Is Competition Such a Good Thing? Static Efficiency versus Dynamic Efficiency

Is Competition Such a Good Thing? Static Efficiency versus Dynamic Efficiency This paper addresses the rationale for antitrust legislation. It is a striking fact that the legitimacy of antitrust law has been taken for granted inthe United States ever since the Sherman Act of 1890 and, until the advent of the so-called Chicago School, it was even taken for granted by conservativeAmerican economists. Europeans, on the other hand, have always been lukewarm about legal action against trusts and cartels and this attitude is found rightacross the political spectrum in most European countries. Nevertheless, in both the U.S.A. and Europe, the ultimate justification for antitrust law derives from economic doctrine regarding the beneficial effects of competition. But what exactly are these beneficial effects and how secure is the contention of economists that competition is always superior to monopoly? Surprisinglyenough, competition, that central concept of economics, is widely misunderstood by many economists, both as a market phenomenon and as an organizingprinciple of economic reasoning. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Is Competition Such a Good Thing? Static Efficiency versus Dynamic Efficiency

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Publisher
Springer Journals
Copyright
Copyright © 2001 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1011160622792
Publisher site
See Article on Publisher Site

Abstract

This paper addresses the rationale for antitrust legislation. It is a striking fact that the legitimacy of antitrust law has been taken for granted inthe United States ever since the Sherman Act of 1890 and, until the advent of the so-called Chicago School, it was even taken for granted by conservativeAmerican economists. Europeans, on the other hand, have always been lukewarm about legal action against trusts and cartels and this attitude is found rightacross the political spectrum in most European countries. Nevertheless, in both the U.S.A. and Europe, the ultimate justification for antitrust law derives from economic doctrine regarding the beneficial effects of competition. But what exactly are these beneficial effects and how secure is the contention of economists that competition is always superior to monopoly? Surprisinglyenough, competition, that central concept of economics, is widely misunderstood by many economists, both as a market phenomenon and as an organizingprinciple of economic reasoning.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 3, 2004

References

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