THE POST-CHICAGO ANTITRUST REVOLUTION: A RETROSPECTIVE.

• Author: Yoo, Christopher S.
• Position: Symposium: The Post-Chicago Antitrust Revolution

INTRODUCTION 2146 I. THE CHICAGO REVOLUTION 2146 A. Consumer Welfare/Economic Efficiency as the Goal of Antitrust 2147 B. Price Theory 2153 II. THE POST-CHICAGO REVOLUTION 2160 A. The Conceptual Limits of Game Theory 2162 B. The Need for More Empirical Validation 2163 C. Post-Chicago's Impact on the Law 2165 III. BEYOND POST-CHICAGO? 2166 A. The Emerging Debate Over Neo-Brandeisian/Hipster Antitrust 2166 B. The Growing Emphasis on Empiricism 2168 CONCLUSION 2168 INTRODUCTION

I would like to thank the Law Review staff for inviting me to write the afterword to what was a terrific symposium. Milestone conferences like this provide a welcome opportunity to look both backward to see how far the law has come and forward to project how emerging trends might affect future developments.

In particular, a conference on "The Post-Chicago Antitrust Revolution" provides an opportunity to look not only at the post-Chicago School, but also the Chicago School, which motivated its genesis. In addition, this afterword is also an apt occasion to speculate about the potential impact of approaches that have gained increasing attention in recent years, such as neo-Brandeisianism and empirical antitrust.

1. THE CHICAGO REVOLUTION

   In many ways, the natural place to begin an afterword for a symposium on "The Post-Chicago Antitrust Revolution" is by looking at the school of thought that gave this movement its name: the Chicago School. Post-Chicago scholars often use the Chicago School as the foil for their analyses. (1) For example, this symposium's opening presentation on "Framing the Chicago School of Antitrust Analysis" used the Chicago School's position as the starting point for its critical analysis. (2) Other symposium contributors took similar approaches. (3)

   Scholars differ in their assessment of the Chicago School's impact. Many Chicago School supporters have claimed that their arguments have swept the field. (4) Others assert that the Harvard School has proven more influential than the Chicago School in shaping antitrust doctrine. (5) Still others have tried to strike a middle ground, arguing that both schools have played a critical role. (6) Differentiating between two separate threads of the Chicago School's argument can help reconcile these disparate assessments. The first contends that consumer welfare/economic efficiency represents the sole focus of antitrust. With respect to this claim, the Chicago School position prevailed, with the Harvard School's support. The second thread involves the Chicago School's preferred approach to applying economic analysis principles to antitrust: price theory. The Chicago School's success with respect to this latter aspect is more mixed.

   1. Consumer Welfare/Economic Efficiency as the Goal of Antitrust

      Although modern antitrust law typically views the Chicago and post-Chicago Schools as the dominant opposing viewpoints, the Chicago School initially arose as a reaction to a different movement: the Populist School that dominated antitrust thinking prior to the 1970s. (7) Echoing Louis Brandeis's concerns about the "curse of bigness," (8) the Populist School rejected economic welfare as the sole focus of antitrust and instead embraced a plural approach that included a wide range of noneconomic concerns, reflected in previous antitrust symposia published in this journal in 1977 and 1979. (9) These scholars embraced a Jeffersonian conception of an economy comprised of small firms, (10) complete freedom of choice by sellers and buyers, (11) and the promotion of wealth redistribution, (12) along with expanding purely economic considerations to include political concerns (13) and a preference for per se rules. (14)

      The Supreme Court decisions of the era largely reflected the views of the Populist School, striking down mergers by firms controlling as little as five percent of the market (15) and declaring a wide range of business practices illegal per se without any inquiry into market power. (16) In addition, the initial 1968 Merger Guidelines promulgated by the Department of Justice under the leadership of Harvard School scholar Donald Turner were skeptical about horizontal mergers in concentrated markets that would create firms with as little as eight percent market share and disfavored any vertical merger involving firms holding as little as six to ten percent of the market. (17)

      The Chicago School challenged each of these commitments. In particular, it rejected populists' advocacy for continuing to base antitrust on a plurality of considerations in favor of making economic efficiency and consumer welfare the sole guide to antitrust law. (18) This early Chicago work was backed by empirical scholarship, (19) a fact noted even by notable Chicago School critics. (20) Not all Chicago School supporters agreed: some have called for even more empiricism, (21) while others have seen Chicago School scholars (and indeed the entire field of industrial organization) turning away from empiricism in the 1980s. (22)

