


































Economics, Law and Policy 
ISSN 2576-2060 (Print) ISSN 2576-2052 (Online) 

Vol. 8, No. 1, 2025 

www.scholink.org/ojs/index.php/elp 

142 
 

Original Paper 

A Historical Study of the Relationship between Economic 

Schools and Antitrust Law 

Kaiming Ding
1
 

1
 School of Law, Harbin University of Commerce, Harbin, Heilongjiang Province, China 

 

Received: April 20, 2025        Accepted: May 6, 2025       Online Published: May 7, 2025 

doi:10.22158/elp.v8n1p142               URL: http://dx.doi.org/10.22158/elp.v8n1p142 

 

Abstracts 

This paper delves into the evolution of antitrust thought, tracing its intellectual lineage through various 

schools of thought. Starting with the Harvard School in the early 20th century, the paper highlights its 

structuralist approach, which emphasized the role of market structure in fostering anti-competitive 

behaviors. The Harvard School’s SCP (Structure-Conduct-Performance) paradigm influenced U.S. 

antitrust enforcement, leading to the breakup of large corporations. The paper then shifts focus to the 

Chicago School, which emerged in the mid-20th century advocating for a behavioral approach 

centered on economic efficiency. The Chicago School’s opposition to extensive government 

intervention and its emphasis on market self-correction challenged the structuralist orthodoxy. The 

subsequent development of the Post-Chicago School introduced refinements, acknowledging the 

limitations of perfect competition and incorporating insights from game theory and transaction cost 

economics. Finally, the paper explores the emergence of the New Brandeisian School, which proposes 

a reevaluation of antitrust policy in the digital era, advocating for a broader focus on market structure 

and competitive processes while rejecting a return to the Harvard School’s strict structuralism. This 

paper contributes to the ongoing discourse on antitrust theory and its application in contemporary 

markets. 

Keywords 

Antitrust Theory, Harvard School, Chicago School, Digital Economy 

 

1. Introduction 

Antitrust has always been closely related to mainstream economic theories of specific periods. Indeed, 

antitrust policymakers sometimes apply economics unreasonably, sometimes veer towards the fringes 

rather than the core of economic theory, and sometimes even overextend correct viewpoints. With the 

rise of neoclassicism in the 1870s and 1880s, analysis became more detailed, and economists 



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increasingly recognized that imperfections in the market could lead to various anti-competitive 

behaviors. Antitrust policy closely followed the development of economics at this stage. Economists 

continued to dedicate themselves to studying the relationship between market structure, market conduct, 

and market performance, ultimately contributing to the establishment of industrial organization theory 

as an independent discipline within economics. Various schools emerged around industrial organization 

theory at different historical stages. 

 

2. Representative of Structuralism: The Harvard School 

2.1 Background 

In 1938, Professor Roger Myerson of Harvard University conducted preliminary empirical validation 

of market structure and market conduct in competitive processes, proposing that the risks of 

monopolistic behavior might correlate with market structures of a certain scale. Later, in 1959, 

Professor Joe S. Bain of Harvard University comprehensively and systematically elaborated on the 

formula of market structure, market conduct, and market performance (the SCP formula) in his book 

Theories of Industrial Organization. The emergence of this theoretical formula marked the definitive 

birth of the Harvard School. 

Under the influence of the Harvard School, U.S. antitrust enforcement agencies applied the SCP 

formula to analyze markets, initiating “breakup” sanctions against many large enterprises based on 

theoretical applications. These actions received support from federal courts, with landmark cases 

including Alcoa, AT&T, and Brown Shoe. The federal courts‟ stance was: “Efficiency cannot 

constitute a defense, and the efficiencies claimed to result from mergers can even be used to attack 

those mergers, on the grounds that smaller competitors would be placed at a disadvantage.” The 

attitude reflected in these cases demonstrates that the SCP formula targeted large, highly concentrated 

corporations. The Supreme Court‟s continued focus on applying the SCP formula in subsequent merger 

cases further indicated that during this period, “structuralism” was established as the dominant 

substantive standard for merger regulation. This approach fully reflected the Harvard School‟s distrust 

of large enterprises and industries with high concentration levels. 

2.2 Main Views 

The Harvard School originated from empiricist research on the concentration of U.S. manufacturing 

industries and their monopolistic impacts. The empirical nature of the Harvard School‟s theoretical 

model is primarily reflected in its analysis of specific markets. Its key conclusions include: 

1) In industries with highly concentrated sellers, corporate profit margins exceed those in markets with 

dispersed or low-concentration sellers. 

