The Chicago School's Foundation is Flawed: Antitrust Protects Consumers, Not Efficiency

HOW THE CHICAGO SCHOOL OVERSHOT THE MARK: THE EFFECT OF CONSERVATIVE ECONOMIC ANALYSIS ON U.S. ANTITRUST, Robert Pitofsky, ed., Oxford University Press, 2008

University of Baltimore School of Law Legal Studies Research Paper No. 2009-17

19 Pages Posted: 13 Mar 2009 Last revised: 17 Nov 2009

See all articles by John B. Kirkwood

John B. Kirkwood

Seattle University School of Law

Robert H. Lande

University of Baltimore - School of Law

Date Written: 2008

Abstract

Chicago School antitrust policy rests on the premise that the purpose of the antitrust laws is to promote economic efficiency. That foundation is flawed. The fundamental goal of antitrust law is to protect consumers.

This essay defines the relevant economic concepts, summarizes the legislative histories, and analyzes recent case law. All these factors indicate that the ultimate goal of antitrust is not to increase the total wealth of society, but to protect consumers from behavior that deprives them of the benefits of competition and transfers their wealth to firms with market power. When conduct presents a conflict between the welfare of consumers and total welfare (e.g., a merger that raises prices but reduces costs), no court in recent years has chosen economic efficiency over consumer protection. For a more extensive discussion of these issues, see The Fundamental Goal of Antitrust: Protecting Consumers, Not Increasing Efficiency, 84 Notre Dame L. Rev. 191 (2008), http://ssrn.com/abstract=1113927

Keywords: antitrust, monopoly, Chicago School, efficiency, consumers, wealth transfers, competition, consumer welfare

JEL Classification: K21, K29, K39

Suggested Citation

Kirkwood, John B. and Lande, Robert H., The Chicago School's Foundation is Flawed: Antitrust Protects Consumers, Not Efficiency (2008). HOW THE CHICAGO SCHOOL OVERSHOT THE MARK: THE EFFECT OF CONSERVATIVE ECONOMIC ANALYSIS ON U.S. ANTITRUST, Robert Pitofsky, ed., Oxford University Press, 2008, University of Baltimore School of Law Legal Studies Research Paper No. 2009-17, Available at SSRN: https://ssrn.com/abstract=1358402

John B. Kirkwood

Seattle University School of Law ( email )

901 12th Avenue, Sullivan Hall
P.O. Box 222000
Seattle, WA n/a 98122-1090
United States

Robert H. Lande (Contact Author)

University of Baltimore - School of Law ( email )

1420 N. Charles Street
Baltimore, MD 21218
United States

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