Chapter 2: What is Competition?
Maurice E Stucke* The financial crisis prompted in the United States unprecedented government bailouts for banks, mortgage servicers, the insurance giant AIG, and automotive makers General Motors and Chrysler. The crisis raised important issues of market failure, weak regulation, our lack of understanding of systemic risk in financial markets, and moral hazard. The crisis prompted policy-makers to re-examine fundamental issues such as the efficiency of markets and the role of legal, social, and ethical norms in a market economy. The goals of antitrust and premises of its current neoclassical economic theories are also being re-examined.1 After all, one well-recognized antitrust goal is ‘to avert the need for massive and ongoing government regulation or nationalization.’2 The ‘overriding purpose of antitrust policy,’ wrote Professors Blake and Jones, ‘is to maintain an economy capable of functioning effectively without creating an abundance of supervisory * Associate Professor, University of Tennessee College of Law, and Senior Fellow, American Antitrust Institute, USA. The author wishes to thank the participants of the Fifth Annual ASCOLA Conference for their helpful comments, and the University of Tennessee College of Law and the WW Davis Faculty Development Fund for the summer research grant. This chapter is based on a longer article ‘Reconsidering Competition’, University of Tennessee Legal Studies Research Paper No 123, available at http://ssrn.com/abstract=1646151. 1 JT Rosch, Commissioner, Federal Trade Commission, ‘Managing Irrationality: Some Observations on Behavioral Economics and the Creation of the Consumer Financial Protection Agency’ (6 January 2010), http://www.ftc. gov/speeches/rosch/100106financial-products.pdf. Commissioner Rosch has been...
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