The US antitrust jurisprudence through the lens of Chicago School and the Transaction Costs Economics

Abstract

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 economicanalysis, 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 thecompetition, 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 thisSchool are, therefore, structures that, by influencing individuals' behaviour, mitigate market imperfections, becoming indispensable in economic analysis.The analysisofthese 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 economictheories, 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.