Towards a Broader View of Competition Policy

For over a hundred years, competition policy has been a central part of a market economy’s legal framework. Over the past third of a century, however, the scope and effectiveness of competition policy has been narrowed under the influence of certain ideas about the functioning of the market economy, sometimes referred to as the Chicago School of Law and Economics—ideas which have subsequently been widely discredited within the economics profession, but whose influence within antitrust law remains significant. This paper argues that, to the contrary, changes in our economy and our understandings of the interplay between economics and politics necessitates a broader reach for competition policy even than envisaged by the original advocates of antitrust law. This takes on particular significance with recent reports, such of that of the Council of Economic Advisers of President Obama, highlighting the increase in market power across many important sectors of the US economy and persistent higher rates of return to capital than seem consistent with competition. These monopoly rents may, in turn, play an important role in the country’s growing inequality