37 UCLA L. Rev. 693 (1989-1990)
The Leasing Monopolist

handle is hein.journals/uclalr37 and id is 707 raw text is: THE LEASING MONOPOLIST
John Shepard Wiley Jr.*
Eric Rasmusen**
J. Mark Ramseyer***
INTRODUCTION
Antitrust law regulates the behavior of monopolists by brand-
ing some acts as bad conduct. To define this key notion, every
antitrust casebook includes the United Shoe Machinery decision, a
classic district court opinion that condemned a monopoly firm's
practice of only leasing and never selling its shoe manufacturing
equipment.' The Supreme Court has never questioned its approval
of the case, and Shoe has provided the authority for later and suc-
cessful government attacks on leasing policies in the computer and
copier markets.2 Nonetheless, because the Shoe court never cor-
* Professor of Law, University of California, Los Angeles; A.B. 1975, University
of California, Davis; M.A. 1980, University of California, Berkeley; J.D. 1980, Univer-
sity of California, Berkeley.
** Assistant Professor of Business Economics, Anderson Graduate School of
Management, University of California, Los Angeles; B.A. 1980, M.A. 1980, Yale Uni-
versity; Ph.D. 1984, Massachusetts Institute of Technology.
*** Professor of Law, University of California, Los Angeles; B.A. 1976, Goshen
College; A.M. 1978, University of Michigan; J.D. 1982, Harvard University.
We thank Stephen Breyer, William Comanor, Frank Easterbrook, Franklin Fisher,
William Klein, Thomas Krattenmaker, and Stanley Ornstein for helpful comments.
Copyright 1990 Wiley, Rasmusen, and Ramseyer.
1. United States v. United Shoe Mach. Corp., 110 F. Supp. 295 (D. Mass..1953),
aff'd, 347 U.S. 521 (1954).
2. For example, in 1956 IBM complied with a Justice Department consent decree
requiring it to offer its computers for sale. Nonetheless, most consumers continued to
rent. See J. SOMA, THE COMPUTER INDUSTRY 35, 61-62 (1976). The Department of
Justice again attacked IBM's rental policies in a suit that the Reagan administration
eventually dismissed. See F. FISHER, J. McGOWAN & J. GREENWOOD, FOLDED, SPIN-
DLED, AND MUTILATED: ECONOMIC ANALYSIS  AND US. P. IBM 191-96 (1983). In
1975, the Federal Trade Commission entered a consent decree with Xerox that declared
that the firm had followed a lease only policy that was among its violations of federal
antitrust law. In re Xerox Corp., 86 F.T.C. 364, 367-68 (1975) Cf. United States v.

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