Economies as an Anti-Trust Defense: The Welfare Tradeoffs

Abstract

The article analyzes economies as an antitrust defense. According to the author, Once economies are admitted as a defense, the tools for assessing these effects can be expected progressively to be refined. Since such refinements will permit both the courts and the enforcement agencies to make more precise evaluations, the threshold value under which an economies defense will be allowed can be reduced accordingly. The historical organization of an industry can ordinarily be presumed to reflect adequately basic efficiencies where significant market or technological developments have been lacking. And even where such recent changes have occurred, an efficiency defense is not automatic. Further more, if an efficiency defense can be supplied, market power consequences that a vertical merger produces need also to be considered. There is no way in which the tradeoff issue can be avoided. To disallow tradeoffs altogether merely reflects a particularly severe a priori judgment as to net benefits.