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 3: Power Structures: Dynamics and Behavior

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. THE IMPORTANCE OF THE STRUCTURE OF RELATIONS FOR THE DYNAMICS OF POWER As seen in the first chapter, the fixation with economic results is responsible for a great deal of the problems current economic law faces. A legal proposal on how to deal with the theme of economic power must be constructed around certain core values, like broad access to and distribution of economic knowledge. In order to do so, it is not enough to analyze economic structures from a static standpoint. It is also necessary to be concerned with economic relations; and for a simple reason. In fact, when talking about structures, what we have in mind are normally legal and economic situations of power, which allow domination over consumers, other competitors, other entire sectors of the economy and even over workers, restricting the choices and/or freedom of choice. Well, this does not happen only if there are economic structures with market power. On many occasions, even in the absence of market power, the structure of the relation between the parties generates power. In a quite relevant work on power, K. Dowding shows how, in fact, seen from the point of view of game theory, power is found a lot more in the structure of individual relations than in the unbalance of strengths between parties. This structure eventually determines the behavior of the individual (the case, for example, of the prisoner’s dilemma).1 It is, in fact, good news, as it confirms what was just suggested, that is,...

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