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David Mitch

The University of Chicago Once Studied a Laissez-Faire Economics Compatible with Public Interest

The Chicago School is often associated with laissez-faire economics that reads into Adam Smith’s philosophy of political economy justifications for self-interest and prudential motivations. However, a careful history of the University of Chicago’s early Economics Department and School of Commerce and Administration reveals a more complicated understanding of how economics and business were to interact with one another and society. The early University of Chicago pursued a program that emphasized that laissez-faire economics and a concern for the public interest were not antagonists but perfectly compatible, writes David Mitch.

COMMENTARY

Two Questions Determine Whether a Pricing Algorithm Becomes Evidence of Price Fixing

Roger D. Blair and Javier D. Donna
Two recent court rulings on casino-hotels using a shared software to fix prices reveal the importance of information exchanges as a super plus factor: an indicator of illegal conspiracy to limit trade. Roger D. Blair and Javier D. Donna discuss how these court cases and other recent lawsuits elucidate the role of the information exchange and the two vectors that determine its strength as a plus factor: data sensitivity and a give-to-get understanding among firms that if they shared their data, competitors would do the same.

RESEARCH

American Antitrust Has Yet To Figure Out Conglomerates

Paul Friederiszick
The Neo-Brandeisians and Chicago School have employed different statistics to show respectively that markets are both concentrated and not concentrated, leaving Americans in the dark about who really holds corporate power. The evidence only looks contradictory due to the failure of American antitrust scholarship and regulation to understand how conglomerates collect market power across many neighboring markets, through what Paul Friederiszick calls “adjacent market takeovers.” This strategy can make firms more efficient, but it can also raise prices and weaken competition even as each individual market still looks competitive, he writes, drawing on his new paper, “The Conglomerate Power Puzzle.”
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Commentary

Congress Has More Work to Do Before PBM Reform Reaches Consumers      

Jeremy Pilaar and Albert (Haotian) Wang
Jeremy Pilaar and Albert (Haotian) Wang present the weaknesses in current legislative reforms targeting pharmacy benefit managers. They suggest that lawmakers focus on reining in PBM income, limiting fees that PBMs can charge, and empowering state legislative efforts.  
Development

The Foreignness of Africa’s Startup Ecosystem

Emanuele Colonnelli, Marcio Cruz, Mariana Pereira-Lopez, Tommaso Porzio and Chun Zhao
Startups in Africa rely heavily on an equity market dominated by foreign investors and founders who studied or worked outside the continent. In new research, Emanuele Colonnelli, Marcio Cruz, Mariana Pereira-Lopez, Tommaso Porzio and Chun Zhao show that this dynamic exists because local equity is expensive, the pool of local entrepreneurs seeking out funding is small, and local entrepreneurs have limited access to foreign investors.
Antitrust and Competition

States Can Facilitate an AI Slowdown Without the Federal Government

Noah Hoffman and Fiona Scott Morton
The artificial intelligence industry recently called for an antitrust exemption to coordinate self-regulation as the risks their models pose to the internet and society...
Antitrust and Competition

Antitrust Enforcers Should Focus on Market Power Not on Vague Welfare Concepts

Alberto Heimler
Alberto Heimler argues that antitrust authorities should focus on whether market power allows one party to exploit relationship-specific sunk investments made by another and how that undermines potential innovation, investments, and competition. 
Cultural Economics

Economics Is Opening Up at the Edges, but Not at the Top

Markus Eberhardt, Giovanni Facchini and Valeria Rueda
In new research, Markus Eberhardt, Giovanni Facchini, and Valeria Rueda find that a growing share of PhD graduates from top U.S. economics programs are leaving academia, looking beyond North America, and moving into the private sector, especially towards the tech industry.
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READING LISTS

Health Care

Americans spend significantly more on health care than any other country. Why? Answers to this question range from hospital monopolies to perverse incentives to opaque pricing to medical licensing to pharmaceutical firms abusing IP practices to “creeping consolidation.” Why is the US health care system so broken? And what can antirust do about it? Catch-up on our coverage of antitrust and the US health care system.

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Antitrust and Competition

The Prescription for Better Health Insurance? Competition.

