Tweaking Antitrust's Business Model (Review Essay)

Abstract

This Essay reviews Herbert Hovenkamp's book, "The Antitrust Enterprise: Principle and Execution" (Cambridge, MA: Harvard University Press, 2005). Hovenkamp documents a remarkable transformation in antitrust doctrine in the three decades since Robert Bork and Richard Posner authored scathing critiques (in 1978 and 1976, respectively) of then-prevailing antitrust rules. Rejoicing that contemporary antitrust has redefined competition in a manner that focuses not on the number of firms in a market but on the degree to which the market generates low prices, high output, and innovation, Hovenkamp offers a number of suggestions for improving antitrust implementation. This Essay evaluates Hovenkamp's suggestions, concluding that most are sound, that a few might be slightly revised to enhance their effectiveness or administrability, and that a couple are downright unwise. In particular, the Essay criticizes Hovenkamp's call for abandonment of the indirect purchaser rule and his proposed test for identifying exclusionary conduct under Section 2 of the Sherman Act.

Keywords: antitrust, Hovenkamp, Posner, Bork, competition, monopoly, indirect purchaser, exclusionary, Sherman Act

JEL Classification: D41, D42, D43, D61, K21, K23, L11, L12, L13, L4