Against (Most) Antitrust Law

The economic benefits of antitrust likely are not worth the costs.

|The Volokh Conspiracy |

With trust-busting all the rage these days, especially on the Liz Warren left, this seems like a good time to repost something I wrote fifteen years ago:

The right way to look at antitrust law is not whether economic theory suggests that particular monopolies can and will exist that can, in theory, be corrected through government action, to the benefit of both consumer welfare and economic efficiency. The real question is whether, once one establishes a regime of antitrust law, whether that regime is going to do more overall harm than good.

Sure, the antitrust authorities may identify "real" monopolists here and there. But they will also likely often misapply economic theory, or apply the wrong economic theory, and break up "monopolists" that were economically efficient and serving consumer welfare.

Meanwhile, various companies will try their darndest to persuade the antitrust authorities that their competitors are "monopolists" that should be reined in. Every time they are wrong and the authorities don't believe them, their lobbying efforts (and the contrary lobbying efforts of the alleged monopolist) are a deadweight lost. Every time they are wrong and the antitrust authorities do believe them, further damage is done to the economy (plus the dead weight lobbying losses).

Moreover, there is no reason to assume that antitrust authorities will always be pursuing the common good. Antitrust enforcement, and antitrust law itself, will develop through political mechanisms, and the authorities will be sorely tempted to punish the enemies of their political allies and reward their friends. Demagogic politicians will order their governments to go after large companies for political gain, not for sound economic reasons. Much of American antitrust law for many years was based on no economic theory whatsoever, but on general mistrust of "bigness," a desire to protect mom and pop businesses from more efficient competition, and demagoguery starting with the American king of the genre, Teddy Roosevelt. And so on.

The losses from antitrust law can be huge: the costs of rent-seeking and countering rent-seeking alone can dwarf any gains from good antitrust enforcement, and antitrust enforcement won't necessarily be good. The question, to this extent, is whether you would rather have market outcomes be governed by Wall Street or K Street. Meanwhile, the losses from monopoly are not likely to be huge. The monopolist sells at a monopoly price, and gains monopoly prents, but the product is still, after all, on the market. And the available monopoly rents should incentivize competitors try to break the monopoly.

So, in my view at least, the libertarian case for not having antitrust law is not that the market is perfectly efficient, but that regulation is worse. I'd be content to leave antitrust law to price-fixing, as the Reagan Justice Department did, but that leaves the regulatory superstructure in place, to create further mischief in the future. So abolish the Antitrust Division, reduce the FTC's functions to interstate fraud, and give it jurisdiction over price-fixing, too. And then be content with the results with an imperfect market.

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73 responses to “Against (Most) Antitrust Law

  1. To what extent is this different from what Bork said 40 years ago?

    1. It’s even more wrong. At least Bork tried to provide some evidence for his claims.

      1. In what way is it wrong? The argument above seems pretty cogent to me. And I can think of a dozen examples in support of that argument just off the top of my head. Are you really going to argue that antitrust enforcement is not influenced by politics?

        1. I don’t see any argument at all.

      2. [citation needed]

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    3. In his book, the Antitrust Paradox, Bork supported limitations on anticompetitive mergers and some limitations on abuses of monopoly power.

    4. I’m not sure of his exact qualifications, but it seems that Bork had at least some background in Economics from his education at the University of Chicago. In contrast, Bernstein does not appear to have any qualifications in the field of Economics. So, there’s a difference.

      1. Um, you seem to lack qualifications in Logic.

      2. Mr. Zanzinger, I’m not sure how much, if any, time Prof. Bernstein has spent actually practicing antitrust law ? advising clients thereupon, or representing them in courts in antitrust litigation ? but he has the same credential that I have, and that I’ve used in more than 40 years of study and practice of antitrust law.

        Lawyers hire economists as expert witnesses, and they cross-examine the economists hired by the other side’s lawyers. That’s not the same as being an economist oneself, I’ll quickly concede ? and thank God for that, all my clients would say!

        On the subject of antitrust law, a law license is a superior credential to a Ph.D. in economics. In fact, an economics Ph.D. won’t get one anywhere except, perhaps, the witness chair.

        Prof. Bernstein’s credentials are ample, and your criticism shows a lack of basic comprehension that antitrust law is a species of law, the practice of which is a professional subdiscipline that certainly involves and considers and embraces and rejects opinions of economists, but one which is distinct from their own academic work or (vastly more rarely) their work as direct consultants to businesses.

