Author(s)
Dennis Carlton and
Randal Picker
Source
University of Chicago Law & Economics, Olin Working Paper No. 312, October 2006
Summary
This paper compares antitrust law in the courts to competition policy by administrative agencies.
Policy Relevance
Administrative agencies hand out too many special favors to do the main job of helping consumers. Competition overseen by the courts can do most of the work. But networks might present special problems that need regulation.
Main Points
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For over a century, United States competition policy has been partly decided by antitrust court cases, and partly by administrative agencies in charge of telecommunications, railroads, trucking, and the airlines.
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Regulatory agencies
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Are useful in setting rules and prices specific to one sector or network.
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Tend to hand out favors for special interests or big firms.
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Distort competition and prices.
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Antitrust cases in the courts avoid special favors and promote competition, but cannot manage sectors in the long run, especially when one firm grows large naturally.
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The deregulation movement recognized that regulation needed to be scaled back, and that competition does enough to help consumers, increasing reliance on antitrust.