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Antitrust and Monopoly
Anatomy of a Policy Failure
By Dominick T. ArmentanoThe Independent Institute
Copyright © 1990 The Independent Institute
All rights reserved.
ISBN: 978-0-945999-62-1
Contents
FOREWORD,
PREFACE,
INTRODUCTION,
Chapter One: THE LEGITIMACY OF ANTITRUST POLICY,
Chapter Two: COMPETITION THEORY AND THE MARKET ECONOMY,
Chapter Three: MONOPOLY UNDER THE SHERMAN ACT: FROM E. C. KNIGHT (1895) TO STANDARD OIL OF NEW JERSEY (1911),
Chapter Four: MONOPOLY IN BUSINESS HISTORY: FROM AMERICAN TOBACCO (1911) TO TELEX-IBM (1975),
Chapter Five: PRICE CONSPIRACY AND ANTITRUST LAW,
Chapter Six: PRICE DISCRIMINATION AND THE COMPETITIVE PROCESS,
Chapter Seven: TYING AGREEMENTS AND PUBLIC POLICY,
Chapter Eight: MERGERS, COMPETITION, AND ANTITRUST POLICY,
Chapter Nine: THE ANTITRUST LAWS AND A FREE SOCIETY,
Appendix: THE ANTITRUST LAWS: RELEVANT,
Index,
CHAPTER 1The Legitimacy of Antitrust Policy
The competitive business process is central to an appreciation of the market economy. If competition exists in the market, business organizations tend to allocate resources efficiently, engage in innovation and technological development, and generally respond effectively to consumer demand. If competition is weak or nonexistent, however, it is not at all evident that the interplay of free market forces will automatically generate beneficial economic behavior and performance. Indeed, it is often alleged that if business organizations could extinguish the market process through monopoly or collusion, they could presumably misallocate resources and create a utilitarian justification for extensive governmental regulation.
THE RATIONALE FOR ANTITRUST
While the American economy may still primarily employ the institutions of private ownership and voluntary exchange, it certainly has never adhered to strict laissez-faire principles. The decline of the free-market system accelerated with the rise of large-scale business enterprise in the post-Civil War period. At that time, spokesmen for business interests, labor, government, and even a few economists asserted that some regulatory control of the economy was required in order to protect consumers from the "trusts" and their attendant unfair practices. Presumably, the Sherman Antitrust Act (1890) and the rest of the antitrust laws were passed in order to halt the spread of business monopoly and to restore effective competition to the market economy.
The conventional perspective on the origins of antitrust regulation is that the laws were enacted to stem the rising tide of "monopoly power." Yet revisionist analysis of the Clayton Act, the Federal Trade Commission Act, and the Robinson-Patman Act has severely shaken this conventional view; various scholars have demonstrated that these particular "antitrust" statutes were often supported and employed by established business interests in an attempt to restrain and restrict the competitive process. Unable to compete effectively with more efficient business organizations, certain special interests sought political and legislative restrictions in an attempt to secure or enhance existing market positions. According to this view, therefore, much of the antitrust movement should more accurately be seen as conservative rather than as "progressive," and as an important part of the "triumph" of conservatism in American politics.
Interestingly, and perhaps ironically, the Sherman Antitrust Act has managed to escape the revisionist assault almost entirely. It is still widely accepted as a statute whose
