Requiem for a Paradox: The Dubious Rise and Inevitable Fall of Hipster Antitrust

72 Pages Posted: 19 Sep 2018 Last revised: 28 Sep 2018

See all articles by Joshua D. Wright

Joshua D. Wright

George Mason University - Antonin Scalia Law School, Faculty

Elyse Dorsey

Government of the United States of America - Federal Trade Commission

Jan Rybnicek

Freshfields Bruckhaus Deringer LLP

Jonathan Klick

University of Pennsylvania Law School; Erasmus School of Law; PERC - Property and Environment Research Center

Date Written: September 14, 2018

Abstract

For antitrust practitioners, scholars, and economists – those who work with antitrust in agencies, courts, or law firms – the development of the antitrust laws over the past half century has been a remarkable and positive development for the American economy and consumers. Most fundamentally, there is agreement that the goal of protecting consumer welfare is and should be the lodestar of modern antitrust enforcement. This has not always been the case. For much of its history, antitrust has done more harm than good. Prior to the modern “consumer-welfare” era, antitrust laws employed confused doctrines that pursued populist notions and often led to contradictory results that purported to advance a variety of social and political goals at the expense of American consumers. From the perspective of antitrust professionals and academics, there is widespread agreement that the intellectual revolution that led to the consumer welfare standard saved an incoherent doctrine from its own internal inconsistencies and saved consumers from its perverse and paradoxical results. Outside of mainstream antitrust practice and the academy, things look quite different. There appears to be another revolution brewing – the Hipster Antitrust Movement. It calls for the return of populism in antitrust enforcement. It declares the modern antitrust era - and the consumer welfare standard specifically – a failure. Hipster Antitrust lays at antitrust law’s feet a myriad of perceived socio-political problems, including, but not limited to, rising inequality, employee wage concerns, and the concentration of political power. The drumbeat for this revolution is strong and growing, with a broad range of enthusiastic participants and devotees, including public intellectuals and think tankers, as well as prominent members of Congress. At its core, the Hipster Antitrust movement calls for a total rejection of the commitment to economic methodology and evidence-based policy that lies at the heart of modern antitrust enforcement. In this Article, we evaluate the Hipster Antitrust claims. Some of those claims are made on modern antitrust’s own terms: that a return to “big-is-bad” antitrust enforcement based upon firm size or banning vertical mergers would make consumers better off. Others are “outside” the domain of consumer welfare-based antitrust: that lax antitrust has caused an increase in economic inequality. We demonstrate that, when evaluated as evidence-based policy proposals, the Hipster Antitrust agenda fails to substantiate its claims and promises. We discuss the dangers to consumers and society of adopting the populist antitrust approach, including enhancing corporate welfare at the expense of consumers, and encouraging rent-seeking by giving agencies and judges unbridled discretion.

Keywords: antitrust, hipster, corporate concentration, FTC, mergers, Section 7, Sherman Act, consumer welfare, platforms

JEL Classification: K21, L4

Suggested Citation

Wright, Joshua D. and Dorsey, Elyse and Rybnicek, Jan and Klick, Jonathan, Requiem for a Paradox: The Dubious Rise and Inevitable Fall of Hipster Antitrust (September 14, 2018). George Mason Law & Economics Research Paper No. 18-29. Available at SSRN: https://ssrn.com/abstract=3249524 or http://dx.doi.org/10.2139/ssrn.3249524

Joshua D. Wright (Contact Author)

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

Elyse Dorsey

Government of the United States of America - Federal Trade Commission ( email )

600 Pennsylvania Ave., NW
Washington, DC 20580
United States

Jan Rybnicek

Freshfields Bruckhaus Deringer LLP

700 13th St NW
Floor 10
Washington, DC 20005
United States

Jonathan Klick

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
2157463455 (Phone)

Erasmus School of Law ( email )

3000 DR Rotterdam
Netherlands

PERC - Property and Environment Research Center

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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