        1. I ought have written above, to be accurate: “[A]n economics Ph.D. won’t get one anywhere in court in an antitrust lawsuit except, perhaps, the witness chair.”

        2. On the subject of antitrust law, a law license is a superior credential to a Ph.D. in economics.

          No doubt.

          But Bernstein is not discussing antitrust law. He is talking about policy, which requires an understanding of the economics of monopoly, oligopoly, and so on. The average Econ Ph.D. knows more about that, a lot more, than probably 95+% of lawyers, including anti-trust lawyers.

          Now, maybe Bernstein is quite knowledgeable on the matter. I don’t know. But to claim that lawyers, even anti-trust lawyers, are expert on the economic aspects of monopoly, is silly.

          1. “The average Econ Ph.D. knows more about that, a lot more, than probably 95+% of lawyers, including anti-trust lawyers.”

            Fortunately, the antitrust law of the Sherman Act (written by non-economists) has thankfully been dialed back significantly because of the participation of economists, who are much more cynical of monopoly claims than populists, or mid-20th Century antitrust attorneys.

          2. Econ PhD’s don’t know a thing unless they work in the private sector and even then their theories don’t hold much water because they’re all fundamentally based in human behavior. Guess wrong about people’s priorities and all those demand curves and calculus is meaningless.

          3. “The average Econ Ph.D. knows more about that, a lot more, than probably 95+% of lawyers, including anti-trust lawyers.”

            Unfortunately, an awful lot of what the “average” Econ Ph.D knows is often dead wrong. Take, for example, Peter Navarro, an Econ Ph.D. with a Harvard Econ degree, one of Trump’s primary advisors on international trade, who apparently knows little to nothing about actual trade economics. Or David Card, with his Econ Ph.D from Princeton, who is a professor of Labor Economics at U.C. Berkely, and who, with Alan Krueger, authored studies finding no disemployment effects from rising minimum wages in the fast food industry. Unfortunately, the methodology for those studies was so fatally flawed that the conclusions are absolutely worthless to everyone except leftist politicians who still insist that raising minimum wages is the answer. In short, there are a LOT of utterly incompetent “average” Econ Ph.Ds out there. It’s a mistake to believe any of them without very carefully examining their reasoning and methodology.

            1. ” with Alan Krueger, authored studies finding no disemployment effects from rising minimum wages in the fast food industry. Unfortunately, the methodology for those studies was so fatally flawed that the conclusions are absolutely worthless to everyone except leftist politicians who still insist that raising minimum wages is the answer.”

              Krugman being a prime example – he frequently cites the krueger study in support of increasing minimum wages even though the flaws of the study is well known and even though the conclusions of the study fly in the face of basic economic theory and flies in the face of his own introductory to economics textbook.

              1. the conclusions of the study fly in the face of basic economic theory and flies in the face of his own introductory to economics textbook.

                Maybe there is a bit more to “basic economic theory” than is dreamt of in your philosophy.

                And maybe it pays, sometimes, to test the theory empirically. Theories can be wrong, or the assumptions may not hold in a specific setting.

                As for Krugman, yeah, Joe_dallas knows better. Right.

            2. What are your sources in the peer-reviewed economic literature on the minimum wage for claiming that Card and Krueger’s methodology was “fatally flawed?” Please be specific.

            3. Peter Navarro is well-known to be an idiot. If you knew nothing other than that he was an adivser to Trump on trade that would be clear.

              The Card and Krueger work has drawn some criticism, but “fatally flawed” is a vast overstatement.

              there are a LOT of utterly incompetent “average” Econ Ph.Ds out there.

              That doesn’t make my statement false.

              It’s a mistake to believe any of them without very carefully examining their reasoning and methodology.

              It’s a mistake to believe anyone’s economic arguments “without very carefully examining their reasoning and methodology.”

              I don’t see Bernstein’s reasoning and methodology presented in the OP. It’s mostly conclusions based on his political views.

        3. Beldar, seems like Bernstein isn’t offering up antitrust law in this post. More like preferred policy. But I still take your point. Given the political nature of the subject, even an esteemed senior professor of economics really wouldn’t have the right credential. No better than a lawyer specializing in anti-trust, actually.

