When one group tries to obtain privileges from the government to secure profits beyond those available under well-functioning markets. Importantly, such privileges-seeking does not create new value in the economy. It merely transfers value from one group to another, while wasting physical, human, and social capital.
“The existence of an opportunity to obtain monopoly profits will attract resources into efforts to obtain monopolies, and the opportunity costs of those resources are social costs of monopoly too… Theft provides an instructive analogy. The transfer of wealth from victim to thief involves no artificial limitation of output,' but it does not follow that the social cost of theft is zero. The opportunity for such transfers draws resources into thieving and in turn into protection against theft, and the opportunity costs of the resources consumed are social costs of theft.” Richard Posner - The Social Costs of Monopoly and Regulation (1975)
Xerox invented modern copier technology and was so successful that its brand name became a verb. In 1972, U.S. antitrust authorities charged Xerox with monopolization and eventually ordered the licensing of all its copier-related patents. As new research by Robin Mamrak shows, this antitrust intervention promoted subsequent innovation in the copier industry, but only among Japanese competitors. Nevertheless, their innovations benefited U.S. consumers.
The draft Merger Guidelines largely replace the consumer welfare standard of the Chicago School with the lessening of competition principle found in the 1914 Clayton Act. This shift would enable the Federal Trade Commission and Department of Justice Antitrust Division to utilize the full extent of modern economics to respond to rising concentration and its harmful effects, writes John Kwoka.
In new research, Cyril Hédoin and Alexandre Chirat use the rational-choice theory of economist Anthony Downs to explain how populism rationally arises to challenge established institutions of liberal democracy.
In a new paper, Bing Guo, Dennis C. Hutschenreiter, David Pérez-Castrillo, and Anna Toldrà-Simats study how large institutional investors impact firm innovation. The authors find that large institutional investors encourage internal research and development but discourage firm acquisitions that would add patents and knowledge to their firms’ portfolios, hampering overall innovation.
Joshua Gray and Cristian Santesteban argue that the Federal Trade Commission's focus in Meta-Within and Microsoft-Activision on narrow markets like VR fitness apps and consoles missed the boat on the real competition issue: the threat to future competition in nascent markets like VR platforms and cloud gaming.
Antitrust debates have largely ignored questions about the relationship between market power and productivity, and scholars have provided little guidance on the issue due to data limitations. However, data is plentiful on the hospital industry for both market power and operating costs and productivity, and researchers need to take advantage, writes David Ennis.
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