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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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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 01 December 2021

The Efficiency Paradox

The Efficiency Paradox

(p.77) The Efficiency Paradox
How the Chicago School Overshot the Mark

Eleanor M. Fox

Oxford University Press

This paper defines various concepts of efficiency and then demonstrates how conservative economic approaches have led to wrong results in several important cases. It asks: What is efficiency? Can antitrust law produce efficiency, and how does it try to do so? It observes that one way antitrust pursues efficiency is by choosing a proxy; notably, either trust in the dynamic of the competition process or trust in (even) the dominant firm. By case examples, it shows the effect of conservative economics in choosing as the proxy trust in the dominant firm. It argues that this phenomenon has produced the Efficiency Paradox: In the name of efficiency, conservative theories of antitrust cut off the most promising paths to efficiency. It is suggested that we can eliminate the Efficiency Paradox by readjusting the pendulum to give more regard to the incentives of mavericks and challengers and less regard to the freedom and autonomy of dominant firms.

Keywords:   efficiency, conservative economics, antitrust, Brooke Group, California Dental Association, Trinko, Leegin, Microsoft

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