Neoclassical Competition Policy without Apology

Abstract

Neoclassical competition policy (NCP) is based on the following principles: (a) the ultimate goal of competition law is the maximization of consumer welfare; (b) competition law interventions should be limited to deal with market failures; (c) market power is not a problem per se; and (d) intervention should be limited only to situations where the expected cost of no intervention is greater than the expected cost of intervention. The Neo Brandeisian school rejects all these principles. It considers that NCP is in part responsible for the observed increased in market concentration and market power and is, therefore, to be blamed for the decline of the labor share and the increase in inequality in the West. In this chapter, I aim to provide a defence of the neoclassical approach to antitrust that is nonetheless sensitive to the legitimate criticisms raised by the Neo Brandeisians.

Keywords: Antitrust, Competition, Market Failure, Neoclassical Economics, Neo Brandeisian School, Regulatory Failure, Welfare

JEL Classification: K21, K42, L40