Books in Brief: Antitrust and Monopoly: Anatomy of a Policy Failure

Antitrust and Monopoly: Anatomy of a Policy Failure, by Dominick T. Armentano (John Wiley, 292 pp., $22.95, cloth; $12.95, paper). It’s all very obvious: Antitrust laws are our last line of defense against corporate power. Without antitrust, big corporations would gobble up little ones, and we would be at their mercy. Anyone who opposes these laws must be a misanthrope … or an economist. In Antitrust and Monopoly, Professor Dominick T. Armentano traces the development of antitrust and carefully analyzes the important cases. In case after case, he shows how the indicted firms were not harming the public but, rather, were expanding output, reducing prices, improving technology, and generally engaging in fierce competition. Thus, he concludes, antitrust actually restrains competition, while it raises prices for consumers. Armentano reaches these conclusions by analyzing competition in terms of dynamic market processes, rather than in terms of the size and number of firms in a given industry. At any point in time, he shows, there always will be dominant firms. But without artificial barriers to entry, these firms are under constant competitive pressures, and many of them are soon displaced. Who creates these artificial barriers? We don’t have to look any further than the government that claims to protect us from monopolistic practices. Government franchises, certificates of public convenience, licenses, tariffs, price-support programs, and similar legal barriers all serve to stifle competition. Perhaps most ironically, antitrust itself often serves as a barrier to entry. What better way than an antitrust suit to keep a competitor off your turf? Thus, in practice, antitrust becomes a weapon to use against successful competitors. Armentano’s policy prescription is the repeal of all antitrust laws. Free the markets, he argues, and let open competition determine which firms best serve the buying public.