Antitrust Law & Economics Under Attack: Populism Versus Innovation

Abstract

The economic analysis of antitrust laws is on the wane. The Chicago School influentially developed an antitrust approach with the principle of economic efficiency as the North Star of enforcement analysis. Robert Bork has seminally singled out The Antitrust Paradox of his time: Antitrust suppressed the competition it should foster. Conducive to an economic analysis of antitrust laws, “Borkian” antitrust has nonetheless experienced continuous criticisms. Recently, powerful assaults revived an old antitrust approach–the populist approach. Self-proclaimed the “Neo-Brandeisians” after Justice Louis D. Brandeis, who extolled small businesses and mocked the “Curse of Bigness,” antitrust populism represents a paradigm-shift away from antitrust law & economics in favor of greater discretionary power in redesigning markets for the sake of a market competition made of small business units. This article argues that the limits of the Borkian antitrust do not justify embracing the populist Brandeisian antitrust. Antitrust is at a crossroads: It can reject Brandeisian antitrust without necessarily reverting to a passe Borkian antitrust. Economic analysis of antitrust laws remains relevant only if we take efficiency seriously–namely, including allocative and productive efficiencies and, most importantly, dynamic efficiency (i.e., innovation). An economic analysis of antitrust laws relevant to today’s (and tomorrow’s) economy can only be innovation-centric. Dynamic efficiency in the antitrust analysis would avoid the misguided populist antitrust approach, but it would also frame antitrust analysis in line with Schumpeterian principles. If innovation matters, Schumpeterian competition needs to be the cornerstone of a renewed economic analysis of antitrust laws.