"There is Little Evidence that Economic Analysis of Law Has Changed [Antitrust] in Any Noticeable Way"

Josh Wright —  12 December 2006

Huh? This statement appears in this article by Professor Anthony D’Amato (Northwestern) on the failure of interdisciplinary scholarship in the legal academy. HT: Brian Leiter. Quite frankly, I was very surprised to see a claim like this in a paper written after 1970 or so. Even in corners of the academy hostile to economic analysis, antitrust is conventionally distinguished as a special case where economics is useful, typically along with some statement about the uniqueness of antitrust. D’Amato reserves no such special treatment for antitrust, criticizing that field in the context of a more general critique of what he describes as the “interdisciplinary turn” in the legal academy on three grounds:

First is the unlikelihood that the joint-degreed persons who join the law faculty will happen to be the ones that their colleagues will end up collaborating with. Second is the even greater unlikelihood that any given discipline can communicate usefully with another discipline. Third is the opportunity-cost factor: that the new interdisciplinary courses will crowd out an essential part of the legal discipline, namely, an understanding of the foundations and dialectical evolution of its forms of language.

Those who study antitrust might be surprised to read the claim that economics has not changed antitrust in any significant way. To give some context, this claim comes as part of D’Amato’s rebuttal case against law and economics as an example of successful interdisciplinary scholarship. D’Amato’s conclusion? Economic analysis earns a “gentlemanly C+” on its report card and claims of success are “misleading if not false.” The rebuttal case consists largely of claims that economic analysis has not been fruitful in many areas of law: contracts (see Eric Posner), torts, criminal law, and includes the statement that the Coase theorem “is hardly helpful to lawyers.” I admit that I found the argument about criminal law difficult to follow (it consists largely of a response to hypothetical examples of crimes that Richard Posner could have but apparently did not write and the obligatory mention of Posner’s comments on the potential benefits of a market in parental rights.

My disagreement is somewhat predictable, as someone engaged in law and economics. But I want to focus on D’Amato’s claim that economic analysis has not even been successful in areas that are “ideal for the division of labor between lawyer and economist,” like antitrust. D’Amato offers as support for the words in the title to this post the following analysis (p.65):

The focus on the quantitative aspects of antitrust — such as Robert Bork’s reductionism of antitrust to the goal of delivering the lowest prices to the consumer — has had a distorting effect on the field. The original impetus for antitrust legislation — combating an incipient fascist tendency of huge corporate combinations to overwhelm and run the government — seems to be an inconvenient memory for those who would like economic analysis to place a price tag on every legal value.

I respectfully dissent. I discuss an objection to D’Amato’s characterization of the antitrust endeavor and ten reasons to think that D’Amato’s claim in the title of this post are wrong below the fold.

Let’s start with the purposes of the antitrust laws. Virtually every antitrust scholar to examine the goals of the Sherman Act, including those who disagree with Bork’s “consumer welfare” (read: total welfare) interpretation, have concluded that the antitrust laws represented a myriad of goals including: economic efficiency, protection of (a la Steve Salop) “true” consumer welfare, and political concerns. It cannot be accurately said that the original impetus of the antitrust laws was solely concern about corporations gaining political power. Economic efficiency has always been part of the analysis. So has true consumer welfare. Economics provides a number of useful analytical tools to inform antitrust analysis in terms of how various forms of conduct will influence these metrics.

Now one might believe that these tools do not perfectly measure the tradeoffs between all goals of antitrust. But it is worth pointing out that understanding how practices impact consumers and total welfare and designing policy accordingly is much better than understanding nothing and designing policy randomly. Robert Lande, a leading opponent of the Bork view, writes about the uses of economics in antitrust under the “true” consumer welfare standard:

Recent advances in economic theory provide the methodology that can help determine when market power is likely to harm consumers, as opposed to those times when free market forces that will best ensure consumers’ protection are operating. This sophistication should lead to increasingly precise implementations of Congress’ commands that all purchasers, whether consumers or businesses, be given the right to purchase products priced at no more than the competitive level and that all sellers be given the right to compete against products priced at no less than that level.

