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Much ado about the Post-Chicago School
Authors: Assistant professor Sónia De CARVALHO
Number of views: 253
In the middle of the 80s, an economic approach, that brings together a group of
academics that stand out by the harsh criticisms to the approach of the School of Chicago
towards competition, arouses interest among the scholars. This school will call into
question some of the foundations and justifications presented by the Chicago School, by
questioning, in first place, the single monopoly profit theory. In this sense, these authors
will develop a set of models designed to demonstrate that the monopolist in the primary
market has incentives to monopolize the secondary market. This School will also analyse
the vertical restraints, standing out the development of Raising Rivals´ Costs Theory and
offer an explanation for free-riding. The Chicago School, on the other hand, is a coherent
and heterogeneous economic school, responsible for the theory of oligopoly and collusion,
which, by advocating the criminalization of price fixing, proceeded to analyse the
anticompetitive effects of predatory pricing and various restrictions vertical. In this paper,
we aim at demonstrating that the roots of the Post-Chicago School go back to the Chicago
School, highlighting the contributions of Director and Levi in the construction of the
Raising Rivals´ Cost Theory and, considering the connection between the Chicago school
and Transaction Costs Economics, the most complete empirical analysis of this theory led
by Elizabeth Granitz and Benjamin Klein. The continuous omission of the Transaction
Costs Economics, considering the steadiness between both, is one of the most negative
aspects of this school, which can only be explained by the fact that heterogeneity of the
Chicago School and Transaction Costs Economics unmask much of the criticism knitted.
Post-Chicago School, as we will conclude, will be incapable of thwarting the ideological
premises of the Chicago School.