Antitrust Policy and Interest-Group Politics

By William F. Shughart II | Go to book overview
Save to active project

Business Enterprise

Private business firms are the demanders of antitrust wealth transfers, but not as a monolithic interest group whose members have the same single-minded purpose. Indeed, it might well be said that private businesses (and consumers) are harmed overall by the existence of an actively enforced antitrust policy. The important point to recognize, however, is that winners and losers are created whenever government intervenes to correct a perceived antitrust problem, and the prospective gains to the benefitting parties provide incentives for using antitrust processes to their own advantage.

As a wealth transfer mechanism, antitrust policy is particularly valuable insofar as it cuts across the economy, applying to a broad spectrum of business practices. It supplies a general legal framework that can be called upon by many firms in a variety of industries to secure advantages over rivals or to obtain protection from competitive market forces. Thus, the law on mergers can be used by the managers and employees of firms targeted for takeover to prevent acquisitions that might cost them their jobs. The same law can be used by rival firms to block a merger that would result in the creation of a more efficient and, hence, more effective competitor. The law on price discrimination can be used by colluding firms to discipline a coconspirator found cheating on their price-fixing agreement; it can be used by an established firm to prevent the entry of an aggressive price cutter; or it can be used by the entrant to prevent established rivals from responding to new competition with lower prices. The law on vertical restraints of trade can be used by independent retailers to forestall the growth of competitors employing more efficient methods of product distribution. There are many more examples in this regard.

The decision to "invest" in antitrust as a method of competition is no different from any other capital-budgeting problem the firm confronts. Faced with a loss of sales to a new or established rival, the firm can respond by cutting price, improving product quality, increasing its advertising expenditures, or taking any of a number of other actions, or combination of actions, that normally characterize the


Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this page

Cited page

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited page

Bookmark this page
Antitrust Policy and Interest-Group Politics


Text size Smaller Larger
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen
/ 214

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?