  2. If you’re concerned about avoiding the waste and abuses of a regulatory system and just want laws against price-fixing enforced, why abolish the Antitrust Division (which already devotes most of its resources to prosecuting price-fixing) and reassign price-fixing prosecutions to the FTC, which has always been a regulatory agency and has never had responsibility for criminally prosecuting price-fixing? It would be more logical to do just the opposite.

  3. This is pretty much just rote evidence-free libertarianism.

    “The government shouldn’t do X because it will screw it up, and that will cost more than the costs of leaving things alone.”

    1. I was also unimpressed with the lack of empiricism in this post.

      Which means, of course, this is ripe for a guest poster who is well-versed!

      1. Sounds to me like you two have reversed the burden of proof. In a society that values freedom and initiative, in a government based upon enumerated powers and deliberate segregation of authority, it seems to me that the burden of proof should be on those arguing that “the government doing X will have more benefits than costs compared to leaving things alone.”

        1. Rossami, burden of proof? I hope you aren’t suggesting anything about this issue ought to be decided by a court.

        2. All I see is an argument that can’t cut it.

          You want to argue the default should be laissez faire, go ahead. But we had that policy discussion some time ago, and even the most right-wing of economists agree that some policy to avoid monopoly is a public good.

    2. “The government shouldn’t do X because it will screw it up, and that will cost more than the costs of leaving things alone.”

      Sounds exactly correct to me. If you want evidence for that proposition, all you need do is examine what government regulation, especially Obamacare, has done to the health care industry.

    3. I believe the evidence is that the government has screwed up EVERY SINGLE THING IT HAS TOUCHED.

      1. What intellectual heft these libertarians have.

  4. But they will also likely often misapply economic theory, or apply the wrong economic theory, and break up “monopolists” that were economically efficient and serving consumer welfare.

    “Economic theory,” is not reason, it is not law, it is not really even philosophy. Fairly often, it is mathematics?in the sense that it purports to tell us what people would do if people were numbers. But always, always, always, economic theory is ideology. That means it is not an escape from politics, nor an improvement on politics, but instead a proper subject for politics.

    My politics suggest that except in the case of genuine natural monopolies, government action to break up monopolies is generally a good thing. Doing so should be the default option for regulators, and not doing so should require a good deal more experience-based analysis?concentrating especially on experience with the economy writ large?than it should require (or accept) theoretical speculation that a given monopoly will be a benign economic player.

    Even if a proposed monopoly seems to wield advantages on behalf of lower prices for customers, the regulatory presumption should be that those advantages won’t happen, or will be less than predicted, or won’t continue, or will be outweighed by costs (in lessened employment, for instance) used to derive the advantages. Because that’s what experience seems to show.

    1. Because that’s what experience seems to show.

      Experience with what? Peyote? Not actual empirical reality.

    2. “My politics suggest that except in the case of genuine natural monopolies, government action to break up monopolies is generally a good thing.”

      Even if we agreed that economic theory is all politics–we don’t–economics is not identical to economic theory. An economic theory is no different from any other theory. It can be tested. If you think you have good empirical evidence that the government breaking up monopolies improves some outcome you think is important, just tell us.

      Your criticism is very interesting for another reason. The problem with antitrust law is that it was based on an unproven economic theory. Competing economic theories emerged, and they were testable. And empirical evidence showed that much of what antitrust law thought about its own economic theory was wrong. For example, the theory that all tie in agreements permitted monopolists expand their monopoly power by extending it to tied products turned out to be wrong. But a lot of harm was done in the meantime that prevented lots of tie in agreements that are wildly beneficial to consumers. Had the old theory survived, your phone might not take pictures today.

      “Because that’s what experience seems to show.”

      What is the evidence for this?

      1. Could you expand on this comment?

        Thanks.

        1. So it was originally believed that tie-in agreements should be per se illegal. Economic theory (supported by evidence) tended to show that tie-in agreements weren’t effectively anti-competitive except in certain narrow conditions, and that a plaintiff could prevail on a per se violation even if those conditions didn’t attach. The law shifted to requiring a lesser “per se” violations, that the plaintiff prove the defendant had sufficient market power in the tying product to show restraint in the tied product. Failure to show that required a rule of reason analysis, which necessitates asking about the actual effect of the tying arrangement on competition. (I.e., the plaintiff has the burden to show a negative effect on competition, not just on the plaintiff’s bottom line.) The rule of reason also shifts burdens: If the defendant shows procompetitive justifications for tying, the plaintiff has to rebut those.

