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Antitrust Policy: A Century of Economic and Legal Thinking

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  • William E. Kovacic

    (Law, George Washington University, Washington, D.C.)

  • Carl Shapiro

    (Haas School of Business & Economics Department, University of California, Berkeley)

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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Bibliographic Info

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
Date of revision:
Handle: RePEc:wpa:wuwple:0303006

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Web page: http://128.118.178.162

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  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. Kovacic, William E, 1992. "The Influence of Economics on Antitrust Law," Economic Inquiry, Western Economic Association International, vol. 30(2), pages 294-306, April.
  3. 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.
  4. Carl Shapiro, 1989. "The Theory of Business Strategy," RAND Journal of Economics, The RAND Corporation, vol. 20(1), pages 125-137, Spring.
  5. 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.
  6. George J. Stigler, 1947. "The Kinky Oligopoly Demand Curve and Rigid Prices," Journal of Political Economy, University of Chicago Press, vol. 55, pages 432.
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Cited by:
  1. James Dalton & Louis Esposito, 2011. "Standard Oil and Predatory Pricing: Myth Paralleling Fact," Review of Industrial Organization, Springer, vol. 38(3), pages 245-266, May.
  2. Adriana Breccia & Héctor Salgado Banda, 2005. "Competing or Colluding in a Stochastic Environment," Working Papers 2005-04, Banco de México.
  3. Richard J. Grimbeek & Sunel Grimbeek & Steven F. Koch, 2011. "The Consistency of Merger Decisions in a Developing Country: The South African Competition Commission," Working Papers 201117, University of Pretoria, Department of Economics.
  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.
  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).
  6. Giocoli, Nicola, 2010. "Games judges don't play: predatory pricing and strategic reasoning in US antitrust," MPRA Paper 33810, University Library of Munich, Germany.
  7. Marc Deschamps, 2013. "Pourquoi des politiques de concurrence ?," GREDEG Working Papers 2013-23, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
  8. Connor, John M. & Bolotova, Yuliya, 2006. "Cartel overcharges: Survey and meta-analysis," International Journal of Industrial Organization, Elsevier, vol. 24(6), pages 1109-1137, November.
  9. 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).
  10. BOCCARD, Nicolas, 2009. "On efficiency, concentration and welfare," CORE Discussion Papers 2009040, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  11. Berinde Mihai, 2008. "Cartels – Between Theory, Leniency Policy And Fines," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 549-552, May.
  12. Litan, Robert E. & Shapiro, Carl, 2001. "Antitrust Policy During the Clinton Administration," Competition Policy Center, Working Paper Series qt45r5r72p, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
  13. 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.
  14. Giocoli, Nicola, 2008. "Three alternative (?) stories on the late 20th-century rise of game theory," MPRA Paper 33808, University Library of Munich, Germany.
  15. Adriana Breccia & Hector Salgado-Banda, 2006. "Competing or Colluding in a Stochastic Environment," Computing in Economics and Finance 2006 423, Society for Computational Economics.
  16. Török, Ádám, 2011. "A dominanciaproblémák tényeinek értelmezése és a közgazdaság-tudományi módszertan
    [Interpretation of the facts of dominance problems and the methodology of economics]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 41-55.
  17. 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).
  18. 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.
  19. Goodwin, Neva, 2005. "The limitations of markets: Background essay," MPRA Paper 27940, University Library of Munich, Germany.
  20. Szücs, Florian, 2012. "Investigating transatlantic merger policy convergence," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 654-662.

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