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Theory in closer contact with industrial life: American institutional economists on competition theory and policy

Published online by Cambridge University Press:  14 May 2021

Matthew T. Panhans Open the ORCID record for Matthew T. Panhans [Opens in a new window]  and
Reinhard Schumacher Open the ORCID record for Reinhard Schumacher [Opens in a new window]
Matthew T. Panhans*
Affiliation:
Federal Trade Commission, Washington, DC, USA
Reinhard Schumacher
Affiliation:
University of Potsdam, Potsdam, Germany
*
*Corresponding author. Email: [email protected]
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Abstract

This paper investigates the views on competition theory and policy of the American institutional economists during the first half of the 20th century. These perspectives contrasted with those of contemporary neoclassical and later mainstream economic approaches. We identify three distinct dimensions to an institutionalist perspective on competition. First, institutionalist approaches focused on describing industry details, so as to bring theory into closer contact with reality. Second, institutionalists emphasized that while competition was sometimes beneficial, it could also be disruptive. Third, institutionalists had a broad view of the objectives of competition policy that extended beyond effects on consumer welfare. Consequently, institutionalists advocated for a wide range of policies to enhance competition, including industrial self-regulation, broad stakeholder representation within corporations, and direct governmental regulations. Their experimental attitude implied that policy would always be evolving, and antitrust enforcement might be only one stage in the development toward a regime of industrial regulation.

Keywords

Competitioneconomic thoughtindustrial organizationinstitutional economicsinstitutionalismpublic policyB15B25L40
Type
Research Article
Information
Journal of Institutional Economics , Volume 17 , Issue 5 , October 2021 , pp. 781 - 798
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press on behalf of Millennium Economics Ltd.

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