2) Industries with extremely high entry barriers are more prone to exhibit higher excess profits and 

monopolistic output levels than other industries, and oligopolistic competition is more difficult to 

achieve than anticipated. 

 



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3) The Structure-Conduct-Performance (SCP) paradigm developed by the Harvard School establishes 

the following assumptions: 

4) As market entry barriers increase, the gap between the optimal price and cost for leading firms 

widens. 

5) Market concentration facilitates implicit or explicit collusion. 

In short, Structure (S) occupies the central position in the SCP paradigm. The monopoly profits of 

firms in highly concentrated industries result from market power and monopolistic conduct, but 

identifying specific behaviors is challenging. Instead, the Harvard School argues that such conduct can 

be inferred from market structure. Regarding firms‟ pricing or product strategies, the Harvard School 

views predatory pricing (below-cost pricing) and discounting practices by potentially dominant firms as 

illegal monopolistic behaviors. 

2.3 Summary 

The Harvard School emerged during the transition from laissez-faire economics to a period of state 

intervention in markets. Due to this unique historical context, it advocates for government intervention 

in markets—particularly in market structure—to improve economic outcomes. Thus, the Harvard 

School is known as structuralism. Its core propositions can be summarized as follows: 

1) Positive correlation between industry concentration and accounting return on investment: Identifying 

highly concentrated market structures is simpler. 

2) High concentration typically leads to high entry barriers, which allow incumbent large firms to 

secure monopoly profits while deterring new competitors. 

3) Oligopolistic interdependence: In oligopolistic markets, a few dominant firms rely on mutual 

dependence and may engage in “tacit collusion” to implement illegal monopolies. 

4) Predatory pricing and discriminatory discounts by large firms are also forms of illegal 

monopolization. 

The structuralist antitrust ideology of the Harvard School aligns with its liberalist beliefs. The U.S. 

liberal tradition and values have profoundly influenced antitrust schools and the enforcement of 

antitrust laws. The Harvard School‟s structuralism reflects the fundamental stance of modern liberalism, 

which emphasizes active economic regulation through the “visible hand” of government intervention. 

 

3. Representative of Behaviorism: The Chicago School 

3.1 Background 

The “Chicago Tradition” embodied in the Chicago School constitutes a key element of the conservative 

ideological spectrum. The school exhibits dual characteristics in theoretical construction: 

Systematic Advocacy for Deregulation: It emphasizes that market systems and voluntary transactions 

are the optimal paradigms for coordinating social activities. By establishing a market-centric theoretical 

framework, it highlights decentralization as the core advantage of market operations. It argues that 

resource allocation and social welfare can achieve equilibrium through spontaneous order, thereby 



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negating the necessity of administrative intervention and mitigating the risks of power monopolization. 

Scientific Transformation of Economics: It employs quantitative methods to transform economic 

research into an empirical scientific system. In policy terms, it develops institutional schemes that 

systematically weaken administrative regulation and strengthen market functions. 

These academic features deeply reflect conservative values, particularly its advocacy of 

neoconservative economic theory. With the rise of neoconservatism in the U.S., the school‟s ideas 

gradually infiltrated judicial practice starting in the mid-1970s. Its influence stems from dual drivers: 

Updates in adjudicative philosophy prompted by changes in Supreme Court justices. 

Institutional anxiety triggered by the decline in U.S. firms‟ international competitiveness (e.g., dual 

losses in market share), which amplified the practical emphasis on the efficiency-first principle. 

The school‟s propositions—such as the market‟s self-correcting mechanism and its derivative concept 

of regulatory restraint—gained sustained institutional vitality. 

3.2 Main Views 

The core propositions of the Chicago School are summarized as follows: 

1) Economic Efficiency Centralism: Economic efficiency is the sole objective of antitrust law, 

encompassing productive efficiency (output value/input cost) and allocative efficiency (Pareto 

optimality). 

These two efficiencies are inversely related: Monopoly incentivizes R&D to enhance productive 

efficiency but causes prices to deviate from marginal costs, reducing allocative efficiency. Policies 

should pursue net efficiency maximization. 

2) Inherent Market Competitiveness: Highly concentrated markets still exhibit non-price competition 

(e.g., service improvements, product innovation). 

Product differentiation not only fails to weaken competition but increases collusion difficulty, 

undermining traditional oligopoly theory. 

3) Market Self-Correction: Monopoly is temporary, as high profits attract new entrants to dismantle 

monopolistic positions. 

