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How the Chicago School Overshot the MarkThe Effect of Conservative Economic Analysis on U.S. Antitrust$
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Robert Pitofsky

Print publication date: 2008

Print ISBN-13: 9780195372823

Published to Oxford Scholarship Online: January 2009

DOI: 10.1093/acprof:oso/9780195372823.001.0001

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Comment on Herbert Hovenkamp and the Dominant Firm: The Chicago School Has Made Us Too Cautious About False Positives and the Use of Section 2 of the Sherman Act

Comment on Herbert Hovenkamp and the Dominant Firm: The Chicago School Has Made Us Too Cautious About False Positives and the Use of Section 2 of the Sherman Act

Chapter:
(p.123) Comment on Herbert Hovenkamp and the Dominant Firm: The Chicago School Has Made Us Too Cautious About False Positives and the Use of Section 2 of the Sherman Act
Source:
How the Chicago School Overshot the Mark
Author(s):

Harvey J. Goldschmid

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780195372823.003.0010

This paper observes the absence in recent years of serious enforcement of section 2. With respect to Justice Scalia's extensive comments in the Trinko decision about the value of aggressive behavior leading to monopoly power, it notes the total absence in the Scalia opinion of any concern with the anticonsumer side of monopoly power—“excessive prices, misallocation of resources, and loss of dynamic efficiency.” That style of passive acceptance follows from one of the basic canons of conservative economic analysis—the theory that if a monopolist tries to take advantage of its market position, new entry and market corrections will automatically appear and make section 2 law enforcement largely unnecessary. The paper advocates a balancing test, citing language in Aspen Ski and Microsoft as a more sensible approach to dominant firm behavior than the rigid passive approach to enforcement, based on general Chicago School scholarship. With respect to recent cases, it notes that a benign attitude toward unreasonable behavior by a monopolist throws into doubt the unanimous opinion of the District of Columbia Court of Appeals finding that Microsoft had violated section 2.

Keywords:   antitrust, section 2, Trinko, Microsoft, Aspen

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