Though the major laws that guide US antitrust policy—the Sherman Antitrust Act, the Clayton Act, and the Federal Trade Commission Act—have all been on the books for more than a century, academic, judicial, and regulatory attitudes toward the enforcement of antitrust have varied greatly over that time. For the past several decades, US antitrust enforcement has been increasingly passive following the ascendancy in the 1970s of the Chicago school of antitrust policy, which emphasized the risks of overintervention and argued for a narrowly tailored enforcement standard focused on economic metrics such as price, output, and efficiency.
The Chicago school of antitrust policy—named for a group of scholars associated with the University of Chicago including Nobel Laureates George Stigler and Milton Friedman, Richard Posner, and Robert Bork—coalesced on the heels of a period of antitrust enforcement that some now characterize as incoherent and, in some cases, harmful. But did Chicago school ideas come to dominate for half a century because they were simply that much better than what preceded them? Research by ETH Zurich postdoctoral scholar Filippo Lancieri, UChicago Law School’s Eric Posner (Richard Posner’s son), and Booth’s Luigi Zingales suggests that a key factor was lobbying by wealthy and powerful business interests.
The researchers started by questioning whether the success of the Chicago school was due to democratic support for its arguments. They examined polling data, presidential speeches, and related sources and find no evidence of a preference among voters for weaker antitrust enforcement, including during 1965–85, which saw the sharpest enforcement decline. “On the contrary,” they write, “throughout this period, the majority of Americans were solidly in favor of strong antitrust enforcement.”
They further investigated whether elected officials, perhaps perceiving a voter preference not reflected by polling data, used their powers to overtly weaken antitrust law. But looking at the tools of such officials—the passage of new laws, the enactment of presidential executive orders, subsequent regulations, nomination hearings, and other activity that may be interpreted as politicians enacting the will of the people—they again find little to support this idea.
“Since the 1970s, no president advocated for a reduction in antitrust enforcement, no Congress voted for reduced enforcement except indirectly in obscure budget bills, and no senate knowingly confirmed nominees to the FTC or DOJ, or to the supreme court, who openly promised to reduce antitrust enforcement,” the researchers write, though they note there are a few exceptions. “The decline of antitrust enforcement took place at the hands of regulators and judges with little to no open political support.”
Even without such support, they acknowledge, the success of the Chicago school could be explained by “enlightened technocrats” enacting the best policy available while insulated from voters who weren’t as sharp or well informed. The researchers reject this narrative as well, however.
A public opinion poll shows a steady decline in trust toward the largest companies in the US since the 1970s. The decline suggests rising demand for antitrust enforcement.
They note that the Chicago school was almost immediately challenged by other academic economists who rejected its simple price-centered approach. By the 1980s and ’90s, they contend, a “post-Chicago” approach supported by game theory and information economics had generally supplanted the Chicago school’s views among scholars. If regulators were relying on the latest ideas from academia, the researchers argue, they would have moved on from Chicago school policies as academic consensus changed.
Lancieri, Posner, and Zingales argue that furthermore, the Chicago school approach did not evidently succeed on its own terms: increasing market competition and supporting greater economic efficiency and growth. They note that during the Chicago school period, productivity growth slowed in the United States—even relative to many other developed economies. Real wages for male workers stagnated, and markups (the spread between a company’s cost of production and the price it charges) rose. The researchers acknowledge that these broad trends could be the result of many factors, but argue that weakened antitrust is a plausible explanation for why the US experienced them more strongly than many of its peers.
So what explains the dominance of Chicago school ideas in antitrust policy over the past half century? Lancieri, Posner, and Zingales argue that nearly “all key decisions that reshaped antitrust policy were made by regulators and judges with relatively little democratic accountability.” Evidence as well as theory, they write, suggest that the Chicago school approach was co-opted by lobbyists representing big-business interests as a useful tool to advance a policy agenda, which led in turn to the decline in antitrust enforcement.
“The Chicago School criticism of the way antitrust was enforced in the 1950s and 1960s was well-founded, both theoretically and empirically,” they write, saying that adherents “provided persuasive and simple arguments that helped convince scholars, judges, and policymakers.” Yet, “it is unlikely that the Chicago view would have spread so fast and would certainly not have dominated jurisprudence for so long without the financial support of powerful economic interests.”
Filippo Lancieri, Eric Posner, and Luigi Zingales, “The Political Economy of the Decline of Antitrust Enforcement in the United States,” Working paper, March 2023.
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