Governments need only accelerate market adjustments, avoiding excessive interference in natural 

resource flows. 

4) Critique of Entry Barriers: Natural entry barriers are largely illusory; real obstacles stem from 

government regulation. 

Free markets require unrestricted entry and exit; government intervention hinders efficiency. 

5) Reassessment of Economies of Scale: Economies of scale are ubiquitous, existing not only within 

firms‟ internal production but also in inter-firm transactional networks. 

Most business behaviors‟ efficiency drivers are hard to quantify. 

Vertical mergers (including tying and resale price maintenance) have efficiency legitimacy. 

Monopolists cannot extract excess profits through vertical leverage, as competitive 

upstream/downstream markets naturally constrain firm behavior. 



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Profit-maximizing firms dominate markets, and competition ensures efficiency prevails. Even 

non-profit-oriented firms cannot escape market pressures. 

6) Cautionary Interventionism: Government intervention must meet strict criteria: proving intervention 

benefits outweigh market self-correction costs. 

Error costs are asymmetric—false positives (misidentifying anticompetitive conduct) are more harmful 

than false negatives (overlooking misconduct). 

The efficiency model is apolitical, prioritizing total social wealth maximization. Any conduct with net 

positive benefits (firm gains > consumer losses, or vice versa) is deemed legal, regardless of 

distributive justice. 

3.3 Summary 

The Chicago School constructs an analytical framework grounded in market self-healing, economic 

efficiency, and mathematical modeling. It emphasizes that antitrust policy should adhere to the 

“principle of minimal intervention”, fundamentally challenging traditional structuralist antitrust 

approaches. Key critiques of the Harvard School include: 

The unreliability of claims that monopolistic profits in highly concentrated industries exceed those in 

low-concentration sectors. 

Effective competition does not require numerous market players; even oligopolistic markets can foster 

competition, and collusion among a few firms does not eliminate all competition. 

Monopolies self-correct over time, with judicial intervention merely accelerating this process. Unlike 

the Harvard School‟s focus on market structure, the Chicago School prioritizes firm behavior analysis, 

earning it the label of behaviorism. 

 

4. The Further Development of the Chicago School 

4.1 Background 

Although the Chicago School dominated antitrust policy in the 1980s, its perfect competition model 

revealed significant flaws in explaining complex market behaviors. The 1992 Eastman Kodak Co. v. 

Image Technical Services case marked a turning point. When the court analyzed Kodak‟s dominance in 

the aftermarket using information asymmetry and consumer lock-in effects, it exposed the dynamic 

competitive complexities overlooked by the Chicago School. Kodak‟s control over 90% of the repair 

market despite holding only 20% of the new product market shattered the traditional framework of 

single-market definition, forcing the judicial system to incorporate game theory and transaction cost 

theory to analyze cross-temporal market power dynamics. The Post-Chicago School emerged to revise 

certain tenets of the Chicago School, arguing that markets are imperfect and that certain monopolistic 

behaviors cannot be eliminated solely through market mechanisms. 

 

 

 



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4.2 Main Views 

The theoretical breakthroughs of the Post-Chicago School are reflected in five core revisions and 

refinements: 

1) Reintegration of Structural Parameters: The school advocates that antitrust reviews of 

anticompetitive conduct cannot abandon market structural parameters. The existence of market power 

serves as a prerequisite for strategic anticompetitive behavior. Employing structural elements as 

screening mechanisms significantly reduces enforcement agencies‟ information-processing costs and 

optimizes regulatory resource allocation. This limited revival of structuralism represents a technical 

correction to the Chicago School‟s purely behavioral analysis paradigm. 

2) Consumer Surplus as the Normative Benchmark: While retaining economic efficiency as a core 

criterion, the Post-Chicago School posits consumer surplus—rather than total social welfare—as the 

primary value judgment standard. It also acknowledges that competition policy must integrate 

non-economic values, including innovation incentives, protection of small and medium-sized 

enterprises, and fairness in market opportunities. 

3) Predatory Pricing as a Strategic Signal: Based on information asymmetry between incumbents and 

potential entrants, the school argues that predatory pricing can function as a market-deterrence 

signaling mechanism. The presence of sunk costs creates dynamic rigidity in entry barriers. Incumbent 

firms may establish substantive barriers through strategic actions like capacity expansion or patent 

fencing, transcending traditional cost-benefit analyses. This framework introduces strategic interaction 

models under conditions of incomplete information. 

