A Legal Theory of Economic Power

A Legal Theory of Economic Power

Implications for Social and Economic Development

New Horizons in Competition Law and Economics series

Calixto Salomão Filho

In this provocative book Calixto Salomão Filho builds a strong case for why economic power cannot be considered a mere market phenomenon. Taking the forgotten realities and effects of these power structures into account, this comprehensive legal analysis persuasively argues the need for a new theory.

Chapter 1: A Neo-Structural Legal Perspective to Economic Power Analysis

Calixto Salomão Filho

Subjects: development studies, development economics, economics and finance, development economics, law and economics, law - academic, competition and antitrust law, law and economics


1. INTRODUCTION: THE INSUFFICIENCY OF THE ANTITRUST CONCEPTS AND INSTRUMENTS For decades, antitrust theory has been moribund and read like an obituary. New ideas have been few and far between, and what little has come on the scene takes pride in having mere practical application, all foundational theories and justifications for antitrust having long since had their day. In fact, the strong tendency toward simplification and doctrinal negativism has a double origin. In the first instance, it is based upon a superficial analysis of the economic landscape that leads to the belief that the effects of private economic power in society are limited to the manufacturer–consumer relationship. Economic history, both in developing and developed countries, shows that the effects of monopoly power are much more pervasive than just the consumer–producer relationship, affecting development patterns and even distribution patterns in society. In the second instance, there is a powerful and again simplistic faith in the ability of economic theory to predict results and, consequently, in our ability to identify the most efficient result in the consumer–manufacturer relationship. This efficient result is, in its turn, the product of a rationality-based analysis of the market functioning. Therefore law and antitrust law in particular have been oriented to correct imperfections in the market functioning. Market power structures, in this (neoclassical)1 view, are nothing more than the product of an imperfect functioning of the market. Adding these two simplifications together leads to a belief in the possibility of identifying one unique...

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