The Law and Economics of Competition Policy

Brian MacLean is an assistant professor of economics at Laurentian
University.

Two years after the enactment of the new Canadian Competition Act
(1986), the Fraser Institute sponsored a conference at which the essays
in this volume were presented. The Fraser Institute
organizers—apparently convinced that the Americans had gone overboard
with the application of antitrust law, and that Canadians risked
following the Americans’ bad example—wished to expose Canadians
involved in administering the new Act to theories and evidence that
might undermine support for activist antitrust law. This book,
therefore, exhibits the laissez-faire slant that typifies Fraser
Institute publications.

The contributors include such renowned international scholars as
Benjamin Klein, Lester Telser, Alan Walters, and Reuven Brenner.
Moreover, all the essays—except Walters’s tribute to Margaret
Thatcher’s deregulation and privatization programs—are based on
solid scholarly research. The essays cover the major theoretical topics
relevant to the evaluation of antitrust law, including predatory and
discriminatory pricing, mergers and takeovers, and vertical restraints.
Most essays are amply illustrated with real-world examples, and due
attention is paid to the practical problems involved in implementing
proposals derived from abstract economic theory. The contributors argue
forcefully that legislation with the purported intent of fostering
competition may be misused by second-rate firms to handicap innovative
competitors.

While nearly all the authors share a critical stance toward activist
antitrust policy, they do not share a common theoretical framework.
Several authors rely on the same static framework as the
“structure-conduct-performance” proponents, who advocate activist
antitrust policy. A few of the authors, however, rely on a dynamic,
Schumpeterian framework, and make devastating criticisms of mainstream
economics. The dynamic, Schumpeterian framework certainly does not
support activist antitrust policy aimed at creating atomistic
competition. But, pursued to its logical conclusion (as in Michael
Best’s book The New Competition), neither does it support the
laissez-faire approach trumpeted in the volume under review.