Role of Economics in Antitrust

The following is a transcript of Eric Posner and Carl Shapiro's debate on the proper role of economics in merger review at the 2024 Stigler Center Antitrust and Competition Conference.

Luis Braido builds on Eric Posner and Carl Shapiro’s debate about the role of economics in merger review by further exploring the tension between efficiency and consumer welfare. He argues that efficiency merits endorsement as it boosts productivity, wealth, and social welfare. Nevertheless, he acknowledges that the law favors competition and consumer welfare over efficiency. From his perspective, enlarging the range of remedies available in merger review is central for protecting productivity gains while preserving competition and compensating consumers for adverse impacts.

Carl Shapiro discusses the central role of economics in merger review under Section 7 of the Clayton Act. Shapiro traces the evolution of merger law in response to advances in Industrial Organization economics over the past 50 years, highlighting how economic concepts and analysis are indispensable for predicting the likely competitive effects of proposed mergers.

Eric Posner discusses why many antitrust professionals believe the law follows economic interpretation, despite the absence of economics in the relevant statutes. He argues that antitrust laws themselves have been resistant to adopting a coherent "economic theory" approach, leading to a tension between the economic views of agencies and academics versus the legal interpretations taken by courts.