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The US antitrust jurisprudence through the lens of Chicago School and the Transaction Costs Economics
Authors: Assistant professor Sónia De CARVALHO
Number of views: 262
In the mid-70s, the US antitrust jurisprudence finally embraced the economic
approaches developed at the University of Chicago on the 30s. The Chicago School of
Economics has as its main characteristic the defence of the private economy and of a
limited intervention of the government, which underlies the idea that individual freedoms
depend on the existence of a system based on private initiative and market economy,
affirming the interdependence of capitalism and democracy. This School was fiercely
against the excessive intervention of competition authorities and courts in competition, to
which attributed as final goal purpose efficiency maximization. From a methodological
point of view, Chicago School will be renowned by the importance of neoclassical price
theory and empirical analysis. Later, within New Institutional Economics, will rise another
economic analysis, such us Transaction Costs Economics and Property Rights Theory, that
even though receiving minor attention from the literature, being until now strangely
excluded from the economic and legal mainstream of the competition, will also inspire
Antitrust Law. The Transaction Costs Economics will demonstrate that the transactions
that make up the market are conditioned by the constraints of behaviour and information,
giving rise to transaction costs that make markets imperfect. The institutions in this School
are, therefore, structures that, by influencing individuals' behaviour, mitigate market
imperfections, becoming indispensable in economic analysis. The analysis of these
economic approaches will reveal that both gave the utmost importance to transaction costs,
as Chicago School, without explicitly mentioning transaction costs, also considered it in
antitrust analysis. In this paper, we aim at demonstrating that this proximity between
Chicago School and Transaction Costs Economics is reflected in US antitrust
jurisprudence. Therefore, it is pertinent to begin by summarizing the main arguments
developed by these economic theories, which later received merits by the courts, thus
making more evident the effect they had on US antitrust jurisprudence, often ignored by
literature. As we will conclude the US antitrust analysis is performed by the Courts through
lens of Chicago School and Transaction Costs Economics.