The Public Policy of Antitrust and Strategy: An Overview

Abstract

or more than a century, the United States has used antitrust law in an effort to control business behavior by forcing firms to compete. The same era that gave birth to antitrust law also witnessed the creation of the business school. In what must constitute one of the legal system's biggest ironies, however, antitrust law has largely ignored the insights of business theory and scholarship, choosing instead to focus on economics as a sister discipline. As the brand of economics used by antitrust law shifted from Harvard School industrial organization to Chicago School price theory, courts, policymakers, and antitrust legal scholars increasingly attempted to force the facts of actual business behavior to fit into a simplistic framework that explained all conduct as a rational attempt to maximize profits. During its first 85 years, antitrust law addressed three harms to competition: (1) the loss of a level playing field for competitors, (2) the exclusion of competitors from access to markets, and (3) the loss of consumer welfare (see Fox 2002). The hard form of price theory advocated by Chicago School adherents, however, refused to acknowledge any type of injury to competition other than consumer welfare losses. As the Chicago School influence reached its zenith during the Reagan Administration, concerns began to surface about the "Faustian Pact" of antitrust law and economics (Rowe 1984). Business scholarship has drawn increasing attention in the search for an alternative or, at least, a complementary approach to economics that could account for both the actual behavior of businesses and the harms to competition beyond consumer welfare loss (Waller 2001). Business schools house a rich variety of disciplines. It is no more likely that any one discipline holds the key to antitrust law than it holds the key to successful business operations. Nonetheless, strategic management, similar to marketing, offers a particularly good source of insights for antitrust law because it focuses on the actual behavior of firms in markets. Thus, even Chicago School proponents such as Posner (1979, p. 939) have suggested that strategic management may yield important insights for antitrust law.

Marketing in Antitrust: Contributions and Challenges

“…It is not coincidental that the marketing management process closely resembles other strategic planning models (e.g., see Hawker 2002). Although the frameworks are similar, the outcomes depend on the level of analysis that, like a funnel, ranges from macro to micro in perspective.…”

Antitrust and Marketing: A Primer and Call to Research

“…What operationalizations could be developed? In this regard, the attendees identified the conception and operationalization of consumer welfare as rich areas of opportunity and proposed stakeholder analyses from marketing and strategic management areas as a potential basis for structuring and examining the nature of consumer welfare (see Hawker 2002). …”

Assessing the Impact of Gasoline Sales-Below-Cost Laws on Retail Price and Market Structure: Implications for Consumer Welfare

“…Public policy scholars within the marketing literature have investigated consumer welfare through the lens of potentially harmful pricing practices such as vertical pricing constraints (Gundlach 2010; Gundlach, Cannon, and Manning 2010), predatory pricing (Dixit et al 2006; Gundlach 1995), and market power (Singh and Zhu 2008); such studies have also broadly examined consumer welfare within the scope of antitrust legislation (Gundlach and Moss 2011; Gundlach and Phillips 2002; Scheffman 2002; Sullivan 2002). A common theory in this literature stream is that pricing practices may harm consumer welfare when they lead to the loss of a competitive playing field, exclude potential entrants access to markets, and thus result in higher prices for consumers (Ashton and Pressey 2008; Hawker 2002).…”