Theory in Closer Contact with Industrial Life: American Institutional Economists on Competition Theory and Policy

Accepted at Journal of Institutional Economics

25 Pages Posted: 17 Feb 2020 Last revised: 24 Apr 2021

See all articles by Matthew Panhans

Matthew Panhans

Federal Trade Commission Bureau of Economics

Reinhard Schumacher

Universit├Ąt Potsdam

Date Written: January 19, 2020

Abstract

This paper investigates the views on competition theory and policy of the American institutional economists during the first half of the 20th century. These perspectives contrasted with those of contemporary neoclassical and later mainstream economic approaches. We identify three distinct dimensions to an institutionalist perspective on competition. First, institutionalist approaches focused on describing industry details, so as to bring theory into closer contact with reality. Second, institutionalists emphasized that while competition was sometimes beneficial, it could also be disruptive. Third, institutionalists had a broad view of the objectives of competition policy that extended beyond effects on consumer welfare. Consequently, institutionalists advocated for a wide range of policies to enhance competition, including industrial self-regulation, broad stakeholder representation within corporations, and direct governmental regulations. Their experimental attitude implied that policy would always be evolving, and antitrust enforcement might be only one stage in the development toward a regime of industrial regulation.

Keywords: History Of Economics, Institutionalists, Antitrust, Competition Policy

JEL Classification: B15, B25, L40

Suggested Citation

Panhans, Matthew and Schumacher, Reinhard, Theory in Closer Contact with Industrial Life: American Institutional Economists on Competition Theory and Policy (January 19, 2020). Accepted at Journal of Institutional Economics, Available at SSRN: https://ssrn.com/abstract=3522010 or http://dx.doi.org/10.2139/ssrn.3522010

Matthew Panhans (Contact Author)

Federal Trade Commission Bureau of Economics ( email )

600 Pennsylvania Ave NW
Washington, DC 20580
United States

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