dissatisfaction of enactable preferences. This probabilistic goal justifies many judicial practices such as broad-ranging inquiries into legislative history even if it does not accurately reveal any shared legislative intent. It also often supports adopting moderate interpretations even when more extreme interpretations are more likely to match legislative preferences. Further, while the general default rule normally requires estimating enacting legislative preferences, the enacting legislature itself would prefer to shift to a default rule of tracking current legislative preferences when those can be reliably ascertained from official action. The basic reason is that the enacting legislature would prefer influence over the interpretation of the entire stock of statutes being interpreted while it is office rather than influence over the future interpretation (when it is out of office) of the statutory ambiguities that exist on the few topics for which it made enactments. Such a current preferences default rule explains many cases that rely on subsequent legislative action despite its hermeneutic irrelevance, and explains both the general doctrine of deference to agency interpretations and the pattern of exceptions to that deference.
Einer R. Elhauge, John R. Lott, Jr. & Richard L. Manning, How Term Limits Enhance the Expression of Democratic Preferences, 5 Sup. Ct. Rev. 59 (1997).
Categories:
Government & Politics
Sub-Categories:
Elections & Voting
Type: Article
Einer R. Elhauge, Allocating Health Care Morally, 82 Calif. L. Rev. 1449 (1994).
Categories:
Health Care
Sub-Categories:
Health Law & Policy
Type: Article
Einer R. Elhauge, The Scope of Antitrust Process, 104 Harv. L. Rev. 668 (1991).
Categories:
Corporate Law & Securities
Sub-Categories:
Antitrust & Competition Law
Type: Article
Einer Elhauge & Barry J. Nalebuff, The Welfare Effects of Metering Ties, 32 J.L. Econ. & Org. (Oct. 22, 2016).
Categories:
Corporate Law & Securities
Sub-Categories:
Antitrust & Competition Law
Type: Article

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