Antitrust (Over-?) Confidence

Competition Policy and Antitrust

Article Snapshot


Thomas Lambert and Joshua Wright


Loyola Consumer Law Review, Vol. 20, No. 2, pp. 219-231, 2008


This paper reviews recent ideas to expand antitrust enforcement.

Policy Relevance

Proposals to expand antitrust enforcement to punish large firms or pursue social goals are likely to harm consumers.

Main Points

  • Recently, a group of scholars (the “North Siders”) has urged aggressive use of antitrust laws to police monopolies and to encourage economic growth, to check the power of large firms, and to limit social costs such as pollution.
  • Many scholars influenced by the “Chicago School” and the “Harvard School” take the view that antitrust should focus more narrowly on whether a firm has harmed or helped consumers.
    • Just being a monopolist should not be illegal, because beneficial economic growth often results from firms’ striving to win the largest share of profits.
    • Some businesses are natural monopolies, which help consumers by passing along savings from economies of scale. It is hard for economists to tell the difference between these helpful monopolies and more harmful ones
  • The North Siders tend to support structural remedies, like breaking a large firm up into smaller pieces. But these remedies have often harmed consumers, because antitrust authorities lack knowledge of how firms should be structured.

  • Antitrust enforcement has focused on competition problems involving several firms, especially cartels, and mergers. This makes more sense than targeting large firms operating alone:
    • Many studies of single firms show that their business practices often help consumers in ways that earlier antitrust scholars did not understand.

  • Antitrust policy should try to reduce the risk of harm to consumers from errors that courts are likely to make. Cases focusing on single firms are likely to erroneously condemn business practices that are helpful, harming consumers in the long run. Harm from cases that mistakenly allow harmful business practices is not likely to persist, because competing firms offer choices.

  • Encouraging more private firms to bring antitrust cases against other private firms is unlikely to help consumers, because litigation can be used to restrict beneficial competition. Juries lack expertise to make sound decisions in these cases. 

Get The Article

Find the full article online

Search for Full Article