The Limits of Antitrust in the 21st Century

Abstract

In recent months, commentators and policymakers have called for expanded antitrust enforcement to address a number of novel harms. As Judge Frank Easterbrook famously observed in 1984, however, antitrust is an inherently limited enterprise, and improvident antitrust enforcement can create greater harm than benefit. To optimize antitrust’s effectiveness, Easterbrook proposed a set of screening mechanisms that would constrain the law’s reach. This Article examines Easterbrook’s prescriptions in light of recent economic learning and market developments. It concludes that Easterbrook’s overarching prescription—that antitrust policies should be calibrated to minimize the sum of error and decision costs—remains fundamentally sound. However, his assertion that false convictions are systematically worse than false acquittals is questionable, and several of his specific screening mechanisms appear unwarranted. As courts and enforcers respond to calls for a bigger and bolder antitrust, they should embrace a revised version of Easterbrook’s approach and supplement it with four additional screening mechanisms. They should intervene only (1) to address consumer harm (2) stemming from behavior that extends market power, where (3) the harm is unlikely to be addressed in a less distortive manner by another body of law or by private ordering, and (4) the intervention does not require extensive knowledge by central planners or confer a great deal of discretionary authority on government officials.