      The Chicago School scored some important victories over the Populist School in the Supreme Court, which increasingly framed antitrust law in terms of consumer welfare (23) and economic efficiency. (24) Consistent with this emphasis on economic effects, the Supreme Court gradually overruled the cases holding vertical contractual restraints per se illegal, (25) a development that participants in this symposium applauded as wise. (26)

      Even Populist School supporters came to acknowledge that economic efficiency had become the central concern of antitrust. (27) In the words of one commentator, by the mid-1990s, "the debate about the organizing values of antitrust ha[d] lost its drama," and "[t]he victory of a purely economic analysis over... the Modern Populist School could hardly seem more complete." (28) Still, as we shall see in Part III.A, the issue has arisen once again in the debate over neo-Brandeisian/hipster antitrust.

      It would be a mistake, however, to attribute the emergence of economic considerations as the exclusive touchstone of antitrust law solely to the Chicago School. Strikingly, the consumer welfare standard also drew support from the Harvard School, which "underwent a significant transformation in the late 1970s" from the interventionist position it took in the 1930s to 1960s. (29) This new Harvard School agreed with the Chicago School's rejection of populist considerations as motivating concerns for antitrust law, (30) as symposium participants have recognized, (31) although the Harvard School was influenced more by institutional competence and other process-based considerations than the broad conceptual economic framework that motivated the Chicago School. (32) This concurrence was tacit, in that Harvard School scholars did not explicitly connect their positions to the Chicago School's. (33)

      The Chicago and Harvard Schools' concurrence on the primacy of economic considerations rendered the Populist School's position untenable. (34) Once the Chicago and Harvard Schools agreed that economic analysis should be the heart of antitrust, debates over antitrust law became what Michael Jacobs called an "intramural dispute" over the type of economic analysis to apply. (35) The commitment to economic analysis over populist considerations is also shared by the post-Chicago School. (36)

      The fact that both of the leading antitrust schools of thought supported treating consumer welfare and economic efficiency as the sole goal of antitrust should not take away from the Chicago School's contribution. It is telling that when endorsing consumer welfare as the antitrust standard, the Supreme Court cited Chicagoan Robert Bork (37) and not the Harvard School scholarship adopting the same position. (38) Revealingly, both critics and supporters give the Chicago School most of the credit for the Supreme Court's adoption of the consumer welfare standard. (39) Robert Pitofsky summed up this consensus nicely when he found it "unanimous" that the Chicago School had "demolished some aspects of the antitrust approach of the 1950s and 1960s (Warren Court period) and eventually displaced it with a more rigorous approach" that "emphasized exclusively economic considerations (to the complete exclusion of other social and political values)." (40)

   2. Price Theory

      While the Chicago School's advocacy for making economics the sole focus of antitrust law ultimately prevailed, its arguments in support of its preferred mode of economic analysis achieved somewhat more mixed results. The Chicago School was forthright in its preference for neoclassical price theory. (41) Built on the work of such giants as Alfred Marshall and Paul Samuelson, price theory has been defined as "the explanation of how relative prices are determined," primarily through industry-level analyses of supply and demand, as well as "how prices function to coordinate economic activity." (42) Unlike the case study approach of the original Harvard School, which explored the variations in the details of different industries and firms, (43) price theory "simplif[ies] a rich (high-dimensional heterogeneity, many agent, dynamics, etc.) and often incompletely specified model for the purposes of answering a simple (scalar or low-dimensional) allocative question." (44)

      Even critics of the Chicago School's price theoretic approach have generally recognized that it has influenced Supreme Court doctrine. The adoption of pricing below cost as the appropriate test of predatory pricing (45) was a clear endorsement of price theory. (46) With respect to the leverage theory of tying, another Chicago School target, (47) the Court abandoned the idea that a showing of market power was unnecessary (48) and returned to subjecting tying claims to a market power requirement. (49) Participants in this symposium recognized that the leverage theory used to justify treating tying as illegal per se without any showing of foreclosure or exclusion was based on "mistaken...