Second, and less importantly, nothing about Bork’s definition of consumer welfare demands the lowest prices for consumers. In fact, using Bork’s definition of consumer welfare, it is a justification under the antitrust laws to use contractual mechanisms to facilitate the delivery of promotional services which increase price and output. We know that certain contractual mechanisms facilitate the supply of promotional services, and prevent a number of types of dealer free-riding, because of advances in the economic theory of vertical restraints which have been subject to empirical testing. Now, all reductionism aside (of or by Bork), there are some seriously complex tradeoffs to be made in designing antitrust rules, i.e. tradeoffs between different dimensions of competition that are often at tension with one another (innovation and price competition are the most easily understood example), and these problems should be attacked with analytical rigor. But economics is a very useful way for addressing these problems as well. And, perhaps as only an economist would suggest, these tools have withstood the market test as those who design antitrust policy now nearly uniformly agree that economics provides an incredibly useful basis for this task.

Third, one not need examine the legislative history of the Sherman Act in order to critique the claim that economics has not changed antitrust law. Here are a list of ten contributions of economics to antitrust that I jotted down while drafting this post. I invite our readers to quarrel with my list or add their own.

  1. The 1982 horizontal merger guidelines and subsequent revisions. These guidelines incorporated economic analysis into merger analysis in terms of understanding the potential unilateral and coordinated effects of proposed mergers. Subsequent revisions incorporated efficiencies analysis. There is simply no doubt that the Guidelines, written together by lawyers and economists, have had a remarkable impact not only on agency practice, but case law. See, e.g., Staples, Oracle, Heinz, Arch-Coal …
  2. The relationship between concentration and price and antitrust policy. A classic example of the contribution of economics to antitrust policy and law is the disintegration of the academic consensus against market concentration had a substantial impact of antitrust thinking in the agencies, and later, in court decisions. This “New Learning” has been felt across antitrust, and perhaps led to the advances already mentioned in #1.
  3. Independent Ink and the economics of price discrimination. Independent Ink explicitly references the economic literature on price discrimination, and an attempt to square the law of tying with this literature (as I discuss in this article). While an understanding of competitive price discrimination has not yet resulted in the repeal of the Robinson-Patman Act, this decision explicitly addresses and ultimately rejects the argument that “metering ties,” as a form of price discrimination, are particularly worthy of antitrust scrutiny in rejecting the presumption that a patent should confer monopoly power … wait a minute …
  4. Patents do not confer market power. I do not want to double count Independent Ink, but the court’s holding here is explicitly based on the economic notion that the patent confers only a downward sloping demand curve and not the power to control market conditions.
  5. Tying law has explicitly adopted the economic analysis of such arrangements and the role of tying in preventing brand-name free riding (especially in the franchise tying context, see e.g., Klein & Saft (1985)).
  6. Merger simulation. Some very important work is being done by economists in predicting the impact of mergers of rivals selling differentiated products. These merger simulation models have had considerable impact in agency analysis of proposed mergers.
  7. Raising Rivals’ Costs. Again, it is incredibly difficult to argue that the economic literature discussing the conditions under which unilateral conduct might raise rivals’ costs and ultimately injure consumers has not influenced antitrust doctrine in tying, refusals to deal, and exclusive dealing.
  8. Modern collusion analysis. The modern antitrust approach to tacit coordination owes its influence to Stigler’s “Theory of Oligopoly.”
  9. The antitrust analysis of vertical restraints. A few lines here cannot do justice to the contribution that economic analysis has made to the antitrust analysis of vertical restraints such as RPM, exclusive territories, exclusive dealing, bundling, and others. But suffice it to say that the discourse of modern antitrust analysis does indeed require economic analysis and understanding concepts like eliminating double marginalization, the various forms of dealer free-riding, hold-up, etc. Without a proper understanding of the economics of various practices, we are vulnerable to ignoring Coase’s warning not to mindlessly adopt the default position that all practices we do not understand must be monopolistic in nature.
  10. Predatory pricing analysis. The recoupment prong of the predatory pricing analysis is certainly informed by economic analysis. A cursory look at recent antitrust cases in this area suggest that economic analysis has indeed “changed” the law in this area. By the way, the presentation materials for predatory pricing at the Section 2 hearings are very worth checking out.