    3. But always, always, always, economic theory is ideology.

      No. At least serious theory, unlike the sort of under-informed and oversimplified ideas presented on too many internet sites, is not always ideology.

      It’s not always right, either, which is why empirical work is essential.

      1. bernard11, not sure I follow this notion?about serious economic theory. If you can point me to even one non-trivial economic theory, one which has repeatedly and reliably predicted economic results in a major real world economy, it would help me give credence.

        Note also, I come to this from the point of view that experience, not reason, is the proper guide for politics. By it’s nature, economics, as soon as it steps into the political arena, announces a commitment to pure reason as a political guide. That’s the ideology I refer to.

        Given the uneven, and even capricious effects economic advice has actually achieved when heeded by politicians, I think I am on safe ground to emphasize its ideological character?manifested especially with regard to continued insistence on using economic theory after repeated failures.

        Of course, I’m all for “empirical work,” as, I understand, are some economists. Perhaps looking among their more recent contributions you could find something to impress me?but I’m not yet optimistic enough to take time to do it myself. I’m pretty sure when economics turns up something capable of delivering reliable predictions (which I hope it will), it will be big, big news?of the sort most educated people will hear about very quickly. I say it hasn’t happened yet. Correct me if you can.

  5. But they will also likely often misapply economic theory, or apply the wrong economic theory, and break up “monopolists” that were economically efficient and serving consumer welfare.

    What is your support for this assertion?

    The monopolist sells at a monopoly price, and gains monopoly rents, but the product is still, after all, on the market.

    What makes you think that breaking up a monopoly would take its products off the market? That doesn’t destroy the demand.

  6. I’m pretty libertarian-leaning, but I’m still a fan in theory of antitrust law and enforcement.

    I do agree mostly with this overall analysis and the basic point is obviously correct that “the real question is whether, once one establishes a regime of antitrust law, whether that regime is going to do more overall harm than good.”

    Even so, I think it’s possible antitrust enforcement can do good overall. It’s rare and rightfully so, but there’s still a place for it, even if theoretical at most times.

    “various companies will try their darndest to persuade the antitrust authorities that their competitors are “monopolists” that should be reined in.”

    I know there are some instances of this, but this is not really compelling overall — a business that has “competitors” is basically already not a “monopolist” by definition.

    1. Even so, I think it’s possible antitrust enforcement can do good overall. It’s rare and rightfully so, but there’s still a place for it, even if theoretical at most times.

      You’re missing the libertarian critique (which Prof. Bernstein expressly described above): assume for the sake of argument that there are rare times when antitrust enforcement would be beneficial. What reason is there to think that regulators and courts will (a) correctly identify those times, and (b) figure out the correct solution in those times? And what reason is there to think that regulators and courts will correctly identify all the times that enforcement will be harmful rather than beneficial?

      1. What reason is there to think that regulators and courts will (a) correctly identify those times, and (b) figure out the correct solution in those times? And what reason is there to think that regulators and courts will correctly identify all the times that enforcement will be harmful rather than beneficial?

        You set an awfully high bar. You want perfection?

        The libertarian critique is fine, except it really isn’t backed up by empirical analysis, at least as Bernstein presents it. It is more a statement of opinion than an analysis.

        Let’s make your questions more sensible, and rephrase as, What reason is there to think that anti-trust enforcement will on net be a benefit? Can’t we just as well ask what reason there is to think it won’t be?

        I mean, these are complicated issues, involving economics, politics, and lots of other things. Libertarian glibness is not an impressive approach.

        1. You set an awfully high bar. You want perfection?

          Perfection would be desirable, yes.

          But what I at least want is evidence ? rather than assumption ? that government will make things better. Liberals tend to compare the messiness of the real world to an abstract ideal government. They see purported market failures everywhere, but don’t consider government failure. The market is always going to lose a debate with a hypothetical government that only makes good decisions.

          1. This is the problem of economics; I get the Hayekian push for humility.

            But in this particular case, we do indeed have past examples of monopolies being a type of market failure and breaking them up actually needed to keep the market-based innovative engine going: Standard Oil and AT&T.

            1. What is your evidence that (1) Standard Oil was a monopoly; (2) breaking up Standard Oil improved market-based innovation; (3) Standard Oil represented a market failure at all; (4) Standard Oil hurt consumers; (5) Standard Oil’s breakup benefited consumers?

