From my position as an advisor to investors and corporations, everything I try to get them to do could be seen, after a fashion, as an attempt to monopolize a part of trade or commerce. I’m afraid there is little philosophical wiggle room on this score. To provide an admittedly crude analogy, when you coach a batter, you don’t tell them to aim for .300, you tell them to aim for 1.000 and see what they can do. Telling them if they get too good (“we can tell you exactly how much is too much”) invariably undermines the benefits of having everyone attempt to maximize.

I would agree that a company might gain such an overwhelming advantage in some core business that through various restrictive practices they could evolve into a force that harms consumer welfare. I believe, however, that such monopolistic harm has rarely occurred or been threatened to the point of presenting an insurmountable, long-term barrier to competition, either before or after the passage of Section 2, without governmental protection at its root.

Given that unlikelihood of long-term harm, I believe that the legal friction involved in having a vague law that could logically be interpreted (and has been) against an infinite array of real-world behaviors, including trying to optimize on Type I vs. Type II errors, simply isn’t worth it. I believe that whatever the good intent of you and like-minded judges in making these sharp distinctions economically valid, we’ll still be presented with politically motivated debacles like the American Airlines case of just a few years ago.

The reality is that the history of enforcement of the antitrust laws in the United States — all 117 years taken as a whole — is probably inconsistent with economic logic. But that doesn’t mean that we cant do better and enforce the antitrust laws in a way that enhances consumer welfare. Section 1 is an obvious example. I dont think many dispute the proposition that cartel enforcement does not make consumers better off.

It is Section 2 where the real dispute is and where lots of economists disagree over how to identify single firm anticompetitive conduct rather than collusion (see, e.g. the Section 2 hearings) in a way that minimizes Type I and Type II error costs and benefit consumers. The challenge is whether Section 2 standards can be made easier to apply in a way that doesn’t blow up Type II error costs and chill competitive conduct on the one hand, or completely exonerate clearly anticompetitive behavior on the other.

There are no shortage of proposals on this score: consumer welfare standards, safe harbors, the no economic sense test, equally efficient competitor tests, the good old fashioned rule of reason, etc. And the complaint is that Section 2 standards as applied will do exactly what you fear: undermine the competition they purport to protect.

But let us not mistake Section 2 for the entire antitrust enterprise. Not to open a whole new can of worms, but the evidence in my view supports the claim that at least Section 1 enforcement is good for consumers. And there is a ton of serious thought in economics and empirics that aims to improve our application of Section 2. Whether that enterprise will be successful will be seen over the next decade or so.

But I do disagree with the proposition that ANY attempt to make objective Section 2 standards must necessarily harm consumers or be entirely toothless.

I definitely have much less knowledge of antitrust law than either Geoffrey or Josh, but I do understand enough to know what Geoffrey is saying, and am convinced by it. Given that, I ask you, what does it say about a law that making it objective would be dangerous to our markets?

Personally, I always figured that the antitrust laws were fundamentally inconsistent with market logic, i.e., taken to their logical conclusion they inevitably undermined the competition they purported to protect. My corollary belief was that any attempt to make them more objective and definitive would either reveal that inconsistency or enshrine what economists would quickly recognize as anti-competitive behavior. My guess is that Josh would not agree with this.

And I agree, eCCP is an excellent site.