4) Sustainability of Cartels via Repeated Games: By constructing repeated game models, the school 

demonstrates that collusion can persist when cartel members establish credible punishment 

mechanisms for defection. In industries with strong network effects or low monitoring costs, cartels 

may sustain long-term viability. This directly challenges the Chicago School‟s classical assertion of the 

inherent fragility of cartels. 

5) Heterogeneous Effects of Mergers in Differentiated Markets: Mergers among firms with 

differentiated products generate varied competitive outcomes. When merged entities‟ products 

increasingly diverge from existing market offerings, the likelihood of post-merger price hikes rises 

significantly, as competitors with low substitution elasticity cannot adjust prices synchronously. 

Conversely, mergers in homogeneous markets are more prone to induce coordinated pricing or 

oligopolistic equilibria. This granular predictive model addresses the mechanical limitations of 

traditional market concentration metrics. 

 

 

 

 

 



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5. The Impact of Economic Schools on Antitrust Law 

The evolution of antitrust law has been profoundly shaped by competing economic theories, each 

offering distinct frameworks for analyzing market power, competitive harm, and regulatory 

intervention. From the structuralist doctrines of the Harvard School to the behaviorist revolution of the 

Chicago School and the nuanced corrections of the Post-Chicago School, economic paradigms have not 

only influenced legal standards but also redefined the very objectives of antitrust enforcement. This 

chapter examines how these schools of thought have molded antitrust jurisprudence, policy tools, and 

enforcement priorities across different eras, while highlighting their enduring tensions and 

convergences. 

5.1 The Harvard School: Structuralism as Legal Doctrine 

The Harvard School‟s Structure-Conduct-Performance (SCP) paradigm dominated antitrust policy 

from the 1940s to the 1970s, embedding structuralism into legal doctrine. Its influence manifested in 

three key dimensions: 

1) Presumption of Harm from Concentration 

Harvard scholars like Joe S. Bain empirically linked high market concentration to reduced competition, 

arguing that industries with few dominant firms inherently incentivized collusion and monopolistic 

exploitation. This presumption translated into aggressive legal standards: Per se Illegality of High 

Concentration: Courts treated mergers leading to elevated market shares (e.g., above 30%) as 

inherently suspect. Landmark cases such as United States v. Aluminum Co. of America (Alcoa) (1945) 

and Brown Shoe Co. v. United States (1962) institutionalized structural thresholds, with Justice Warren 

declaring in Brown Shoe that antitrust law must “strike down mergers that create a „reasonable 

likelihood‟ of structural harm.” Hostility to Efficiency Defenses: The Supreme Court in FTC v. Procter 

& Gamble Co. (1967) rejected efficiency gains as merger justifications, fearing they would entrench 

dominant firms and “further disadvantage smaller competitors.” 

2) Enforcement Tools and Remedies 

Structuralism prioritized structural remedies: Divestiture Orders: Breakups of monopolies like AT&T 

(1982) aimed to fragment concentrated markets. Merger Guidelines (1968): The DOJ‟s guidelines 

established strict Herfindahl-Hirschman Index (HHI) thresholds, prohibiting mergers in highly 

concentrated markets absent extraordinary circumstances. 

3) Political and Ideological Alignment 

The Harvard School‟s skepticism of corporate power resonated with postwar liberalism, which viewed 

antitrust as a tool to democratize economic power. This alignment is evident in Congress‟s 1950 

Celler-Kefauver Act, which expanded merger control to curb conglomerates‟ rising influence. 

5.2 The Chicago School: Efficiency as Antitrust’s North Star 

The Chicago School‟s ascendancy in the 1980s marked a paradigm shift, refocusing antitrust on 

economic efficiency and consumer welfare. Its impact unfolded through: 

 



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1) Theoretical Foundations 

Price Theory and Rational Actors: Scholars like Richard Posner and Robert Bork reconceptualized 

antitrust through neoclassical price theory, positing that firms always act to maximize profits and that 

markets self-correct through entry and innovation. 

Single-Market Efficiency Goal: Bork‟s The Antitrust Paradox (1978) argued that antitrust‟s sole 

objective should be total welfare maximization, rejecting structuralist concerns about fairness or 

decentralization. 

2) Legal and Policy Reforms 

Rule of Reason Revival: Courts adopted Chicago-inspired analyses, requiring plaintiffs to prove actual 

harm to competition rather than relying on structural presumptions. Continental T.V., Inc. v. GTE 

Sylvania (1977) exemplified this shift by upholding non-price vertical restraints under a reasonableness 

test. 

