Corporate & Securities Law

Did the Chicago School Overshoot the Mark?

I’ve posted to SSRN a new essay entitled Overshot the Mark?  A Simple Explanation of the Chicago School’s Influence on Antitrust.  It is a book review of Robert Pitofsky’s recent volume How the Chicago School Overshot the Mark: The effect of Conservative Economic Analysis on U.S. Antitrust, and is forthcoming in Volume 5 of Competition Policy International.

The book review is a critical review of the Post-Chicago antitrust agenda adopted by many of the volume’s authors, and a defense of what the editors describe as conservative economics (but seem to mean Chicago School), from an empirical, evidence-based perspective.  The idea of the review is avoid the ideological component of the Chicago v. Post-Chicago debate by choosing to focus instead on the relative predictive power of the economic models.  In short, the evidence-based antitrust concept is one that requires running a horserace between the competing economic models of various forms of antitrust relevant behavior (I focus on RPM and exclusive dealing in the review) in order to identify the best available economic learning upon which antitrust policy can and should be built.  The standard requires flexibility over time but also commits policy makers to take seriously predictive power of models rather than grabbing whatever is convenient from the menu.

There are a number of other critical points about the volume, the approach to antitrust it advocates, and responses to specific essays in the review.

Here is the abstract:

Using George Stigler’s rules of intellectual engagement as a guide, and applying an evidence-based approach, this essay is a critical review of former Federal Trade Commission Chairman Robert Pitofsky’s How the Chicago School Overshot the Mark: The Effect of Conservative Economic Analysis on U.S. Antitrust, a collection of essays devoted to challenging the Chicago School’s approach to antitrust in favor of a commitment to Post-Chicago policies. Overshot the Mark is an important book and one that will be cited as intellectual support for a new and “reinvigorated” antitrust enforcement regime based on Post-Chicago economics. Its claims about the Chicago School’s stranglehold on modern antitrust, despite the existence of a perceived superior economic model in the Post-Chicago literature, are provocative. The central task of this review is to evaluate the book’s underlying premise that Post-Chicago economics literature provides better explanatory power than the “status quo” embodied in existing theory and evidence supporting Chicago School theory. I will conclude that the premise is mistaken. The simplest explanation of the Chicago School’s continued influence of U.S. antitrust policy — that its models provide superior explanatory power and policy relevance — cannot be rejected and is consistent with the available evidence.

You can download it here.

Full post as published by Truth on the Market on April 03, 2009 (boomark / email).