A Giant Problem: The Influence of the Chicago School on Australian Competition Law, Economic Dynamism and Inequality

Abstract

<jats:p> Australia has a competition problem: there is not enough of it. Our industries are concentrated. Our markets show signs of weak competition. The way Australia’s courts, parliamentarians and regulators think about competition is partly to blame. Although it has been less influential in Australia than in the United States, the Chicago School’s views on competition have shaped our laws, policies and enforcement practices. The Chicago School views market concentration as a virtue more than a vice. The School contended that barriers to entry are negligible, market power is temporary, most mergers are good, vertical restraints and predatory pricing are either benign or efficient. The growing body of research and experience, however, shows that the Chicago School’s faith in the ability of markets to self-correct and deliver competitive outcomes was misplaced. There is a strong progressive case for repositioning how we think about competition. Focusing more on the competitive process, the structure of markets and the incentives those structures create for firms will play an important role in reducing inequality. </jats:p>

A More Dynamic Economy

“…In past decades, competition policy in Australia has been overly influenced by the 'Chicago School' approach, which took a relatively relaxed attitude to market dominance (Triggs and Leigh 2019). Chicago School adherents such as Robert Bork argued that if a firm tried to overcharge, competitors would take its market share.…”

Employee Social Network Strategies: Implications for Firm Strategies and Performance in Future Organizations

“…Since routines and managerial decisions play a critical role in firm strategies and organizational performance, understanding the firm’s core competences through complex systems that evolve unpredictably is essential ( Graen, 1976 ). For instance, Triggs and Leigh (2019) propose there is a growing body of research and experience that shows the “Chicago School’s faith in the ability of markets to self-correct and deliver competitive outcomes was misplaced” (p. 1). Therefore, firms must analyze formal firm strategies and formal environment strategies with informal employee social network strategies to improve firm strategies, resources, capabilities and the industry environment ( Figure 4 ).…”

Stock Markets and Competition: What Does A Concentrated Stock Market Tell Us About Competition In The Economy?

“…Market concentration has enjoyed somewhat of a renaissance in recent years. Dismissed for decades by the Chicago School as being largely irrelevant to questions of competition (Triggs & Leigh, 2019), 1 some of the world's top economists (Akerlof, Holden & Rayo, 2018;Blonigen & Pierce, 2016;Wu, 2018), 2 including those from the Chicago School, 3 are now exploring whether high levels of market concentration can help explain some of our most pressing economic conundrums: from low inflation, low investment, low growth and low productivity, to high markups, abnormally high profits and increasing anti-competitive conduct. Some of this analysis, including leading books on competition policy, has used stock markets as a proxy for what is happening in the rest of the economy (Tepper & Hearn, 2019).…”