On the Economics of Antitrust Enforcement

• NCJ Number: 73782
• Journal: Georgetown Law Journal Volume: 68 Issue: 5 Dated: (June 1980) Pages: 1103-1111
• Author(s): F S McChesney
• Date Published: 1980
• Length: 9 pages
• Publication Format: Article
• Language: English
• Country: United States of America

Annotation

The article argues that an economic approach to antitrust enforcement through the concept of cost minimization and efficiency has little chances of succeeding.

Abstract

The article is a response to Professor W. F. Schwartz's contribution (NCJ-73781) which explores the application of cost minimization to the improvement of antitrust enforcement systems. First it is argued that Professor Schwartz's theory is based upon the debatable assumption that efficiency requires an antitrust enforcement system and that adoption of efficiency as the goal of antitrust would require a transformation of the existing enforcement system. In support, it is argued that anticompetitive behavior persists despite the presence of antitrust legislation and that a change in the existing enforcement system might only create greater inefficiency because the business community would be uncertain about legal efficiency principles. Next it is contended that cost minimization and efficiency are not synonymous and that it would be substantially more difficult to achieve efficiency rather then mere cost minimization. While cost minimization establishes the outer boundary of society's production possibilities curve, the cost efficiency point, which is a single point on the cost minimization schedule, is discoverable only by reference to prices and consumer preferences as well as to cost and production. Regardless of how cost minimizing an antitrust policy may be, individuals might not demand antitrust at a price sufficient to produce it. Such a situation would call for no antitrust enforcement. Finally the article takes issue with Profesor Schwartz's analysis of the incentive of antitrust enforcers in a public enforcement system, and argues that prosecutors and judges probably would be incapable of coping with the complexities of an efficiency-oriented enforcement system. The article includes bibliographical footnotes. (Author abstract modified)