Posted by Social Science Research Network
By Warren S. Grimes (Southwestern Law School)
Abstract: Current antitrust orthodoxy focuses on short term price/output factors. This increasingly criticized model does not adequately protect competition in industries in which individuals and small firms thrive. Small entrepreneurs may be efficient for a variety of reasons, including the incentives that flow from owner operation, the personal relationships that lead to superior service, or the strong creative component of the business. Despite advantages in efficiencies and superior willingness to innovate, small providers have been forced out of the market by intended or unintended effects of antitrust enforcement decisions and regulatory initiatives. Recognizing the twin metrics of consumer choice and entrepreneurial choice is critical to protecting competition and restoring antitrust relevancy. This article explores the concept of entrepreneurial choice and its application to small entrepreneurs. It examines shortcomings in enforcement and regulatory policies in three critical industries (agriculture, healthcare, and communications and entertainment) and compares these industries to the wine and beer industries, where creative small entrepreneurs have a revitalized presence. The article concludes by offering an approach for protecting efficient and in-demand small entrepreneurs while enhancing life choices for consumer and seller alike. In industries in which small entrepreneurs are efficient, this formula includes enhanced merger control, more vigorous antitrust enforcement to maintain open distribution, and greater tolerance for small seller collective actions needed to offset monopsony power.