In 1978 the United States Supreme Court held for the first time, in City of Lafayette v. Louisiana Power & Light Co., that municipalities do not enjoy a blanket exemption from the coverage of the federal antitrust laws. Although a majority of the Justices agreed that Congress had intended to exempt some conduct of local governments under the antitrust laws, there was no majority support for either of the two proposed formulations of the exemption. It was not until 1982, in Community Communications Co. v. City of Boulder, that the Court agreed on the requirements for state-action exemption for municipalities: a state acting in its sovereign capacity is immune from the antitrust laws under Parker v. Brown, while a local government is immune if it acts "in furtherance or implementation of clearly articulated and affirmatively expressed state policy."A wave of antitrust litigation against local governments followed the City of Lafayette decision. The author discusses the response of the local governments to the Supreme Court's decisions, and analyzes the developments brought by the Local Government Antitrust Act of 1984.

Will treating the conduct of local governments the same as the conduct of private enterprises pose serious threats to government, industry, or the antitrust laws? Mark Lee argues that the nation will be better off as a result because efficient forms of economic organization, previouly prohibited by the judiciary, will be permitted to flower and antitrust's policy war with itself will be put to an end. Lee reviews the powerful implications of the Supreme Court rulings in City of Lafayette v. Louisiana Power and Light and Community Communications Co. v. City of Boulder and offers a comprehensive, up-to-date, and detailed analysis of cases involving allegations that a local government commited an antitrust offense. He introduces a unique system for classifying different practices, one based on microeconomic functions, that will permit practitioners to classify and analyze any practice that concerns them.