Abstract

Austrian economics identifies three reasons, any one of which invalidates antitrust as a mechanism for ensuring competition. The first is the political economy realization that antitrust cannot be administered without political cronyism, which will blunt its effectiveness. The second is the problem of knowledge; no antitrust judge or regulator can know all the relevant facts for rendering a decision that improves the operation of markets. Either of these is fatal to the arguments for antitrust. This chapter will focus on the third objection: antitrust is premised on a flawed, static model of competition. By not recognizing that competition is a dynamic process involving innovation, antitrust actually thwarts competition, achieving the opposite of its intended effect.