Merger Guidelines (1982/1984): The DOJ revised merger standards to prioritize efficiency gains, 

allowing mergers if they enhanced productive efficiency even at the cost of higher concentration. 

3) Case Law Transformation 

Predatory Pricing: In Matsushita Electric Industrial Co. v. Zenith Radio Corp. (1986), the Supreme 

Court required plaintiffs to demonstrate a predatory pricing scheme‟s plausibility using cost-based 

metrics, reflecting Chicago‟s skepticism of such claims. 

Vertical Restraints: State Oil Co. v. Khan (1997) overturned per se illegality for maximum resale price 

maintenance, endorsing Chicago‟s view that vertical agreements often improve distribution efficiency. 

4) Ideological Legacy 

The Chicago School‟s deregulatory ethos aligned with Reagan-era neoliberalism, framing antitrust as a 

technocratic endeavor to optimize markets rather than control corporate size. 

5.3 The Post-Chicago School: Bridling Market Realism 

Emerging in the 1990s, the Post-Chicago School introduced game theory, behavioral economics, and 

dynamic analysis to address the Chicago School‟s oversimplifications. Its contributions include: 

1) Strategic Behavior and Market Dynamics 

Game-Theoretic Models: Scholars like Carl Shapiro and Jean Tirole demonstrated how firms in 

concentrated markets could sustain collusion through repeated interactions or leverage network effects 

to foreclose rivals. 

Two-Sided Markets: The EU‟s Google Shopping (2017) decision applied Post-Chicago insights, 

recognizing that dominant platforms could distort competition by privileging their own services in 

multi-sided markets. 

2) Refined Merger Analysis 

Unilateral Effects Doctrine: Modern guidelines acknowledge that mergers in differentiated markets 

(e.g., pharmaceuticals) can enable price hikes even without coordination, as seen in FTC v. Lundbeck 

Inc. (2010). 



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Digital Ecosystem Concerns: Cases like FTC v. Meta/Within (2023) reflect Post-Chicago fears that 

tech giants‟ acquisitions of startups may stifle future innovation. 

3) Behavioral Antitrust 

Incorporating insights from Kahneman and Tversky, scholars argue that cognitive biases (e.g., 

overconfidence, herd behavior) enable anticompetitive strategies traditional models overlook. This has 

influenced investigations into algorithmic collusion and “dark patterns” in digital markets. 

5.4 Conclusion 

Economic theories have not merely influenced antitrust law—they have redefined its DNA. From 

structuralism‟s crusade against corporate giants to Chicago‟s efficiency revolution and Post-Chicago‟s 

recalibrations, each school reflects its era‟s economic anxieties and ideological currents. As markets 

evolve, antitrust law will continue to serve as a battleground for competing visions of competition, 

reminding us that economics is not just a lens for interpreting markets but a force that shapes them. 

 

6. Future Possibilities: The New Brandeis School 

For super platform enterprises, regulation akin to the governance of public utilities could be considered. 

The “New Brandeisism” advocates that antitrust laws should focus more on market structure and 

competitive processes, yet it opposes a full return to the Harvard School‟s 

“structure-conduct-performance (SCP)” paradigm. Through a systematic critique of U.S. competition 

policy, the New Brandeis School proposes reconstructing the value foundation and practical pathways 

of antitrust law. It emphasizes transcending the narrow consumer welfare standard in the digital 

economy era and returning to the original legislative intent of the Sherman Act: curbing excessive 

capital concentration and safeguarding economic democracy. The rise of the New Brandeis School 

coincides with the global attention to super internet platform governance in the EU, U.S., and China. 

For decades, the Chicago School—which opposed monopolistic conduct rather than monopolistic 

status—dominated antitrust theory. Applied to internet platforms, this meant tolerating platform scale 

while targeting monopolistic behaviors tied to that scale. The New Brandeis School rejects the Chicago 

School‟s framework, arguing that the current antitrust approach—linking competition to short-term 

“consumer welfare” defined by price effects—fails to address structural market power in the modern 

economy. Measuring competition solely through output and price overlooks the negative impacts of 

platform dominance. This theoretical shift abandons the Chicago School‟s “market supremacy” dogma, 

seeking to integrate structuralist traditions with dynamic competition theory and digital governance 

tools. It aims to uphold the Sherman Act‟s pluralistic values of decentralizing economic power and 

ensuring fair opportunity while adapting to evolving monopolistic dynamics in the digital age. 

However, whether the New Brandeis School will solidify as a distinct school of thought and gain 

mainstream acceptance in antitrust jurisprudence remains to be seen. 

 

 



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