In recent years there has been an upsurge of interest in competition policy applied to labor markets. But the development of a coherent competition policy for labor markets requires us to confront an old debate: What is the economic foundation of competition law? We argue that both the total welfare and consumer welfare standards are flawed. An often-proposed alternative (the “protection of the competitive process standard”) lacks a foundation in economic welfare principles and therefore provides no guidance in resolving trade-offs. Fortunately, there is an alternative. We suggest that a newly emerging approach, known as the transactions cost approach to competition law, offers promise as a credible alternative foundation for competition policy in labor markets and other antitrust markets more generally.

Darryl Biggar, Allan, Alberto Heimler1

I. INTRODUCTION

In recent years there has been a substantial increase in interest in the application of competition law to labor markets. We believe this is a positive development. Labor markets have, for too long, been seen as off-limits to competition enforcers. As a first step in the reinvigoration of antitrust enforcement in the context of labor markets, several recent papers have sought to articulate a clear competition policy for labor markets.2 In developing a competition policy for labor markets, antitrust economists are forced to confront, once again, the question of the ec

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