              Standard Oil is probably the perfect example of what David is talking about. It was a government lacking humility, solving a problem that didn’t exist. This was a pro-Sherman Act argument (against Standard Oil):

              “trusts have made products cheaper, have reduced prices; but if the price of oil, for instance, were reduced to one cent a barrel, it would not right the wrong done to people of this country by the trusts which have destroyed legitimate competition and driven honest men from legitimate business enterprise”

              That’s pretty telling about who the Sherman Act was intended to protect (not consumers).

          2. Liberals tend to compare the messiness of the real world to an abstract ideal government. They see purported market failures everywhere, but don’t consider government failure.

            I can’t speak for all liberals, but I don’t think that’s true. I would say libertarians refuse to see market failures – note your use of “purported” – and assume that government cannot accomplish anything. Tell me, do you think, for example, pollution problems are a market failure? Or do you think the market – the real one – can solve them?

            I don’t think libertarians have a particularly good record of being willing to test their theories against “the messiness of the real world.” Too many are happy to believe their ideas have the logical rigor of Euclidean geometry.

            I could equally well say, “Libertarians tend to compare the messiness of the real world to an abstract ideal market economy. They see purported government failures everywhere, but don’t consider market failure.”

            The market is always going to lose a debate with a hypothetical government that only makes good decisions.

            Government is always going to lose a debate with those who think it can never make good decisions.

      2. I’m not missing it, actually.

        The reason I think we can identify monopolies is that for all the complexity of the economic theory of antitrust, at the end of the day it just seems fairly obvious when significant market power is wielded. The close cases are not those times.

        Visa and Mastercard have market power. So, they went around preventing vendors from giving customers the option to pay other than by credit card and avoid those fees. An antitrust settlement made some headway in curbing that practice. I think that was a good thing.

        Yes, people suck, and when wielding government power they suck even more. So it’s best to minimize and decentralize government power. I’m all for that. But eventually you reach a point where, shucks, you have to rely on the old fashioned idea of trying to get relatively moral and trustworthy people into those positions of authority.

        I’m also all for restraint and delay. Short term monopoly profits can incentivize someone to build a better mouse trap. Things move fast in some sectors, and before long someone else may well knock them off their post. But there can still come a time where antitrust enforcement makes sense.

        1. “Visa and Mastercard have market power. So, they went around preventing vendors from giving customers the option to pay other than by credit card and avoid those fees.”

          Yes, let’s use this example of two competitors competing in a market against each other to prove the dangers of monopoly.

          “An antitrust settlement made some headway in curbing that practice. I think that was a good thing.”

          How does forcing Mastercard and Visa to pay $6B in settlement help Mastercard and Visa’s customers? They’re the ones paying for it.

          1. How does forcing Mastercard and Visa to pay $6B in settlement help Mastercard and Visa’s customers? They’re the ones paying for it.

            Why are they paying for it?

            Can MC and Visa arbitrarily raise their fees to generate an extra $6B? If so, why didn’t they do so before being fined?

            1. “Why are they paying for it?”

              Because consumers of goods and services always pay the providers’ expenses.

              “If so, why didn’t they do so before being fined?”

              Presumably because of competition. But the extra expenses were levied against their primary competitors, too. So both can raise prices without fear of a S 1 violation.

          2. “this example of two competitors competing”

            This wasn’t an example of competing, it was an example of blatant anti-competitive behavior. And it was done in parallel by supposed “competitors” who were actually not competing.

            “How does forcing Mastercard and Visa to pay $6B in settlement help Mastercard and Visa’s customers?”

            That’s not what I’m referring to. Visa and Mastercard have adhesion contract “terms of service” and they were inserting clauses that prevented vendors from offering a lower price or discount for cash/debit or charging a surcharge for credit cards. An antitrust settlement stipulated that they couldn’t do this any more.

            1. “…adhesion contract…”

              Adhesion contracts are enforceable everywhere in the United States.

              “An antitrust settlement stipulated that they couldn’t do this any more.”

              Right, and sophisticated vendors who voluntarily did this in a competitive market, are now no longer able to do it. And you are certain they will be better off. Why?

              1. Holy shit you’re dense. Vendors could NOT do this before, due to market power wielded by Visa and Mastercard. Now, vendors CAN do this, due to the antitrust settlement.

