Barriers to Entry: A Market Lock-in Model of Discrimination

Abstract

This article draws on recent literature in economics on increasing returns, network effects and market lock-in, to advance two types of arguments - one descriptive and one normative - about racism in the context of law school admissions. First, I suggest that it might be useful to view white dominance in law school admissions as the product of a locked-in, culturally and racially specific network standard that favors white applicants. Anticompetitive conduct by white professional leaders and law school administrators during the Jim Crow era created an overwhelming initial advantage, if not an outright monopoly, in early market competition for law student admissions. This monopoly, which lasted well over a century, may have produced a de facto standard that favors white cultural performances and disproportionately excludes people of color in admissions. Over time, reinforcing institutional networks have grown up around this culturally specific standard, and have effectively locked the standard into market structures. For example, to gain access to the legal profession network, law schools have had to adopt admissions criteria that rely on the Law School Admissions Test (LSAT), which at least in its earlier incarnations was designed to exclude applicants of color. Law schools wishing to maintain their national ranking or place graduates in lucrative positions must admit students based on their scores, because legal professionals and law school rankings recognize high LSAT scores for the entering class as a signal of the school's quality. In turn, those schools wishing to attract applicants with high LSAT scores must maintain their national rankings and post-graduation employment rates. Thus, over time, the LSAT standard has become progressively more embedded into the network, creating significant barriers to entry for people of color whose cultural performances do not conform to the standard. Second, a lock-in model of discrimination may have several more normative implications. Initially, (and most controversially), it suggests that current admissions standards are not solely the race-neutral, efficient products of market competition, but rather are the self-reinforcing product of earlier anticompetitive conduct by whites. Because such anticompetitive behavior will not necessarily produce the most efficient market outcomes, there is no guarantee that law school admissions criteria produce applicants who are the best legal problem-solvers or even the best law students. In addition, the model suggests that racial disparities persist because communities of color do not enjoy true equal opportunity to compete. At the turn of the century, whites intentionally excluded people of color from participating in the establishment of the defacto standard in law school admissions and the legal profession. Currently, a locked-in market standard creates significant barriers to entry for people of color. Far from a level playing field, competition takes place in markets where white monopoly power may have become self-reinforcing. Finally, the model proposes a politically useful metaphor or analogy for discrimination and affirmative action. A market lock-in analogy frames racism in antitrust terms, as historically anticompetitive conduct that over time will continue to exclude people of color, even in the absence of continuing intentional discrimination. Likewise, the model redescribes affirmative action as a type of antitrust remedy, designed to dismantle a locked-in white monopoly on opportunity and resources.