Revitalizing Antitrust in Its Second Century: Essays on Legal, Economic, and Political Policy

By Harry First; Eleanor M. Fox et al. | Go to book overview
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Part II
Antitrust and a Dynamic Economy

The antitrust laws proscribe restraints or transactions that do or may lessen competition. Thus, the definition of the word competition is key to the statutory construction.

Yet the definition is not fixed. It has shifted over time. In the 1960s, protection of the competition process emphasized protection of entrepreneurial freedom and of opportunities for small and middle-sized business; the courts gave inadequate attention to claims of efficiency and to the possibility of higher costs to the consumer. 1 By the end of the 1970s, "competition" meant promotion of rivalrous interaction, but not at the expense of better or cheaper goods or services to consumers. 2 In the 1980s, Chicago School advocates redefined competition; they conceived of competition as exclusively a process to produce efficiency, and they urged that efficiency should be defined not only in terms of benefits to consumers but also, more specifically, in terms of increased aggregate wealth: 3 the sum of (increased) producer profits and consumer surplus. (This sum was called "consumer welfare" by Professor Robert Bork and others. 4) If the transaction increased aggregate wealth or ex ante appeared likely to do so, it was categorized as competition-increasing and was not to be proscribed. 5

None of the three approaches to competition, however, paid particular attention to technological progressiveness, although it is well known that an invention that provides a new, cheaper, or better way of doing a known thing, or a way to do a theretofore unknown thing, can benefit consumers and increase the vitality of the economy to an extent far greater than rivalry that merely pushes price to cost. Chicago School simply assumed that greater progressiveness would derive from the greater business freedom that a minimized antitrust would unleash. Traditionalists doubted that yet less antitrust would unleash much creative energy. Moreover, they believed that greater progressiveness would derive from maintaining at least a

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