Industrial Organization, Antitrust, and Public Policy

267 Pages·1983·7.3 MB·English

by  Alfred E. Kahn (auth.)

Industrial Organization,
Antitrust, and Public Policy
MIDDLEBURY COLLEGE CONFERENCE
SERIES ON ECONOMIC ISSUES
An Incomes Policy for the United States
Michael P. Claudon and Richard R. Cornwall, Editors
Welfare Reform in America
Paul M. Sommers, Editor
Industrial Organization, Antitrust,
and Public Policy
John V. Craven, Editor
Middlebury College Conference Series volumes are made possible
by the generosity of the Christian A. Johnson Endeavor
Foundation. These volumes are edited at Middlebury College and
represent articles drawn from conferences held there. Due to
costs of publication, the Series volumes are not intended to be full
records of the conferences as they were presented. In some cases
the contributed papers have been revised for publication.
Industrial Organization,
Antitrust, and Public Policy
John V. Craven, Editor
Springer-Science+Business Media, B.V.
Library of Congress Cataloging In Publlcatlon Data
Main entry under title:
Industrial organization, antitrust, and public policy.
(Middlebury College conference series on economic issues)
Selection ~~ the papers presented at the 3rd annual Middlebury
Col\ege Conference on Economic lssues. held in Apr. 1981.
Bibliography: p.
Contents: The relevance of industrial organization 1 Alfred E.
Kahn-The anti-antitrust movement 1 Willard F. Muel\er -Antitrust
enforcement 1 Oliver E. Williamson-[etc.]
1. Trusts, Industrial-United States-Congresses. 2. Industrial
organization (Economic theory)-Congresses. \. Craven, John V.,
1921- 11. Middlebury Col\ege Conference on Economic ls
sues (3rd: 1981) III. Series.
HD2783.15 338.8'0973 82-6622
AACR2
ISBN 978-94-017-1876-9 ISBN 978-94-017-1874-5 (eBook)
DOI 10.1007/978-94-017-1874-5
Copyright © 1983 by Springer Science+Business Media Dordrecht
Originally published by Kluwer-Nijhoff Publishing in 1983
Softcover re print of the hardcover 1 st edition 1983
No pari of thls book
may be reproduced in any form by print, photoprlnt, microfilm, or
any other means, without written permission !rom the publisher.
Contents
Volume Editor's Introduction vii
The Relevance of Antitrust
1
The Relevance of Industrial Organization 3
Alfred E. Kahn
2
The Anti-Antitrust Movement 19
Willard F. Mueller
3
Antitrust Enforcement: Where It Has Been; Where It Is Going 41
Oliver E. Williamson
4
An Evaluation of Horizontal Merger Enforcement 69
David B. Audretsch
5
Toward a Broader Concept of Competition Policy 89
Robert E. Smith
II
Concentration and Behavior 107
v
vi CONTENTS
6
The Notion of a Critical Region of Concentration: Theory
and Evidence 109
Ralph M. Bradburd and A. Mead Over, Jr.
7
Industrial Organization and Technological Change: Recent
Econometric Findings 129
Edwin Mansfield
8
Concentration and Performance in Local Retail Markets 145
Peter J. Meyer, with the assistance of Katherine M. Garber,
and Barbara A. Pino
Ill
Toward a Minimum Socially Optimal Scale 165
9
Economies of Scale and Monopoly Profits
William G. Shepherd
IV
Extending the Reach of Antitrust 205
10
Micro Determinants of Conglomerate Mergers 207
Steven Schwartz
11
The Incidence of Price Changes in the U. S. Economy 243
Katherine Maddox McElroy, John J. Siegfried
and George H. Sweeney
List of Contributors 267
Volume Editor's Introduction
This book contains a selection of the papers presented at the third
annual Middlebury College Conference on Economic Issues, held in
April, 1981. The theme of the conference was "Industrial Organization
and Public Policy.'' It is perhaps testimony to the complexity of our
industrial structure that thirty years have passed without legislative action
on antitrust even as the field of industrial organization has been heavily
mined by scholars. Evidence that Congress prefers a hands-off policy
seems now stronger than ever. This book seeks to present analyses and
assessments that would aid the reader in judging the correctness of such
public policy.
Alfred Kahn, in Part I, questions whether scholars whose concerns lie
in the field of industrial organization can contribute significant insights to
the major problems of the day - inflation, declining productivity, rising
costs of resources, and income allocation. Although the paper following is
not a direct response to Professor Kahn's skepticism, Willard Mueller
presents in it a lively attack on those who discount the importance of an
activist antitrust policy. Given the rather sharply contrasting views of
Professors Mueller and Kahn, Oliver Williamson's contribution is an op
portune perspective of where antitrust enforcement has been in the past
two decades, and where it is going in the 1980s. Part I concludes with
David Audretsch's assessment of the effectiveness of the enforcement of
our merger law, followed by Robert Smith's proposal that we tie antitrust
action more closely and more logically to macro stabilization policies.
The selections in Part II emphasize the industrial organization trinity:
market structure, behavior, and performance. Coauthors Ralph Bradburd
and A. Mead Over, Jr. deal with the special problems of critical concen-
vii
Vlll INTRODUCTION
tration ratios. Edwin Mansfield provides analysis that relates technologi
cal change to market structure. Concluding Part II, Peter Meyer, with the
assistance of Katherine M. Garber and Barbara A. Pino, shows the results
of an investigation into concentration in local retail markets, a relatively
neglected but important geographic delimitation.
Part III is embodied in a single paper- William Shepherd's pursuit of
the key to the antitrust dilemma: how to distinguish profits arising from
scale economies from those derived through market power.
What activities would an optimal antitrust policy cover? The selections
in Part IV provide a partial answer to that question. Steven Schwartz
suggests in "Micro Determinants of Conglomerate Mergers" that the
puzzle of what to do about conglomerates is partially solved by enforce
ment of existing antitrust laws, if that enforcement is vigorous. In reach
ing that conclusion he provides a number of useful tests of the deter
minants of mergers. Katherine McElroy, John Siegfried and George
Sweeney conclude Part IV with an inquiry into the distributive effects of
antitrust policy.
In less than a decade from now, the one-hundredth anniversary of the
Sherman Act will be noted, perhaps celebrated. It is the editor's fond
hope that this collection will contribute to a keener appreciation of the
strengths and weaknesses of our antitrust laws and to a clearer perception
of important issues in the field of industrial organization.
I
THE RELEVANCE OF
ANTITRUST