Business School Economics and Antitrust: What's Thought and What's Taught

Abstract

Economics--especially microeconomics and the field of industrial organization-has had a long history of involvement with antitrust (see Blaisdell 1932; Henderson 1924; Scherer 1990; Stevens 1940; White 1984, 1999). The U.S. Bureau of Corporations, which was established in 1903 within the Department of Commerce and Labor, provided research support for early antitrust prosecutions brought by the U.S. Department of Justice (DOJ), including U.S. v. Standard Oil of New Jersey et al. (1911) and U.S. v. American Tobacco Co. (1911). An early, and possibly the first, use of an economist's testimony was in the DOJ's prosecution of U.S. v. United States Steel Corp. (1920). The Bureau of Corporations was superseded and absorbed by the Federal Trade Commission (FTC) in 1914. Within the FTC, the Economic Department (which later became the Economic Division and then the Bureau of Economics) inherited the Bureau of Corporation's research and investigative role. In 1933, responsibility for antitrust prosecutions was placed in the DOJ's Antitrust Division. Within three years, the Division hired its first staff economist. As late as the 1960s, however, economists at both enforcement agencies were generally second class citizens and outside the mainstream of decision making and policy influence (see Green 1972; Weaver 1977). Since then, however, economists' roles and positions within both agencies have risen (see Kwoka and White 1989, 1994, 1999). In general, economics since the 1930s has had an increasingly influential role in shaping the paradigms of public and private antitrust enforcement. Areas in which economists, within and outside of the agencies, have contributed include the following: 'Structure-behavior-performance paradigm (Sherman Act 1890, 1, 2; Clayton Act 1914, 7), *Merger guidelines (Clayton 7), *Intellectual property guidelines (Sherman 2), *Tying (Sherman 2; Clayton 3), *Predatory behavior (Sherman 2), 'Vertical restraints (Sherman 1, 2; Clayton 3), *Price discrimination (Clayton 2), *Network economics (Sherman 2), 'Raising rivals' costs (Sherman 2; Clayton 3), and *Treble damages remedy (Clayton 4).