                1. The vendors purportedly used to enter into “clauses that prevented vendors from offering a lower price or discount for cash/debit or charging a surcharge for credit cards.” You said an antitrust settlement stipulated that vendors could no longer enter into these clauses–because Visa and Mastercard were prohibited from inserting such clauses into the contracts. Do you understand that if the law prevents A from contracting with B on terms Z, that both A and B are prohibited by law from entering into terms Z? And that at least under your reading of things, the current law today is that vendors are no longer entering into agreements whereby they agree not to offer lower prices or discounts for cash/dbit, or charging a surcharge for credit cards?

                  You’re also just wrong that vendors “could NOT do this before”. Many vendors refused to accept credit cards, at all. Schools did this and Mastercard eventually conceded to them (prior to the antitrust settlement).

                  What’s fucking crazy about your entire example, is that the antitrust settlement led many states to ban surcharges… as a matter of consumer protection. This is an example of a tie-in agreement that has pro-consumer effects, and here you are arguing that the Sherman Act prohibits it.

                  1. Yes — I’m absolutely certain that consumers are better off when bloodsucking rent seekers don’t have a stranglehold on 3% of nearly every retail transaction because their market power keeps anyone from avoiding those costs.

                    “the antitrust settlement led many states to ban surcharges… as a matter of consumer protection”

                    Bingo. Yup. As per usual, the government interfered in the name of “consumer protection” but what they actually did was enable monopoly power at the specific behest of Visa and Mastercard who lobbied for those laws.

                    1. “I’m absolutely certain that consumers are better off when bloodsucking rent seekers don’t have a stranglehold on 3%…”

                      The “bloodsucking rent seekers” are consumers. Why shouldn’t credit card companies and consumers of credit cards be able to use their own market powers to force vendors to upcharge cash customers? Vendors still have to make a decision based on the relative market power of cash versus credit card consumers. That’s just the market.

                      I’m against anti-surcharge laws because I don’t like the government fiddling with the market, but I’m also against the government interfering with agreements between vendors and credit card companies. Vendors always remained free to only accept credit cards that don’t require the prohibition (like Discover, at least for a time). Or none at all. Why is this state of affairs screaming for government intervention, except on the basis that the government should favor cash customers over credit card customers? What business is it of the state to resolve that dispute?

                    2. It comes down to the fact that Visa and Mastercard have “market power” i.e. monopoly power which enables them restrain competition from all other forms of retail payments. Consumers don’t have that, and neither do vendors with respect to retail payments. They are rent seekers and monopolists, who lately are even using their market power to stifle political speech. It’s not a realistic option for most vendors to just not accept Visa and Mastercard. You’re making zero antitrust sense, talking about consumers having “market power” and even less sense with the idea of “upcharging cash customers” when cash doesn’t have the 3% fee.

  7. ” The real question is whether, once one establishes a regime of antitrust law, whether that regime is going to do more overall harm than good.”

    Asking this question suggests that you have never had to live under an oppressive monopoly, which in turn implies that the current regulatory system is working.

    (Current broadband Internet service could use a bit of competition, for most of the country. You have your choice of the cable company, or the phone company. If, that is, you are lucky enough to have that many choices.)

    1. To what extent do you think that the limited amount of competition in broadband internet service is directly attributable to government intervention? Here’s a hint – a lot of it. Very very few industries are amenable to stable monopolies with the government giving a big helping hand in creating artificial barriers to entry. Even the classic example of a monopoly, Standard Oil of the late 19th Century, was losing market share to competition BEFORE the Federal Government started its legal crusade against Standard Oil. And what is almost NEVER reported about Standard Oil is HOW it managed to get to a 92% market share by 1892. Before Rockefeller entered the market, housefires and deaths from fires started by impure kerosene were incredibly common; Rockefeller started gaining market share in the 1870s after he significantly improved the refining process to market a much purer kerosene that didn’t sputter, flare up, and cause lethal fires. Then he rationalized both transportation and distribution of kereosene to make it much cheaper for consumers; between 1865 and 1892, the retail cost of a gallon of kerosene FELL by nearly 90%. It just took competitors 30 years+ to catch up to Rockefeller’s innovations. A monopoly built on providing consumers a better quality product at a much lower price is NOT a bad thing.