Amanda Starc and Martin Gaynor
Anticompetitive behavior, such as consolidation, in the health-insurance industry has allowed a small group of insurers to dominate the market. One of the main drivers of this behavior is “adverse selection,” where individuals know more about how sick they are than insurance companies do. To mitigate the risk of paying out more claims than they can cover, insurers often raise their premiums. Kellogg’s Amanda Starc and her colleague argue that, to create a truly healthy health-insurance marketplace, regulators and policymakers need a framework for rethinking the complex interactions between adverse selection and regulatory guardrails.
Antitrust and Competition

Antitrust as a Cure for the Private Equity Disease

Theodosia Stavroulaki
The United States healthcare system has experienced an expansion of private equity ownership. In new research, Theodosia Stavroulaki argues that private equity acquisitions risk harming healthcare by increasing prices, reducing quality of care, limiting access to care, and hurting the labor force.
Commentary

Pharma’s AI Boom Has Bet on the Wrong Bottleneck

Michael Santoro
Investors have poured billions into using artificial intelligence to discover new drugs, and 2026 is the first real test of whether AI-designed medicines actually helps patients. The boom has genuinely transformed the search for molecules — but that was never the costly, failure-prone part of making a medicine, and there AI has so far had little to add. Capital, and the public subsidies have not yet priced the difference, writes Michael A. Santoro.
Antitrust and Competition

The Pharmaceutical Benefits Manager Settlements Are a Novel Advance for the FTC and Competition Enforcement

Fiona Scott Morton and Mariah Smith
In February, the Federal Trade Commission settled with pharmaceutical benefits manager (PBM) Express Scripts. The FTC had sued Express Scripts and two other large PBMs under the long dormant Section 5 of the FTC Act, which targets “unfair methods of competition.” The settlement suggests that the FTC may succeed in addressing the convoluted contracts between PBMs, drug manufacturers, health insurers, and employers that drive up drug prices for Americans. It also opens unchartered territory for antitrust enforcement and the limits of Section 5, argue Fiona Scott Morton and Mariah Smith.

George J. Stigler, one of the most influential economists of the 20th century, won the Nobel Prize in Economic Sciences in 1982 “for his seminal studies of industrial structures, functioning of markets, and causes and effects of public regulation.” His research upended the idea that government regulation was effective at correcting private-market failures. Stigler introduced the idea of regulatory capture, in which regulators could be dominated by special interests. These regulators would work for the benefit of large, monied organizations rather than the public good. Catch up on ProMarket's coverage of his legacy.

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Antitrust and Competition

Merger Review Needs More Uncertainty

Bart Lahcen
All merger reviews come with uncertainty, but the culture among courts, consultants, and regulators is to pretend that sophisticated modeling can eliminate uncertainty, and thus any uncertainty reflects poor econometric analysis. Creating standards of uncertainty would produce more honest analysis and better competition outcomes, writes Bart Lahcen.
Fiscal Policy

Financial Transparency Reduces the Accumulation of Offshore Fortunes

Annette Alstadsæter, Niels Johannesen, Ségal Le Guern Herry and Gabriel Zucman
In new research, Annette Alstadsæter, Niels Johannesen, Ségal Le Guern Herry & Gabriel Zucman find that Norwegian households that become wealthy today are much less likely to adopt offshore tax evasion strategies under modern high-transparency standards. 
Regulation

Transplanting FRAND Principles from SEP to Data Licensing  

Tingting Song
In new research, Tingting Song examines how FRAND principles typically used to discipline excessive or discriminatory terms in SEP licensing can be applied to data brokers in data licensing.
Income Inequality

What Makes a Venture Capitalist Successful?

Blake Jackson and Ilya Strebulaev
In new research, Blake Jackson and Ilya Strebulaev track the careers of 100,000 people working at venture capital firms in the United States to ask which investors succeed and why. They find that five percent of VCs generate 90 percent of the industry's profits, that the backgrounds investors bring with them predict who ends up in that group, and that public recognition itself opens the doors to the deals that keep them at the top.

Private Equity Is Buying Life Insurers, and the Public Bears the Heightened Risk.

Pranjal Drall and Andrew Granato
In new research, Pranjal Drall and Andrew Granato argue that the move of private equity firms into life insurance has increased the probability that insurers will go insolvent. If they do, under an obscure system of insurance guaranty funds, the losses will spread out beyond the insolvent insurer’s creditors to other insurers and, ultimately, taxpayers. 

Wealth Buys Power, but Americans Are Focused on the Wrong Wealthy

Matthew Lucky
Matthew Lucky reviews The Everywhere Millionaire: Who Is Really Rich in America and How They Got There by Owen Zidar and Eric Zwick, now out at Henry Holt and Co.

Call for Papers for 2027 Stigler Center Conference: Will AI Kill Markets (and Democracy)?

ProMarket writers
The Stigler Center is putting out a call for papers for its 2027 annual conference. The theme of this year's conference will be the impact of artificial intelligence on markets and democracy. Please see here for more information. "The best...

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The publication of the Stigler Center at The University of Chicago Booth School of Business

ProMarket is dedicated to discussing how competition tends to be subverted by special interests. The posts represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty. For more information, please visit ProMarket Policy.