Antitrust Policy and Interest-Group Politics

By William F. Shughart II | Go to book overview

2
The Interest-Group Theory of Government

If "majority rule" were in fact a meaningful way of characterizing political outcomes in a representative democracy, there would be no minimum wage law, no agricultural price supports, no import tariffs and quotas, in short, none of the many and varied government programs and policies that benefit the few at the expense of the many. Yet, such special interest measures exist--deed flourish--in the United States and elsewhere. This simple observation about political life raises two important questions. If a large number of governmental activities generate no discernible benefits for the majority, why are such policies adopted? Given the very real costs, both direct and indirect, borne by taxpayers in supporting the machinery of wealth redistribution, why do such policies persist?

One approach to answering these questions, which might be termed the "market failure" approach, derives from the work of Arthur Pigou. 1 This way of analyzing government emphasizes the reasons why in many cases the private market economy cannot be wholly relied upon to allocate and distribute resources in a socially optimal way. For example, the existence of positive or negative "externalities"--benefits or costs associated with economic activities not received or borne directly by market participants--causes some goods to be oversupplied and some to be undersupplied. Left alone, private markets would produce too much environmental pollution and not enough education. Similarly, the informational disadvantages of buyers respecting the quality or performance characteristics of certain products and services leaves them vulnerable to exploitation by sellers. The suggestion is that government intervene in policy-specific ways, using taxes, subsidies, price regulation, and the like to correct these market failures: "In the Pigovian approach the state is a productive entity that produces public goods, internalizes social costs and benefits, regulates decreasing cost industries effectively, redistributes income Pareto optimally, and so forth." 2

The market failure theory of government, assuming as it does that government benignly pursues the objective of maximizing social wel-

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Antitrust Policy and Interest-Group Politics
Table of contents

Table of contents

  • Recent Titles from Quorum Books ii
  • Title Page iii
  • Contents vii
  • Figures ix
  • Tables xi
  • Foreword xiii
  • Preface xvii
  • Introduction 1
  • Notes 8
  • Part I Normative and Positive Theories of Antitrust 9
  • 2: The Interest-Group Theory of Government 36
  • Part II Private Interests at Work 51
  • 3: Business Enterprise 53
  • 4 - The Antitrust Bureaucracy 100
  • 5: The Congress 104
  • 6: The Judiciary 121
  • 7: The Private Antitrust Bar 138
  • Part III The Political Economy of Antitrust 155
  • 8: Using Antitrust to Subvert Competition 157
  • 9: Reform in the Realm of Interest-Group Politics 177
  • Select Bibliography 197
  • Index 203
  • About the Author 209
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