The Economic Institutions of Capitalism

• Published date: 01 September 1986
• Date: 01 September 1986
• DOI: 10.1177/0003603X8603100308
• Subject Matter: Article

The Antitrust Bulletin/Fall 1986

The Economic Institutions

of

Capitalism

Oliver E. Williamson

New York: The Free Press (1985), 450 pp.

Reviewed by Dennis C. Mueller, Department

of

Economics,

The University

of

Maryland

827

In the last two decades, several of the major tenets

of

the

conventional wisdom

of

industrial organization have been chal-

lenged. Where high market shares and concentration were once

thought to induce market power and cooperative behavior and

thus higher prices, they are now presumed by many to be

symptomatic

of

the greater efficiency (and hence lower prices?)

of

the leading firms. Where leading economists like George

StiglerIand Jesse Markham' once expressed doubts concerning

the extent

of

efficiency gains stemming from mergers, each new

merger wave now brings forth a chorus

of

new hypotheses about

the efficiency gains from mergers.

In no area has the assault on industrial organization's conven-

tional wisdom been broader and more likely to have lasting

effects

than

in the reexamination by the transaction costs

economics school

of

interfirm and intrafirm contractual linkages.

Where some contractual ties were once thought to "serve hardly

any purpose beyond the suppression of competition."> and thus

were deemed to be in violation

of

the antitrust statutes per se,

1G. J. Stigler, "Monopoly and Oligopoly by Merger," American

Economic Review 40 (May 1950): 23-34.

2J. W.

Markham,

"Survey

of

the Evidence and Findings on

Mergers," in Business Concentration and Price Policy (Princeton,

N.J.:

National Bureau

of

Economic Research, 1955), pp. 141-82.

3Standard Oil Co.

of

California v. United States, 337 U.S. 293,

305-06 (1949).

© 1986 by Federal Legal Publications, Inc.