Comments on: "One thing is clear to me: the orthodox and unvarnished Chicago School of economic theory is on life support, if it is not dead" http://truthonthemarket.com/2009/02/05/one-thing-is-clear-to-me-the-orthodox-and-unvarnished-chicago-school-of-economic-theory-is-on-life-support-it-it-is-not-dead/ Academic commentary on law, business, economics and more Thu, 09 Sep 2010 08:19:12 +0000 hourly 1 http://wordpress.com/ By: TRUTH ON THE MARKET » Correcting the Record: AAG Varney and the Chicago School’s Premature “Retirement” http://truthonthemarket.com/2009/02/05/one-thing-is-clear-to-me-the-orthodox-and-unvarnished-chicago-school-of-economic-theory-is-on-life-support-it-it-is-not-dead/#comment-7539 TRUTH ON THE MARKET » Correcting the Record: AAG Varney and the Chicago School’s Premature “Retirement” Wed, 03 Feb 2010 17:02:41 +0000 http://www.truthonthemarket.com/2009/02/05/one-thing-is-clear-to-me-the-orthodox-and-unvarnished-chicago-school-of-economic-theory-is-on-life-support-it-it-is-not-dead/#comment-7539 [...] I’d like to highlight another portion of the speech Geoff mentioned that, as Commissioner Rosch has done in earlier remarks of his own, takes a shot at the Chicago School in order to justify greater intervention and a [...] [...] I’d like to highlight another portion of the speech Geoff mentioned that, as Commissioner Rosch has done in earlier remarks of his own, takes a shot at the Chicago School in order to justify greater intervention and a [...]

]]> By: TRUTH ON THE MARKET » Neo-Chicago Meets Evidence-Based Antitrust http://truthonthemarket.com/2009/02/05/one-thing-is-clear-to-me-the-orthodox-and-unvarnished-chicago-school-of-economic-theory-is-on-life-support-it-it-is-not-dead/#comment-7538 TRUTH ON THE MARKET » Neo-Chicago Meets Evidence-Based Antitrust Thu, 17 Sep 2009 19:02:53 +0000 http://www.truthonthemarket.com/2009/02/05/one-thing-is-clear-to-me-the-orthodox-and-unvarnished-chicago-school-of-economic-theory-is-on-life-support-it-it-is-not-dead/#comment-7538 [...] I’m not sure what that means, but there is a more serious point underlying all of this that goes beyond semantics.  I think that Dan and Evans & Padilla both have it right that this theory + empiricism + error-cost framework is the most intellectually powerful approach to generating a coherent approach to antitrust based on the best available theory and evidence.  In my recent work, including the Pitofsky book review linked above, I’ve calling this approach “evidence based antitrust” largely to avoid the whole Chicago v. Post-Chicago debate which has become so loaded that folks often use it as an excuse to say unreasonable or simply incorrect things. [...] [...] I’m not sure what that means, but there is a more serious point underlying all of this that goes beyond semantics.  I think that Dan and Evans & Padilla both have it right that this theory + empiricism + error-cost framework is the most intellectually powerful approach to generating a coherent approach to antitrust based on the best available theory and evidence.  In my recent work, including the Pitofsky book review linked above, I’ve calling this approach “evidence based antitrust” largely to avoid the whole Chicago v. Post-Chicago debate which has become so loaded that folks often use it as an excuse to say unreasonable or simply incorrect things. [...]

]]> By: antitrust guy http://truthonthemarket.com/2009/02/05/one-thing-is-clear-to-me-the-orthodox-and-unvarnished-chicago-school-of-economic-theory-is-on-life-support-it-it-is-not-dead/#comment-7537 antitrust guy Thu, 05 Feb 2009 21:34:13 +0000 http://www.truthonthemarket.com/2009/02/05/one-thing-is-clear-to-me-the-orthodox-and-unvarnished-chicago-school-of-economic-theory-is-on-life-support-it-it-is-not-dead/#comment-7537 I think he makes a more basic error, which is to confuse macroeconomics with microeconomics. His neo-Nixonian "we're all Keynesians now" does not have much to say about the microeconomics relevant to antitrust analysis. He fixes this somewhat by later discussing behavioral economics, but that and Keynes are not too closely tied together. Another disturbing point is his proposition on p. 9 that suggests that the Clayton Act can prevent the formation of a firm because if ultimately fails, thus having a catastrophic effect on the market, it will substantially lessen competition. It's pretty tough to predict failure for a merging company--if the stockholders can't do that, how can the FTC? I think he makes a more basic error, which is to confuse macroeconomics with microeconomics. His neo-Nixonian “we’re all Keynesians now” does not have much to say about the microeconomics relevant to antitrust analysis. He fixes this somewhat by later discussing behavioral economics, but that and Keynes are not too closely tied together.

Another disturbing point is his proposition on p. 9 that suggests that the Clayton Act can prevent the formation of a firm because if ultimately fails, thus having a catastrophic effect on the market, it will substantially lessen competition. It’s pretty tough to predict failure for a merging company–if the stockholders can’t do that, how can the FTC?

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