The publication of this clinically analytical and trenchantly insightful volume is felicitously timed. By fortuitous coincidence, it comes at a time when the Chicago School enjoys a high-water mark of acceptance in U.S. legal circles, and at a time when the U.S. merger movement of the 1980s is cresting. It provides a welcome warning against the dangers of translating abstract theories, based on highly restrictive (and unrealistic) assumptions, into facile public policy recommendations. As such the Schmidt/Rittaler study serves as a needed antidote to the currently fashionable predilection to confuse ideology with science. In the Chicago lexicon, the only appropriate policy toward business is a policy of untrammeled laissez-faire. Because there are no market imperfec tions (other than government-created or trade-union-generated monopolies), the market can be trusted to regulate economic activity, inexorably meting out appropriate rewards and punishments. In this ideal world, corporate size and power can be safely ignored. After all, corporations become big only only because they are efficient, only because they are productive, only because they have served consumers better than their rivals, and only because no newcomers are good enough to challenge their dominance. Once an industrial giant becomes lethargic and no longer bestows its productive beneficence on society, it will inevitably wither and eventually die. This is the "natural law" that governs economic life. It demands obedience to its rules. It tolerates no interference by the state.
I. The Perception of Competition as a Dynamic Process.- II. Premises and Assumptions of the Chicago School's Concept of Competition.- 1. Rationality and Autonomy of Economic Agents.- 2. Perfectly Competitive Markets.- 3. Workability of the Market Mechanism.- 4. Lang-run Effectiveness of the Market Process (Time Horizon.- III. Antitrust Theory and Public Policy.- 1. Market Structure Interference.- 2. Market Behavior Interference.- IV. The Chicago School's Approach to Antitrust Theory.- 1. Method of Competition Analysis.- 2. Consumer Welfare as Chicago's Antitrust Goal.- a. Measuring Consumer Welfare: The Efficiency Criterion (Welfare Indicator).- i. Allocative Efficiency.- ii. Productive Efficiency.- (1) Economies of Scale.- (2) Transaction-Cost Efficiencies.- iii. Monopoly Power and Productive Efficiency: Williamson's Trade-Off Model.- b. Allocative and Productive Efficiency as the Sole Criterion for Consumer Welfare: A Critique.- i. The Omission of Other Objectives.- ii. The State of Perfect Competition as a Standard of Reference (Theory of Second Best).- iii. The Failure to Consider External Effects.- iv. The Profitability Approach as an Alternative Concept of Efficiency Measurement.- c. The Omission of Dynamic Efficiency Aspects: The Case of Technological Progress.- i. Firm Size and Technological Progress.- ii. Concentration and Technological Progress.- iii. The Chicago School and Technological Progress.- V. Evaluating Concentration from the Chicago Point of View.- 1. Corporate Size and Industry Concentration as Evidence of Superior Efficiency.- 2. Causes of Monopoly Power.- a. Control of a Scarce Input.- b. Legal Protection of Monopoly Power.- c. Monopoly Power in the Long Run.- 3. Measuring Monopoly Power.- 4. Determinants of Market Structure and the Effectiveness of Competition.- a. Barriers to Entry.- b. Advertising.- c. The Lack of an Oligopoly Theory.- 5. The Economic Effects of Mergers.- a. Horizontal Mergers.- b. Vertical Mergers.- c. Conglomerate Mergers.- 6. Anticoncentration Policy from the Chicago Point of View.- a. Merger Control.- b. Divestiture.- c. Deregulation.- VI. The Evaluation of Anticompetitive Behavior.- 1. Explicit and Implicit Collusion.- 2. Exclusionary Practices.- 3. Tying Arrangements.- 4. Predatory Pricing.- 5. Resale Price Maintenance.- VII. A Critical Resume of the Chicago Approach to Antitrust Policy.- 1. Underlying Assumptions and Methodology.- 2. The Goals of Antitrust Policy.- 3. The Role of Theory and Empirical Evidence.- 4. Policy Recommendations.- 5. The Chicago School Approach as a Basis for Antitrust Policy.