Price Theory and US Antitrust: a Note on an Enduring Legal Doctrine

Since the mid-1980s the post-Chicago approach to antitrust economics has produced a few game-theoretic models which have challenged many typical Chicago antitrust propositions. Yet, Chicago style antitrust has not yet lost its hold on u.s. antitrust. The paper suggests that the Chicago persistence within u.s. antitrust and, by the same token, the inhospitality of u.s. antitrust towards game-theoretical Industrial Organization theory owe much to the vitality of the legal doctrine according to which antitrust analysis should be consistent with traditional price theory. In particular, the paper analyzes two issues: i. the adoption of the equilibrium end-state notion of competition which is still dominant within mainstream economics and ii. the unshaken faith in the resilience of competition vis-à-vis Type ii errors committed by antitrust Agencies, provided that government-induced barriers to entry be absent or negligible.