Antitrust Policy Reform in the Times of Inflation and Chicago School of Law and Economics

Melike Arslan, Northwestern University

The Chicago School Law and Economics is commonly seen as the primary cause of the “paradigm shift” and “dramatic decline” in the US Antitrust policy since the late 1970s. However, this literature fails to appreciate the importance of the expansion and strengthening of some antitrust policy areas by the political actors during the 70s in setting up this future decline in enforcement. In large part, this omission reflects the considerable theoretical difficulty in social sciences in aligning the political and ideational explanations for policy change. The US Antitrust policy change offers a suitable case to bring together these explanations, because of the plurality of actors sharing decision-making (the Congress, courts, antitrust agencies, experts etc.). This paper investigates the structural positions and negotiations between these actors, relying on data from Congressional hearings, antitrust agencies’ policy documents, intellectual works of antitrust experts and the landmark court decisions in antitrust, in order to explain how the US Antitrust policy took its current form during the 1970s. It shows that the Congress perceived antitrust policy as a tool to deal with its political crises in the 1970s, therefore, sought to expand and strengthen antitrust enforcement independent of intellectual influences. However, antitrust agencies in large part were able to direct the Congressional antitrust reform agenda to the changes that could align with the Chicago School approach and increased the ability of the antitrust agencies in shaping enforcement policies going forward. Therefore, this paper offers a theory of how political and ideational factors can bring about independent and almost-opposite policy changes at the same time, and the administratively autonomous policy agencies can play the role of bridging these changes to create a new policy direction.

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 Presented in Session 198. The politics of markets