Much ado about the Post-Chicago School

Author:Sónia De Carvalho
Pages:283-297
SUMMARY

In the middle of the 80s, an economic approach, that brings together a group of academics that stand out by the harsh criticisms to the approach of the School of Chicago towards competition, arouses interest among the scholars. This school will call into question some of the foundations and justifications presented by the Chicago School, by questioning, in first place, the single monopoly profit... (see full summary)

 
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Much ado about the Post-Chicago School
Assistant professor Sónia De CARVALHO1
Abstract
In the middle of the 80s, an economic approach, that brings together a group of
academics that stand out by the harsh criticisms to the approach of the School of Chicago
towards competition, arouses interest amon g the scholars. This school will call into
question some of the foundations and justifications presented by the Chicago School, by
questioning, in first pla ce, the single monopoly profit theory. In this sense, these authors
will develop a set of models designed to demonstrate that the monopolist in the primary
market ha s incentives to monopolize the secondary market. This School will also analyse
the vertical restraints, standing out the development of Raising Rivals´ Costs Theory and
offer an explanation for free-riding. The Chicago School, on the other hand, is a coherent
and heterogeneous economic school, responsible for the theory of oligopoly and collusion,
which, by advocating the criminalization of price fixing, proceeded to analyse the
anticompetitive effects o f predatory pricing and various restrictions vertical. In this paper,
we aim at d emonstrating that the roots of the Post-Chicago School go back to the Chicago
School, highlighting the contributions of Director and Levi in the construction of the
Raising Rivals´ Cost Theory and, considering the connection between the Chicago school
and Transaction Costs Economics, the most complete empirical analysis of this th eory led
by Elizabeth Granitz and Benjamin Klein. The continuous omission of the Transaction
Costs Economics, considering the steadiness between both, is one of the most negative
aspects of this school, which can only be explained by the fact that heterogeneity of th e
Chicago School and Transaction Costs Economics unmask much of the criticism knitted.
Post-Chicago S chool, as we will conclude, will be incapable of thwarting the ideological
premises of the Chicago School.
Keywords: Chicago School, antitrust law, the Raising Riva ls' Costs theory, Post-
Chicago School.
JEL Classification: K22
However, in the hands of Chicago School proponents,
economics has become an engine for an ideology hostile to
the operation of antitrust law.”
Thomas M. Melsheimer, Economics and Ideology:
Antitrust in the 1980s, STAN. L. REV., Vol 42, 1990, p. 1335.
1. Introduction
This School will also analyse the vertical restraints, highlighting the
development of the Raising Rivals Costs Theory.
1 Sónia de Carvalho - Department of Law, Portucalense Infante D. Henrique University; Researcher at
IJP - Portucalense Institute for Legal Research, Porto, Portugal, scarvalho@upt.pt.

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