Antitrust is for the short term

Short-Term

I strongly adhere to the Chicago School idea that markets tend to self-correct… with a significant qualification.

Self-correction often takes a lot of time.

Competitive disruption, innovation or entry is not instant.

Hence, we cannot simply trust that the market will fix it.

Some policy implications:

  1. Antitrust intervention should as a rule focus on remedying short term deviations from consumer welfare, not long term ones;
  2. Antitrust decision-making should be agile, and not too participatory or politicized as a rule;
  3. Antitrust proceedings should be fast. Abridged procedural rules – including deadlines – are necessary;
  4. Antitrust remedies should be predominantly behavioral, because structural remedies yield long term consequences which affect the trajectory and pace of market self-correction.

2 thoughts on “Antitrust is for the short term”

  1. Nonsense! If antitrust authorities are forever intervening to solve short run “problems” then the market will never be able to respond. Such a viewpoint effectively contradicts the stated claim of being a supporter of Chicago economics. Intervention should be only required/occur when the market will not respond over a longer time horizon, say 1 to 2 years.

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    1. Thank you. This helps a lot. I know understand that I wrote the post with an embedded assumption: that the antitrust agency should prove when it intervenes that the market will not self correct in the long term (or that it will take too much time). This is actually the policy in many existing areas, from SNIIP analysis to potential competition. But this is often forgotten, for instance when we discuss remedies like divestitures or breakups which alter the long term. Let me also clarify one or two things: authorities should intervene carefully, not constantly. And I dont claim to be a supporter of Chicago economics.

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