Giants among us: do we need a new antitrust paradigm?

Traditional antitrust policy was formulated to control pricing and output decisions that were not disciplined by competitive forces, either because of monopoly power or agreements in restraint of trade. Because there is no single criterion for evaluating political policy outcomes, antitrust regulators eventually settled on the “consumer welfare standard,” correctly recognizing that any other standard was incoherent. Recently “platforms” (defined here as firms or apps that solve the key transaction costs problems of triangulation, transfer, and trust) have tended toward giantism. This had led to calls for a new approach to antitrust, restoring the old multiple set of goals. But every platform by definition defines an industry, and is a monopoly within that industry. Such network economies or advantages in managing trust are the reasons platforms exist in the first place. This paper reviews the history of antitrust, defines platforms and the problems of “giantism,” and suggests some policies that certainly won't work and should be abandoned. The problem is power, not monopoly. So power is what the “new paradigm” needs to address.

Duke Scholars

Author Michael C. Munger Political Science