Edited by Peter G. Klein and Michael E. Sykuta
Chapter 23: The Chicago School, Transaction Cost Economics, and Antitrust
Joshua D. Wright John Roberts’ reign at the US Supreme Court is only in its nascent stages. Already, however, its antitrust activity level has exceeded the Court’s single case average prior to the 2003–04 Term by a significant margin. This flurry of antitrust activity, combined with an apparent willingness to reconsider long-established precedents that conflict with modern antitrust theory, suggests that the Supreme Court will play a relatively significant role in shaping antitrust doctrine for years to come. In the four decades prior to the Roberts Court’s first Term, antitrust jurisprudence could be summarily, but accurately, described as slowly but surely absorbing the insights of the Chicago school and the transaction cost approach: per se prohibitions against vertical restraints gave way to rule-of-reason analysis, the per se rule against tying was softened, hostility to vertical integration and predatory pricing all but disappeared, and the law incorporated a more sophisticated understanding of the procompetitive uses of exclusive dealing contracts. As courts increasingly incorporated the lessons of the Chicago school and transaction cost contributions of the 1960s, 1970s, and 1980s, the hostility toward various business practices was relaxed in favour of a rule-of-reason approach that placed evidentiary burdens on plaintiffs to demonstrate these practices would generate anticompetitive effects (Wright, 2007a). Identifying the economic influences underlying a series of court decisions is a difficult task. But that task is rendered impossible without some guidelines as to what the author intends when he claims that a particular set of decisions is influenced by...
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