* Law Clerk to the Hon. James K. Logan, United States Court of Appeals for the 10th Judicial Circuit; Assistant Professor, Northwestern University School of Law (beginning August 1987); Research Fellow, American Bar Foundation (beginning August 1987). B.A. Yale University, 1981;J.D. Yale University, 1986; Ph.D Candidate (Economics), Massachusetts Institute of Technology. I thank John Donohue, Henry Hansmann, Al Klevorick, George Priest, Garth Saloner, Steven Salop, Richard Schmalensee, Louis Schwartz, Oliver Williamson, and participants of seminars at Cardozo, Duke, Emory, Iowa, Northwestern, and Yale for valuable comments. Financial support from the Yale Center for Studies in Law, Economics and Public Policy is gratefully acknowledged. 1. Structural theories have many antecedents. See, e.g., G. Stigler, A Theory of Oligopoly, in The Organization of Industry 39-63 (1968); Hay & Kelley, An Empirical Survey of Price Fixing Conspiracies, 17 J.L. & Econ. 13 (1974). More generally, these theories follow the Structure-Conduct-Performance (S-C-P) paradigm of Joseph Bain, under which structural variables (such as seller concentration) were modeled to affect conduct variables (such as collusion or competition) which in turn were to affect performance variables (such as profits). J. Bain, Industrial Organization 43 (2d ed. 1968). Although conduct can conversely affect structure, see, e.g., infra note 4 (predatory behavior will influence seller concentration), such feedback effects are beyond the scope of this Article. Bain's S-C-P paradigm has gained widespread acceptance. See, e.g., F. Scherer, Industrial Market Structure and Economic Performance 3-7 (2d ed. 1980); Weiss, The Structure-Conduct-Performance Paradigm and Antitrust, 127 U. Pa. L. Rev. 1104 (1979). 2. For example, Judge Richard Posner has championed a structural approach for detecting and punishing antitrust collusion. See R. Posner, Antitrust Law: An Economic Perspective 55 (1976); R. Posner & F. Easterbrook, Antitrust: Cases, Economics Notes and Other Materials 336 (1981); 6 P. Areeda, Antitrust Law ? 1430, at 178-82 (1986). 3. The Federal Trade Commission has examined structural characteristics to focus investigative resources on suspect industries. For a history of the FTC's attempts at targeting collusion, see D. Pender & M. Coate, Case Generation and Remedies 8 (F.T.C. Collusion Project Working Paper No. 3, June 29, 1984) (unpublished paper on file at the Columbia Law Review). 4. At least one court has considered structural evidence as a plus-factor for inferring the actual existence of collusion. See, e.g., Wall Products Co. v. National Gypsum Co., 326 F. Supp. 295 (N.D. Calif. 1971) (stressing structural characteristics of the relevant market that predisposed it to collusion); see also R. Posner, supra note 2, at 73 & n.52 (discussing implications of case). While this Article investigates how structure affects collusive behavior-that is, efforts to make competitors cooperate-the structural approach also applies to identifying