Antitrust, Innovation, and Competitiveness

By Thomas M. Jorde; David J. Teece | Go to book overview

6
Ignorance and Antithrust

FRANK H. EASTERBROOK

The hallmark of the Chicago approach to antitrust is skepticism. Doubt that we know the optimal organization of industries and markets. Doubt that government could use that knowledge, if it existed, to improve things, given the ubiquitous private adjustments that so often defeat public plans, so that by the time knowledge had been put to use the world has moved on. 1 Efforts to improve markets through law aim at a moving target, with a paradox: if an economic institution survives long enough to be studied by scholars and stamped out by law, it probably should be left alone, and if an economic institution ought to be stamped out, it is apt to vanish by the time the enforcers get there. No wonder Chicago does not have a stirring program for aggressive antitrust enforcement. 2 To have such a program is to deny one or more of the premises underlying the analysis.


I

If the program implied by Chicago's analysis--clobber cartels and mergers to monopoly but treat with great skepticism proposals to do anything else--has not converted all judges and political actors as fully as it has convinced the Antitrust Division, Chicago's analytical lens is at least in wide use. Everyone at this conference believes that antitrust analysis means economic analysis. So does almost every judge. All have accepted the proposition that antitrust policy divorced from economics would be a calamity, and an antitrust policy conjoined with some inconsistent social policy would be incoherent and ineffectual. 3 To keep prices down and efficiency up, in the interests of consumers and the economy as a whole, courts and other enforcers must think like economists.

Which is easier said than done. Economic method entails more than recognizing that demand schedules slope downward and that people make decisions on the margin. To learn anything valuable about an industry or market the economist must collect facts, formulate hypotheses about the effects that are likely if the conduct is monopolistic, use data to search for these effects, and

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Antitrust, Innovation, and Competitiveness
Table of contents

Table of contents

  • Title Page iii
  • Preface vii
  • Notes viii
  • Contents ix
  • Contributors xi
  • 1 - Introduction 3
  • Notes 25
  • References 27
  • 2 - Antitrust Law as Industrial Policy: Should Judges and Juries Make It? 29
  • Notes 45
  • 3 - Innovation, Cooperation, and Antitrust 47
  • Notes 63
  • References 68
  • Appendix: National Cooperative Research and Commercialization Act (ncrca) 71
  • 4 - Antitrust: Source of Dynamic and Static Inefficiencies? 82
  • Notes 95
  • References 96
  • 5 - Agreements Between Competitors 98
  • Notes 114
  • 6 - Ignorance and Antithrust 119
  • Notes 132
  • 7 - Antitrust Lenses and the Uses of Transaction Cost Economics Reasoning 137
  • Notes 158
  • References 161
  • 8 - Monopoly Conduct, Especially Leveraging Power from One Product or Market to Another 165
  • 9 - Market Structure and Technical Advance: The Role of Patent Scope Decisions 185
  • Notes 219
  • 10 - Conclusion 233
  • Index 235
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