Suffice it to say, I strongly believe that economic analysis has changed antitrust analysis (including antitrust doctrine itself, not to mention enforcement policy). I welcome your thoughts. In particular, can you think of areas of antitrust analysis that I have missed that are clearly influenced by economic analysis? Do you disagree with my examples? What about other traditional areas of law where economic analysis pre-existed “law and economics” (D’Amato mentions insurance and banking)?

20 responses to "There is Little Evidence that Economic Analysis of Law Has Changed [Antitrust] in Any Noticeable Way"

  1. 

    “The process is a “heads-I-win-tails-you-lose” manipulation . . .” and thus D’Amato nails “law and economics”

  2. 

    I do credit you, however, with a change I’ve made in the paper. You won’t regard it as much of a concession, and maybe it could bother you even more. I changed the word “noticeable” in the sentence you quoted at the outset, to “innovative.” I know it’s small coinage, but if you’re ever passing through Northwestern (inaptly named) I’ll buy you a drink for the price of the value you have added.

  3. 

    Missed your comment Marc while submitting mine. Fair enough scoring.

  4. 

    As fun as it has been, I fear I cannot add any more without turning the post and comments into my own article: “Why economics has changed antitrust.” Of course, the article would be unpublishable in any peer reviewed journal — though perhaps I could convince some law review to take it.

    The most absurd thing, as fun as it has been (very!), would be to continue this exchange with you. You clearly hold your view as strongly as I hold mine (perhaps you too are a “committed disciplinarian”?), and are clearly not going to accept my invitation to take this claim out of your paper. So it does not appear the exchange will be productive.

    Perhaps it would be productive if I accepted your invite to teach you economics. I do love a challenge, but from what I’ve read in your comments you have convinced that you are easily beyond my abilities as a teacher (maybe in a few years when I have more experience?). I’d be happy to suggest elementary textbooks offline.

    I feel like I’ve done what I set out to do: rebut the claim in the title of the post. I stand by those views as you do yours. These claims and evidence are here for all to see. Perhaps you will convince some readers that your claim is accurate. But I doubt it. Best of luck to you and with the paper in any event.

  5. 

    Strange idea of fun, talking past each other…

    Wright scores big on falsifying the conclusion with which he titled this post, but with a slight deduct for getting bogged down in the rhetorical nickel-and-dime of coin dealers.

    D’Amato scores one for rhetorical brilliance, illustrating the beffudlement of lawyers trying to argue antitrust in the face of economics.

    Both sides get deducts for painful punditry regarding “Wright,” making this exchange net very little.

  6. 

    If this debate is getting “absurd,” you can quit at any time. Yet we should see who is making it absurd.

    You gave an example (vaguely stated, to be sure) of conduct that “cannot” violate the antitrust laws. I posited a coin dealer who met the terms of your example. I showed how this coin dealer “could” violate the antitrust laws. Now you respond by saying that in my naivete I overlooked the fact that section 1 of the Sherman Act prohibits what the coin dealer has done.

    First of all, you don’t have to be an economist to read the Sherman Act, though it certainly doesn’t help.

    Second, it was the very point of my example that the coin dealer violated the antitrust laws. Yet with barely muffled satisfaction you hurl this back at me and say that, lo and behold, what the coin dealer did was to violate the antitrust laws! You attack me by agreeing with me. Don’t you see the absurdity of your position?

    You keep harping on my alleged “mistake” in saying that Microsoft won the antitrust case. Microsoft settled with the US government by accepting a slap on the wrist. They got away with their predatory conduct against Netscape for a few shekels. Of course Microsoft won; they won big-time. They didn’t win by having better economists than the US government or Netscape. They won because they had better lawyers. And they got those better lawyers by paying them many many times what the government could have afforded to pay them. I don’t defend these lawyers. Microsoft, Google, Yahoo, and Amazon are today’s robber barons, only much richer. And what about the increasing consolidation of the media? The US is heading toward corporate fascism, abetted by economists who concentrate on the means (vertical, coordinated, tying, etc.) while losing sight of the original political purpose and intent of the antitrust laws.

