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Antitrust Policy: A Century of Economic and Legal Thinking

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Author Info
William E. Kovacic (Law, George Washington University, Washington, D.C.)
Carl Shapiro (Haas School of Business & Economics Department, University of California, Berkeley)

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Abstract

Passage of the Sherman Act in the United States in 1890 set the stage for a century of jurisprudence regarding monopoly, cartels, and oligopoly. Among American statutes that regulate commerce, the Sherman Act is unequaled in its generality. The Act outlawed "every contract, combination or conspiracy in restraint of trade" and "monopolization" and treated violations as crimes. By these open-ended commands, Congress gave federal judges extraordinary power to draw lines between acceptable cooperation and illegal collusion, between vigorous competition and unlawful monopolization. By enlisting the courts to elaborate the Sherman Act' s broad commands, Congress gave economists a singular opportunity to shape competition policy. Because the statute' s vital terms directly implicated economic concepts, their interpretation inevitably would invite contributions from economists. What emerged is a convergence of economics and law without parallel in public oversight of business. As economic learning changed, the contours of antitrust doctrine and enforcement policy eventually would shift, as well. This article follows the evolution of thinking about competition since 1890 as reflected by major antitrust decisions and research in industrial organization. We divide the U.S. antitrust experience into five periods and discuss each period' s legal trends and economic thinking in three core areas of antitrust: cartels, cooperation, or other interactions among independent firms; abusive conduct by dominant firms; and mergers.

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Paper provided by EconWPA in its series Law and Economics with number 0303006.

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Length: 27 pages
Date of creation: 27 Mar 2003
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Handle: RePEc:wpa:wuwple:0303006

Note: 27 pages, Adobe.pdf
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Web page: http://129.3.20.41

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Find related papers by JEL classification:
K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
K00 - Law and Economics - - General - - - General (including Data Sources and Description)
N4 - Economic History - - Government, War, Law, and Regulation

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. George J. Stigler, 1980. "The Economist as Preacher," University of Chicago - George G. Stigler Center for Study of Economy and State 11, Chicago - Center for Study of Economy and State.
  2. George J. Stigler, 1947. "The Kinky Oligopoly Demand Curve and Rigid Prices," Journal of Political Economy, University of Chicago Press, vol. 55, pages 432. [Downloadable!] (restricted)
  3. Kovacic, William E, 1992. "The Influence of Economics on Antitrust Law," Economic Inquiry, Oxford University Press, vol. 30(2), pages 294-306, April.
  4. Shapiro, Carl, 1989. "Theories of oligopoly behavior," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 6, pages 329-414 Elsevier. [Downloadable!] (restricted)
  5. Carl Shapiro, 1989. "The Theory of Business Strategy," RAND Journal of Economics, The RAND Corporation, vol. 20(1), pages 125-137, Spring. [Downloadable!] (restricted)
  6. Franklin M. Fisher, 1989. "Games Economists Play: A Noncooperative View," RAND Journal of Economics, The RAND Corporation, vol. 20(1), pages 113-124, Spring. [Downloadable!] (restricted)
  7. Gaskins, Darius Jr., 1971. "Dynamic limit pricing: Optimal pricing under threat of entry," Journal of Economic Theory, Elsevier, vol. 3(3), pages 306-322, September. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Oliver Budzinski, 2009. "Modern Industrial Economics and Competition Policy: Open Problems and Possible Limits," Working Papers 93/09, University of Southern Denmark, Department of Environmental and Business Economics. [Downloadable!]
  2. Javier Campos Méndez & Juan Luis Jiménez González, 2003. "Old and new ideas in Competition Policy," Documentos de trabajo conjunto ULL-ULPGC 2003-06, Facultad de Ciencias Económicas de la ULPGC. [Downloadable!]
  3. Joseph A. Clougherty, 2003. "Industry Trade-Balance and Domestic Merger Policy: Some Empirical Evidence from the U.S," CIG Working Papers SP II 2003-19, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG). [Downloadable!]
  4. Adriana Breccia & Hector Salgado-Banda, 2005. "Competing or Colluding in a Stochastic Framework," Birkbeck Working Papers in Economics and Finance 0504, Birkbeck, Department of Economics, Mathematics & Statistics. [Downloadable!]
  5. Joseph A. Clougherty, 2004. "Antitrust Holdup Source, Cross-National Institutional Variation, and Corporate Political Strategy Implications for Domestic Mergers in a Global Context," CIG Working Papers SP II 2004-09, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG). [Downloadable!]
  6. Lee, Cassey, 2004. "Legal Traditions and Competition Policy," Centre on Regulation and Competition (CRC) Working papers 30697, University of Manchester, Institute for Development Policy and Management (IDPM). [Downloadable!]
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  7. Adriana Breccia & Hector Salgado-Banda, 2006. "Competing or Colluding in a Stochastic Environment," Computing in Economics and Finance 2006 423, Society for Computational Economics. [Downloadable!]
  8. Robert E. Litan & Carl Shapiro, 2003. "Antitrust Policy During the Clinton Administration," Law and Economics 0303003, EconWPA. [Downloadable!]
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