      1. Sorry, should say “withOUT the government giving a big helping hand in creating artificial barriers to entry.”

      2. Rockefeller greatly improved production methods for kerosene, lowering its cost dramatically, as you say. But let’s not pretend that wouldn’t have happened in a more competitive market as well and if it had the price of kerosene would have been lower still.

        Or do you contend that John D. lowered prices out of generosity, rather than because he thought lowering them would increase his profits?

      3. “To what extent do you think that the limited amount of competition in broadband internet service is directly attributable to government intervention?”

        Well, the government created the Internet, so I guess without government intervention, there would be no competition in the market of providing Internet. Was that the answer you were looking for?

        ” A monopoly built on providing consumers a better quality product at a much lower price is NOT a bad thing.”

        YMMV. See, for example, IBM’s effective monopoly on computer equipment in the 60’s and into the 70’s. By contrast, the PC market was driven by competition almost from the beginning, and today’s desktop PC is 1000 times faster, stores way more than 1000 times as much information, and is about 1/3 the cost of a 1981 model PC. (And the video system went from 4 colors to 16.7 million colors).

      4. You’re right about broadband. The main factor there is governments seeing the public rights of way as lucrative revenue sources. So government becomes the enabler and benefactor of these monopolies.

    2. Asking this question suggests that you have never had to live under an oppressive monopoly,

      You mean, other than the federal government?

      which in turn implies that the current regulatory system is working.

      Lisa, I’d like to buy your rock.

      1. “You mean, other than the federal government?”

        The federal government doesn’t have a monopoly. If you don’t like USA-brand government, feel free to shop around for one you like better.

      2. That’s pretty specious reasoning.

    3. “(Current broadband Internet service could use a bit of competition, for most of the country. You have your choice of the cable company, or the phone company. If, that is, you are lucky enough to have that many choices.)”

      In context, this is a really interesting observation. The natural monopoly (bolstered by government intervention) of broadband internet services did harm consumers, for decades. In some markets, this behemoth company that finally had the wherewithal to compete with natural monopolists showed up to compete, and immediately broadband internet services improved, and costs came down. And the nation is debating why it needs to breakup the behemoth to encourage competition.

  8. I have to say that I am not impressed with an essay that makes a sweeping dismissal of antitrust law, but is void of references to specific cases.

  9. The right way to look at antitrust law is not whether economic theory suggests that particular monopolies can and will exist that can, in theory, be corrected through government action, to the benefit of both consumer welfare and economic efficiency. The real question is whether, once one establishes a regime of antitrust law, whether that regime is going to do more overall harm than good

    No, the real question is could the monopoly have existed in the first place without government action. And the answer in the vast majority of cases is no.

    At the very beginning of electrification in the US, there were multiple companies competing in the same territories, until the government stepped in and put a stop to it, creating monopolies by government fiat.

    There are very few industries where the genuinely natural barriers to entry of new players are high enough to allow a monopoly to form without government protection (in the form of artificial barriers to entry).

  10. “Demagogic politicians will order their governments to go after large companies for political gain, not for sound economic reasons.”

    Pshaw, typical libertarian paranoia. The reason antitrust enforcement isn’t 100% effective is because of Republicans and lobbyists – the former can be voted out of office and the latter can be contained by common-sense campaign-finance reform.

    That would solve any problems better than the so-called “free market” which is in any case losing favor among the rising young generation.

    1. Neato satire, except zero people argue anything like that. Even so-called socialists like markets, just with more entitlements.

      (I say so-called because people on this blog have told me that’s not really socialism; YMMV)

      1. Well, in my haste I may have omitted some other factors in the non-enforcement of the antitrust laws against the big corporations, such as cowardly centrist Democrats who have been corrupted by big money. Fortunately, there’s now a progressive caucus to require Democratic leadership to follow the true interests of the people.

        There’s also the problem of Trump confusing the issue by pretending to be for antitrust enforcement, but in reality he’s trying to distract from his sinister Russian-inspired deregulatory agenda.

        1. And of course socialists love markets, they simply don’t like the way the mega-corporations are using their market power to destroy the planet, put small business out of business, and enslave their workers.

          1. The process is illustrated in this scientific diagram:

            https://bit.ly/2O20CUy

  11. I’m sure that Burnstein will then agree that in exchange for no, or almost no, anti-trust laws all patents and copyrights should be protected for no more than five years.

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