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Richard Schmalensee, May 02, 2007
This article is based on remarks prepared for delivery at the Georgetown Law School Conference “Conservative Economic Influence on U.S. Antitrust Policy,” April 2007.
In preparation for writing this paper, I re-read Robert Bork’s The Antitrust Paradox, and I thoroughly enjoyed doing so. Not because I agree with everything in it, though there is much with which to agree. And not only because I enjoy Judge Bork’s writing, though it is always a pleasure to see a sledgehammer used with such precision. The main reason I enjoyed going through The Antitrust Paradox again was nostalgia: I was reminded how much fun it was to teach antitrust policy to economics students in the 1970s. Then-recent decisions and ongoing policy debates provided enough sharp disagreements and economic howlers that it was easy to keep students interested and amused and even, on good days, outraged. A clearly negative aspect of the conservative economic or, as I prefer, Chicago School, legacy in U.S. antitrust policy is that most of this fun has been taken away.
Nonetheless, I think it is now widely though surely not universally accepted that the Chicago legacy in antitrust has on balance been strongly positive. In this essay I will take a look back at some decisions and issues that were in the antitrust mainstream around 1970 through the lens of The Antitrust Pardox, with occasional use of Richard Posner’s roughly contemporaneous Antitrust Law. My goal is to review some of the aspects of U.S. antitrust policy that outraged Chicago School lawyers and economists in the 1970s and some of Chicago’s subsequent victories that are now generally accepted as positive changes. I will also argue that some of Chicago’s lost battles also constitute positive aspects of its legacy.
This essay is rather more of a hymn of praise than I would have written if I had attempted a finely balanced treatment, but my assignment was to praise Chicago, not to attempt to bury it. Moreover, I have no doubt that other contributors to this conference will tell the other side of this interesting story well. To keep this essay reasonably brief, I focus on four broad issues: the objectives of antitrust, policy toward “no-fault” concentration, the treatment of productive efficiency, and the evaluation of non-standard business conduct.
