When Economics Met Antitrust: The Second Chicago School and the Economization of Antitrust Law

Posted by Social Science Research Network

When Economics Met Antitrust: The Second Chicago School and the Economization of Antitrust Law – Patrice Bougette (University of Nice Sophia Antipolis – Law, Economics, and Management Research Group (UMR CNRS 7321 GREDEG)), Marc Deschamps (Université de Lorraine ; University of Strasbourg – Bureau of Economic Theory and Application) and Frédéric M. Marty (Research Group on Law, Economics and Management (UMR CNRS 7321 GREDEG))

ABSTRACT: In this article, we use a history of economic thought perspective to analyze the process by which the Chicago School of Antitrust emerged in the 1950s and became dominant in the US. We show the extent to which economic objectives and theoretical views shaped antitrust laws in their inception. After establishing the minor influence of economics in the promulgation of U.S. competition laws, we then highlight U.S. economists’ very cautious views about antitrust until the Second New Deal. We analyze the process by which the Chicago School developed a general and coherent framework for competition policy. We rely mainly on the seminal and programmatic work of Director and Levi (1956) and trace how this theoretical paradigm was made collective, i.e. the ‘economization’ process took place in US antitrust. Finally, we discuss the implications, if not the possible pitfalls, of such a conversion to economics-led competition law enforcement.