Much ado about the Post-Chicago School

Abstract

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.