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Contrast of Antitrust Schools of Thought
Antitrust school of thoughts are divided into three schools of thought who described an economic view of markets and wealth. The three schools of thought contrast themselves regarding antitrust policy. They present different ideologies on industrial structures intellectual fundamentals. Their disagreement is posed on the basis of met6hodology and basic ideologies. This is attributed to different fundamental premises that are examined by various economists.
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Chicago School of Thought
This school of thought is common to most industry players. The Chicago antitrust school of thought provides a distinctive approach on antitrust policies. The school of thought defines the need for more evidence to prove the case of conscious parallelism. It states that actions of self interest and profit motivation practises must go beyond mere interdependence. The school of thought which was drafted by University of Chicago professors and researchers provides a broad definition of unfair competition. In the early 1970, s a team of scholars took to themselves to convince the US Supreme court on competition policies which did not require a lot of restraints on competition. The thought is based on the idea that there is no need to put restraints and control in the market in order to ensure fair competition. The Chicago policy is based on economic efficiency and theory that efficient competition in certain markets needs to be regulated, (Emmett, R. B., & Biddle, J., 2010).
The school of thought also depicts that lrge corporations should not be regulated with the perception that they will use their influence to promote unfair competition. The market should be left alone and unrestricted whereby sellers and buyers acted in a free and competitive manner, (Singleton, R. C., 1986). In the long run under the same conditions, the market will behave rational and efficient. The school was widely accepted and used in the time of Ronald Reagan. The school is also still critical in the modern society where free markets are symbolised with capitalism, where all corporations are left to undertake their business operations freely.
Structural/Harvard School of Thought
The structural school of thought was presented by Harvard University scholars. The school of thought was late to be used in more than 40 years since its inception in the 1930’s. The structural school of thought is also known as the structure-conduct-performance school of thought. It was a theoretical framework that used the ideals of prize and their effect on the competitive market, (Areeda, P., & Hovenkamp, H., 2011).
Their view stated that industrial bureaucracies, trade and worker union and other internal organisational issues are the major factors that affect competition in the market. They relied on the current perfect competition market where price was the major issue that affected competition. The school of thought indicated that if price then would be a factor monopolistic ventures could then shape price patterns through price comparisons and marginal cost. It is basically based on a perfect competition markets and principles. The school of thought rellies on the principles of barriers a perfect competitive market. In a perfectly competitive market there are barriers of entry and limited information, (Baron, D. P., 2006).
Their general conclusions were that markets are general slow and now and again affected by demand and supply. Competition should also be evaluated in such kind of conditions. The school of thought is significant in the modern society where competition is evaluated on the basis of price, supply and demand. It was also common in the 1930’s where nations put regulations on markets top ensure a fair competition from big companies.
The new IO Approach
The last approach of the famous antitrust schools of thought is the new IO approach. The school of thought advocates four different situations in the market. The first principle is that competition is supposedly effective when there a small number of competitors in the markets. Such markets are easy and quick to manage and exploit. The second principle indicates that barriers should be present to entry into the market. Then for more efficiency there is need for innovation and competition. The school of thought is commonly adopted by conservative capitalist markets. Countries like Mexico have adopted the policy to encourage development of the existing corporations, (Baron, D. P., 2006).
Of all the schools Chicago has proved to provide basics for a more free and efficient method. Its principles have led to creation of better and successful markets which acts within a certain code while giving chance large and small corporations to flourish and expand.
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