Comparing basic premises of three antitrust schools of thought

Antitrust Schools of Thought

The schools of antitrust thought have similarities and differences in their views. The Structural approach views purpose as social, political, and economic objectives. The Chicago approach views purpose in economic objectives as efficiency with a focus on prices paid by the consumer. The New IO approach views purpose with economic objectives in static and dynamic efficiency. The Structural approach views markets as fragile and prone to failure where the Chicago approach and the New IO approach view markets as resilient. but, Chicago believes that market imperfections can be addressed through incentives where the New IO approach believes that some market imperfections, such as network externalities and strategic behavior limits efficiency.

The Structural approach believes that government intervention is the best protection to consumers. The Chicago and New IO approaches believe that competition is the best protection to consumers. but, Chicago believes competition is also the best protection for economic efficiency where the New IO approach believes that government intervention may need to be required. Structural believes there is a need to protect consumers from others and themselves, especially in unfair practices, where Chicago believes consumers are responsible for their own protection, and New IO believes consumers can protect themselves if there are choices in the market.

For markets to function efficiently, the Structural approach believes protection for competitors is needed to prevent monopoly and avoid foreclosing competitor opportunity. Chicago believes conditions for perfect competition are sufficient, but not necessary, where New IO believes both innovation and competition are required with emphasis on dynamic efficiency. As far as the relationship between the number of competitors and market performance, Structural views more competitors as more competition where Chicago and New IO view the market efficiency being effective with a small number of competitors.

The Structural approach believes high barriers to entry reduces efficiency and the potential entry may not limit the power of incumbent firms. Chicago believes barriers to entry are due to the efficiency of incumbent firms and the potential to entry limits the economic power of incumbents. On the other hand, New IO believes barriers can be present, especially from the economics of standardization that can lead to market power of an incumbent. The New IO approach agrees with the Structural approach where market power derives from horizontal power and vertical arrangements, but also views market power as extended through strategic behavior. Chicago, on the other hand, views market power as only deriving from horizontal factors.