Economics and the Interpretation and Application of U.S. and E.U. Antitrust Law: Volume II

The standard economic-efficiency analysis of antitrust (1) ignores many kinds of inefficiency (e.g., the kinds generated when resources are misallocated among unit-output-increasing, quality-or-variety-increasing [QV]-investment-creating, and production-process-research [PPR]-executing uses and when the resources allocated to QV-investment creation [PPR execution] are misallocated among areas of product-space) and (2) ignores Second-Best Theory (viz., the fact that, to determine a competition-increasing policy's impact on any kind of inefficiency, one must take appropriate account not only of the targeted competition-imperfection's tendency to cause such inefficiency in an otherwise-Pareto-perfect economy but also of the tendency of the economy's other Pareto imperfections to cause such inefficiency and the way in which the relevant Pareto imperfections interact to cause such inefficiency). This book develops a "distortion-analysis" approach to economic-efficiency analysis that responds appropriately to Second-Best Theory and uses it to analyze the economic efficiency of selective and universal prohibitions of every kind of antitrust-law-covered business conduct.