Journal of Economic Perspectives—Volume 14, Number 1—Winter 2000—Pages 43–60 Antitrust.pdf

Journal of Economic Perspectives—Volume 14, Number 1—Winter 2000—Pages 43–60 Antitrust Policy: A Century of Economic and Legal Thinking William E. Kovacic and Carl Shapiro assage of the Sherman Act in the United States in 1890 set the stage for a century of jurisprudence regarding monopoly, cartels, and oligopoly. PAmong American statutes that regulate commerce, the Sherman Act is unequaled in its generality. The Act outlawed “every contract, combination or conspiracy in restraint of trade” and “monopolization” and treated violations as crimes. By these open-ended commands, Congress gave federal judges extraordi- nary power to draw lines between acceptable cooperation and illegal collusion, between vigorous competition and unlawful monopolization. By enlisting the courts to elaborate the Sherman Act’s broad commands, Congress also gave economists a singular opportunity to shape competition policy. Because the statute’s vital terms directly implicated economic concepts, their interpretation inevitably would invite contributions from economists. What emerged is a convergence of economics and law without parallel in public oversight of business. As economic learning changed, the contours of antitrust doctrine and enforcement policy eventually would shift, as well.1 This article follows the evolution of thinking about competition since 1890 as 1 In State Oil Co. v. Khan (118 S. Ct. 275, 284 [1997]), the Supreme Court emphasized the trend in its previous antitrust decisions of recognizing and adapting to changed circumstances and lessons of accumulated experience. The degree of professional acceptance and empirical verification that eco- nomic theories must achieve before they are relied upon in the courtroom remains an issue of debate within the courts. See Gavil (1997). Willia