    The last refuge of a committed disciplinarian is to insist that any outsider who criticizes the discipline does not understand it. Your posts are a perfect portrait of such an expert. You keep telling me that I do not understand economics. You say you are not here to teach me all of economics. Well, if you know all of economics, I’d be interested. When will the next recession occur? Will it be brief or severe? Or are these macro problems that are outside your definition of your expertise? Like antitrust?

    Well, enough vituperation for now. I agree with you totally on one point: it has been fun.

  7. 

    This is slowly but surely getting absurd. Your response is again a bit disappointing for its grasp basic economic or antitrust concepts, and riddled with errors. This failure would not be disappointing but for your claim that was the inspiration for the title of this post.

    Let’s start small and obvious. I am happy to stand by my statement that there exist both a set of conduct X which contains types of conduct which can violate the antitrust laws and a set Y which contains conduct which cannot. I’m comfortable with that. If that was unclear, I’m also comfortable blaming myself for failing to make it so. But lets all get on the same page, and see if we can have a rational debate after all.

    But now let the absurdity truly commence! And perhaps, maybe even send you to that tent you mentioned. You write: “what I am supposed to do with your example” of “single firm conduct of firms without market power”? Well, for starters … my answer is “understand it.”

    Let’s try again. The thing about the aardvark and the nest is clever and all. Really. But a firm unilerally imposing exclusive dealing contracts, tying arrangements, maximum resale price maintenance, slotting allowances, etc. that does not have sufficient market share to control market output does not violate the antitrust laws. Those are several examples. How about a firm with market power that prices below its marginal cost in a market with no barriers to entry? Agency guidelines also have injected various safe harbors into antitrust analysis of joint ventures. There are hundreds of these. Surely you at least agree that exclusive dealing, tying, and predatory pricing are conduct is the subject of the antitrust laws — what with your opinion of Microsoft *winning* their lawsuit by befuddling the judges (no clever retort about that error which rhymes w. my last name or some such?)? Now, I respectfully submit that this conduct has not much to do with aardvarks or nests. Though I am willing to admit I dont know much about either of those.

    But lets expose the fundamental naivety of your example of the coin dealers a bit more. The agreement you suggest between competing coin dealers on price is not unilateral conduct — it involves an agreement between competitors after all — and so I’m happy to say that the dealers have not violated Section 2! They’ve violated section 1 by entering a conspiracy in restraint of trade. These sorts of distinctions: coordinated v. unilateral conduct, vertical v. horizontal, etc … are generally covered very early in antitrust courses. You butcher these basic distinctions but purport to make claims regarding the purpose, direction, and evolution of antitrust analysis — not to mention the outcomes of specific cases. Without looking, can you tell me what claims were made against Microsoft? Which they won and lost at the district court level? How about on appeal? The first lesson on these basics is gratis.

    So, I’ve given you quite more than a single example of business conduct that does not violate Section 2. I’ve given you several examples of conduct by a single firm alleged to violate the antitrust laws. And you ask for more without properly digesting these first? Want more? These are easy to generate. I would hope any decent law student could come up with about 25 in an hour.

    As to the notion that all my other claims rest on this single example … this is clearly false, but I can live with it since the example and my original claim are both correct (Wright? Sorry, had to do one). My claim, to repeat, is something like the following: “D’Amato’s claim that economics has not changed antitrust is demonstrably false.” I’ve offered plenty of support for that claim in the comments and in the original post. Much of which you have not responded to — nor can you sensibly.

    I’m not here to teach you all of antitrust. I certainly dont claim that I can do that. You’ve got Herclites, I’ve got a story about the horse you can only lead to the water but still dies of thirst. Forgive me, I dont think the horse had a fancy name or title.

