A healthy dose of competition

From hospitality to hipsterism

In the first of a series on subjects where economists are rethinking the basics, we look at arguments against letting businesses grow as large as they would like

DONALD TURNER, America’s top trustbuster in the mid-1960s, saw antitrust law as benefiting from an “inhospitable” tradition: on many matters its default response was to say no. Government lawyers routinely blocked mergers merely on the grounds that the resulting company would be too big. The companies’ counterargument that being bigger would make them better was rarely entertained by the courts.

In the 1970s the “Chicago school” of antitrust law successfully harnessed economics to argue for a much more hospitable approach. Over the following decades America’s regulators became so welcoming that critics painted them as doormats. In many industries the largest firms have consistently gained market share without any official concern; the most successful technology companies have grown into veritable titans. Many economists studying the subject now worry that a lack of competition is an economic drag, especially online. Some scholars go further, arguing that the Chicago school’s sense of what is good for consumers is not serving their broader interests.

The Chicago school, built on the work of Aaron Director, an economist from the mid-20th century, reached its zenith in the writing of the legal scholars Robert Bork and Richard…