Antitrust, Innovation, and Competitiveness

By Thomas M. Jorde; David J. Teece | Go to book overview
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however, efficiency features are often deeply embedded, then there appears to be no alternative but to engage the issues on their own terms.

The notion that "ideas, not vested interests" drive policy outcomes is understandably attractive to academics. Sometimes, perhaps often, this is wishful thinking. But as Theodore Frech argues, and I agree, "a genuine scientific revolution has occurred... [and] has led to a more thoughtful and rational approach to antitrust" ( 1987, p. 263). Indeed, William Baxter's forcefulness notwithstanding, "it would have been politically impossible for... Baxter to have done what he did [as Assistant Attorney General for Antitrust], had there not been an intellectual shift in the underpinnings of antitrust" ( Bork, 1985, p. 25).

There are, to be sure, needs to consolidate the gains. A more deliberate use of microanalytic reasoning, to which I refer, should help to accomplish this.

The discussion of D'Andrade is based on Donald McCloskey book review of Metatheory in Social Science ( McCloskey, 1986).
See Williamson ( 1991).
Note, however, that strategic anticompetitive purposes can be realized only if the preconditions for monopoly power are satisfied--which is the exception rather than the rule. As discussed elsewhere, the critical preconditions are high concentration coupled with high hurdles to entry ( Williamson, 1977, pp. 292-93). Paul Joskow and Alvin Klevorick ( 1979, pp. 225-31) and Januz Ordover and Robert Willig ( 1981) concur. Frank Easterbrook ( 1984) also uses a structural test as his first antitrust "filter." Also see Williamson ( 1987).
In re Foremost Dairies, Inc., 60 F.T.C. 944, 1084 ( 1962).
Federal Trade Commission v. Procter & Gamble Co., 386 U.S. 568, 574 ( 1967).
The disclaimer of efficiencies appeared in Procter & Gamble's brief as Respondent in the Clorox Litigation. See Fisher and Lande ( 1983, p. 1582, n. 5).
United States v. Von's Grocery Co., 384 U.S. 270, 301 ( 1966) ( Stewart, J., dissenting).
The phrase was used repeatedly by Walter Adams in his testimony in the Purex v. Procter & Gamble Co. case.
The quotation is attributed to Donald Turner by Stanley Robinson, N.Y. State Bar Association, Antitrust Symposium, 1968, p. 29.
United States v. Arnold, Schwinn & Co., 388 U.S. 365 ( 1967).
Brief for the United States at 47 ( U.S. v. Schwinn, note 32).
In principal, Arnold Harberger's ( 1954) analysis of economywide welfare losses of monopoly was pertinent. But this theory operated at a very high level of aggregation and was too removed from firm and market particulars. His later and more general treatment is more germane ( Harberger, 1971).
On the application of the partial equilibrium welfare economics model to economies as an antitrust defense, see Williamson ( 1968, 1977) and Fisher and Lande ( 1983). The latter is much more skeptical.
Bain was among the first to acknowledge the merits of an economies defense in assessing mergers ( 1968, p. 658). Wesley Liebeler ( 1978), Robert Bork ( 1978), and Timothy Muris ( 1979) have all made extensive use of the partial equilibrium trade-off model in their insistence that antitrust enforcement that proceeds heedless of tradeoffs is uninformed and contrary to the social interest.


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