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How the Chicago School Overshot the MarkThe Effect of Conservative Economic Analysis on U.S. Antitrust$
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Robert Pitofsky

Print publication date: 2008

Print ISBN-13: 9780195372823

Published to Oxford Scholarship Online: January 2009

DOI: 10.1093/acprof:oso/9780195372823.001.0001

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Conservative Economics and Antitrust: A Variety of Influences

Conservative Economics and Antitrust: A Variety of Influences

(p.30) Conservative Economics and Antitrust: A Variety of Influences
How the Chicago School Overshot the Mark

F. M. Scherer

Oxford University Press

This paper observes that antitrust analysis has moved sharply to the conservative side and emphasizes the complexity of issues. First, it notes that the move toward less enforcement does not reflect just the influence of economists but also of lawyers, enforcement officials, and judges who believe in the precept that government is the problem and not the solution. Second, it observes that conservative approaches avoiding government intervention is not a consistent view of the Chicago School. It has advocated vigorous antitrust enforcement in the area of price-fixing among direct rivals (cartel policy) and occasionally advocated limits on the size of corporations. However, in recent years, extreme Chicago views have influenced enforcement, particularly during Republican administrations. Illustrations include declining enforcement efforts with respect to predatory pricing, concentrated (i.e., oligopoly) markets, and mergers. As an example of scholarship that argues that market forces will solve all problems, the paper cites an article by J. McGee to the effect that with the exception of industries where the state blocks entry “[t]here is the strongest presumption that the existing structure [of industry] is the efficient structure.” In a concluding section, the paper takes on a specific issue that has been advocated as a result of conservative economic analysis and has achieved substantial support. That view, virtually a consensus in terms of conservative economic analysis, is that government regulation of intellectual property—particularly mandatory licensing of patents as a remedy for wrong-doing—will reduce investments in innovation and, in the long run, injure consumers. That conclusion is inconsistent with a body of empirical evidence that antitrust enforcement had little adverse impact on investments in innovation.

Keywords:   Chicago School, antitrust analysis, conservative economic analysis, enforcement, government regulation, intellectual property

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