Abstract
The representatives of the Chicago School also take the view that concentration in markets increases the danger of collusion. However, collusion could be easily recognized at once, and, therefore, easily prosecuted. The position of the Harvard School that market concentration is an indication of collusion is criticized by the Chicago School on the grounds that it might discourage competitive conduct that promotes efficiency.1 Firms with a large market share better satisfy the wants of consumers than smaller firms. An increasing degree of concentration means aggressive competitive behavior with prices close to long-run costs.2 Declining concentration would suggest cartelization or monopolistic price behavior, however, that stimulates entry of newcomers because of supra-competitive profits.3
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References
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Cf. FTC v. Exxon Corp., CCH Trade Regulation Reporter Transfer Binder: FTC Complaints and Orders 1979-83 § 21,866, and FTC v. Kellogg Co. et al., op. cit. § 21,899. Cf. U.S. v. IBM Corp., 4 CCH Trade Regulation Reporter § 45,070 Case 2039, and U.S. v. AT & T, 4 CCH Trade Regulation Reporter § 45,070 Case 2416.
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Sullivan, Antitrust, Microeconomics, and Politics..., supra. 5.
Rosenbluth, Comment on a Paper by Demsetz, supra, 391.
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Schmidt, I.L.O., Rittaler, J.B. (1989). Evaluating Concentration from the Chicago Point of View. In: A Critical Evaluation of the Chicago School of Antitrust Analysis. Studies in Industrial Organization, vol 9. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-2567-0_5
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