THE ECONOMICS AND LAW OF A SEMI-REGULATED INDUSTRY: THE PHILADELPHIA NATIONAL BANK CASE.

摘要

This dissertation, The Economics and Law of a Semi-Regulated Industry: The Philadelphia National Bank Case, involves the fields of industrial organization and regulation. After five years of discussion, Philadelphia National and Girard Trust Corn Exchange Banks applied to merge in 1960. They were respectively the second and third largest of forty-two commercial banks in the four-county area.;Under the Bank Merger Act of 1960, the controlling agency, the Comptroller of the Currency, recognized the public interest affirmative defense, i.e., a merger may be consummated if the convenience and needs of the community to be served outweigh the anti-competitive effects of the proposed transaction, and approved it. The Justice Department immediately challenged under Section Seven of the Clayton Antitrust Act.;The case raised three main legal and economic issues. First, did the antitrust laws apply to bank mergers? Second, what was the relevant market for the line of commerce? Third, if consolidation has anticompetitive aspects, can affirmative defenses override them? The defendants has three major ones which the Federal District Court accepted. They are: following customers to the suburbs, competing with New York City and other large banks nationwide, and stimulating local economic development.;The Supreme Court enjoined the merger on a simple market share test. The then largest bank had less than a one-fourth share versus the greater than one-third one of the proposed merged bank. Its decision shows unqualified hostility to rising concentration.;The Philadelphia National Bank case marks the start of an abrupt, unexpected change in banks' regulatory and legal status. Prior to the Supreme Court's decision that Clayton's Section Seven applied, the majority legal opinion was that regulation immunized banks from antitrust. Whereas today, the Justice Department treats banks almost on a par with other commercial and industrial sectors. Focusing on its economic, legal, historical, and institutional aspects, the Philadelphia National Bank case should provide useful insights for policy makers, bankers, lawyers, and economists.;This dissertation's main stress will be on the quality of the case's economic analysis. That is, what economic criteria were applied in the case? If the case had been presented by economists, not lawyers, what additional, available data and factors would have been introduced? Finally, if knowledge were perfect, what extra issues would economists use as criteria for rational, economic decisions? The last issue also involves an analysis of why pertinent information is not available. The answers to the last two questions shows the strengths and weaknesses of the adversary process as a basis for economic decisions. From an economist's view, the merger should have been allowed if the welfare gain from more efficient operations outweigh the welfare loss from a reduced number of banks, i.e., increased consumer welfare in the market place.