    After all of this, I am sure you will still stand by your conclusion that economic analysis has not changed antitrust law. It is a shame that you will not take this claim out of your article. It does not belong there. It is wrong. It weakens your claim substantially to anybody with even a passing knowledge of the events in antitrust over the past 40 years. If weakening your claim is not a good enough reason, perhaps accuracy is? There is no shame in admitting ignorance of a field. But its your article. Have a blast.

    I do appreciate all your comments. It has been fun. And though I’m certain you will not see why it is appropriate, now that I’ve narrowly escaped that whole aardvark-tautology gambit, I’m off to envision you, a desert, and that tent.

    P.S. I don’t know Bernanke or Paulson, sound like macro guys to me 🙂

  8. 

    Although you are “not quite sure” that I read your previous post, you now demonstrate conclusively that you yourself do not read your own posts. Allow me to quote what you said in post # 8:

    “And by the way, while there is plenty of business conduct which can violate the antitrust laws, you might be surprised to know that there is
    a great deal of conduct which cannot.”

    But now you say, in post # 10:

    ” Third, and on a related note, you say that I claim the opposite: that there exists plenty of conduct that cannot violate the antitrust laws.
    Not quite right. There exists significant sets of conduct that both can and cannot violate the antitrust laws.”

    Who is being “not quite right” here? Is it Wright who is not quite right? I can only respond to the written words you have used. When you go on to deny that you said whose very written words, and when the printed word contradicts you, how can you expect to conduct a rational debate? Maybe with Heraclitus, but not with D’Amato.

    But let’s proceed. To quote myself in post #9, I asked you to “give us an example or two of business conduct that cannot violate the antitrust laws.” I went out on a limb in asking you this question, because if you then provided me with such an example, I’d have to fold my tent and slink into the night desert. However, again you backed off. Instead of giving me an example, you gave me a tautology. You said, in post # 9:

    ‘One easy example should suffice: single firm conduct by firms without market power. There is universal agreement by economists and in the law that this conduct (whether by exclusive dealing, tying, or other vertical contract) cannot violate Section 2 of the Sherman Act.”

    In other words, you are giving me an example that by definition is outside the Sherman Act. Why not use the example of an aardvark licking up a nest of termites? The aardvark is by definition not engaging in antitrust behavior.

    What am I supposed to do with your example? After all, on it your other claims all rest. And so I imagine a coin dealer, engaging in “single firm conduct” “without market power” (I quote from your post # 9). He enters into an agreement with all the other thousands of coin dealers in the United States. They all agree not to sell an ounce of silver to any customer without also requiring the customer to purchase for $20 a 5×8 photograph of President George W. Bush for each ounce of silver bought. Further, they all agree not to sell an ounce of gold to any customer without also requring the customer to purchase a laminated high-definition 12×20 portraint of the President for $600. What would Bernanke say about this? What would Paulson say? What would you say? Surely the one thing you cannot say, unless you change what you’ve already said so far, is that the coin dealers have violated section 2 of the Sherman Act.

    Now, maybe my coin dealer example isn’t the exact one you had in mind. I would then ask you again: give me a single example of business conduct that “cannot” be an antitrust violation.

  9. 

    I appreciate the reply. Let’s start with the bigger issues and then rehash some basic economics and antitrust to dispel some of the claims you worked into your comment.

    First, you claim your article was not about antitrust. I do not dispute that. But you use antitrust as an example to make your case that economic analysis has not been a success story at least in part because it has not changed the law even in an area conducive to such analysis like antitrust. I have demonstrated, I think beyond reasonable dispute, that antitrust does not support your claim.

    Second, you imply that anthropology or any other form of analysis would change antitrust, as if economics has changed the field in a manner akin to flipping a coin. Again, you disclaim knowledge about the field and then make anecdotal and superficial claims about its content. And this breezy treatment demonstrates a lack of knowledge that really should prevent these sorts of claims. Perhaps you could respond again that “your article is not about antitrust.” I agree. But antitrust is also not about your article.

    Third, and on a related note, you say that I claim the opposite: that there exists plenty of conduct that cannot violate the antitrust laws. Not quite right. There exists significant sets of conduct that both can and cannot violate the antitrust laws. I do not deny the existence of either set. One easy example should suffice: single firm conduct by firms without market power. There is universal agreement by economists and in the law that this conduct (whether by exclusive dealing, tying, or other vertical contract) cannot violate Section 2 of the Sherman Act. There is plenty of conduct in there … enough to hold a whole set of FTC/DOJ hearings. But let us not get bogged down in the details. After all, it is your article and your claim that antitrust supports your thesis. A quick review of the literature should be sufficient to get you up to speed.

    Fourth, and on to the small details, you disclaim not to have expertise but a sufficient amount to declare that Microsoft should have lost the lawsuit. Of course, it is clear that you are under the impression that MS won the lawsuit and was found not to violate the antitrust laws. Well, let me be the first to let you know: Microsoft was found to violate the Sherman Act. Whether this was because of befuddlement or otherwise, I will leave to you. But there is a significant economic literature involving understanding Microsoft’s practices and their consumer welfare implications, and it is worth reading.

    Fifth, in response to this: “I still say that economic analysis has not thrown any light upon antitrust law.” If the examples in the post and the comments dont convince you, I am fairly certain that it cannot be done. Which is a shame, because as you say, this is not your area of expertise and your claim has little to do with antitrust. But your reference to economics and antitrust is clearly erroneous, does not support your claim, and hand waving — even vigorously with reference to quantum mechanics, will not make it accurate.

    Sixth, and finally, quite the opposite of your broader claim, one might view antitrust has suggestive of the opposite relationship. It is the law that (in this area) appears to be more directionless and vague — and economics which has given policy makers and judges the tools through which to move the ball forward.

  10. 

    I agree with Professor Hodak’s philosophy. But I think his basic claim is trivial. Of course if you’re going to regulate economic power you need to use economic analysis. If you’re going to regulate music, you need to use musical analysis. If you’re going to fight an army, you need to know military strategy. But it doesn’t follow that these kinds of analytical knowledge will help you carry out your original intent. Many a general has lost a war because the opposing general counted on the losing general’s knowledge of military strategy. Microsoft should have lost the big antitrust case, but it counted successfully on economic analysis to justify and befuddle the court. More specifically, let me address Prof. Wright’s remarks.

    (I realized I got Wright wrong as soon as I hit the submit button; but I’ll keep trying until I get it Wright.)

    My article was not about antitrust, it was about assuming that one discourse can throw light upon another. Of course, compared to an expert, I display lack of knowledge of antitrust. The only “expertise” I can defend is international law.

    To be sure, economic analysis has changed antitrust. The use of any kind of analysis will change its target. Anthropological analysis would change antitrust too.; Economic analysis has complexified antitrust law, to the point where an outside observer can say that with 10 or 30 factors you can prove that just about anything that a corporation decides to or decides not to do is an antitrust violation. You say the opposite is true: that there is a great deal of conduct that “cannot” violate the antitrust laws. Perhaps you might give us an example or two of business conduct that cannot violate the antitrust laws.

    I still say that economic analysis has not thrown any light upon antitrust law, and in the case of Microsoft, it has perhaps dimmed the light that was already there.

  11. 

    Wright. Not White. No problem, happens all the time. But more importantly, your comment is non-responsive to the post and demonstrates a clear lack of knowledge of economics or antitrust.

    First, your claim was that (as the title of the post states) economic analysis has not changed antitrust. I listed ten ways that it has (and can probably push the list to about 50). I would have thought that the appropriate response from you would be a concession that your argument does not apply to antitrust. Your comment here suggests that perhaps antitrust is not a field where you have enough expertise to be making these sorts of claims which such confidence. Whether that is the case or not, it certainly cannot be that my counterexamples “proved your point.”

    Second, the idea that economic efficiency and the exercise of market power are “directionless factors” goes a long way to show your failure to understand basic economics. One can quarrel about whether the appropriate antitrust standard is total welfare or consumer welfare, but not as to whether economic analysis is useful to address either question. Economics can tell us a great deal about the efficiency (total welfare) and consumer welfare implications of a number of practices.

    In fact, the very point of my post (which I am not quite sure that you read) was that this sort of economic analysis has been incorporated into a great deal of antitrust enforcement and doctrine.

    And, by the way, while there is plenty of business conduct which can violate the antitrust laws, you might be surprised to know that there is a great deal of conduct which cannot. Of course, the reason this second set exists is because of the contributions of economists to our understanding of these practices which were ultimately incorporated into antitrust analysis.

  12. 

    Thanks to Josh White for his careful collation of economic factors relevant to antitrust. I think he proves my point. With so many directionless factors, one can find an antitrust violation in practically everything that businesses do.

  13. 

    Antitrust Guy: In addition to Mr. Hodak’s comments, I think you have misread both Baker’s article and my post in another fundamental way. Your statement that I have assumed that “economics is the end all be all of antitrust” misses the point made explicit in the post that the antitrust laws involved a myriad of goals. D’Amato’s claim was that the antitrust laws were designed solely to restrain corporations from gaining political power is clearly incorrect.

    Baker’s excellent paper applying the self-enforcing contract framework to antitrust enforcement discusses balances between producer and consumer interests — but it cannot possibly support D’Amato’s claim. Baker discusses the possibility that the US political system adopted a political bargain between these interests in the middle of the 20th century, and provides a lens through which to view post-1950 developments such as the rise of the Chicago School in light of this bargain. He does not show, nor attempt to demonstrate, that economic analysis was irrelevant to antitrust at the time the Sherman Act was passed.

    There is, however, a VERY large literature on the legislative history of the Sherman Act which is consistent with my claim that these laws were passed in light of a myriad of concerns including economic efficiency, market power induced wealth transfers to consumers, political concerns, etc.

  14. 

    To say that Antitrust “arose from political concerns” in order to distiguish those concerns from economic ones (clearly D’Amato’s intent) is illogical and disingenuous.

    Illogical: Antitrust was a political response to economic power. The authors of the Sherman Act did not intend their law to be used arbitrarily (notwithstanding opinion and evidence to the contrary), and one can’t possibly counter economic power without defining it, which requires economic analysis, otherwise the state power placed in opposition to it has no standard against which to act.

    Disingenuous: No one likes competition, including politicians. In the struggle to control our nations resources, government is inherently at odds with the private sector. Most people consider regulation to be a non-economic activity, but from a public choice perspective, this is a plainly incomplete view of politics. It’s all about the money. Ironically, Sherman, who was willing to employ government power to regulate companies into submission was a vocal opponent of the income tax, which he was powerless to stop, once the idea took root that the government should be able to do whatever it wants with our businesses and finances.

  15. 

    Mr. Person,

    If you are intending to try your case via blog, I suggest you address a far less sophisticated jury, one that perhaps does not understand the second-order effects of creative-destruction. They aren’t too hard to find, but you somehow stepped into one area where they are scarce.

  16. 

    I would recommend looking at Jonathan Baker’s recent article about the political bargain encapsulated in antitrust law (“Competition Policy as a Political Bargain,” 73 Antitrust L.J. 483 (2006)) before assuming that economics is the end all and be all of antitrust. D’Amato’s argument fits with what Baker shows–that antitrust arose from political concerns, not economic analysis, and that the shift to an economic analysis has defanged the politics of antitrust (maybe not in a good way).

  17. 

    I’m an antitrust (litigating) lawyer and would like to know why there appears to be little concern for the loss of American jobs (and related dismantling of the American economy) by rigid adherence to the antitrust doctrine that lowest price determines who wins an antitrust lawsuit, even though such policy destroys the opportunity for many consumers to earn enough money to pay the lowest price without governmental help and destroys the ability of small businesses to compete.
    Also, why is it that economists have not yet caught on to the most serious monopoly of them all – Google’s monopolies on information, searching information, and selling pay-per-click key-word targeted Internet advertising directed users of Internet search engines. See my antitrust complaint against Google/AdWords at http://www.lawmall.com/google.
    Carl E. Person
    Antitrust and Civil Rights Lawyer

Trackbacks and Pingbacks:

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