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Bork'S Paradox: Static Vs. Dynamic Efficiency In Antitrust Analysis

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  • JACK HIGH

Abstract

Judge Robert Bork holds two opposing attitudes towards perfect competition. It is a highly useful economic model for illustrating allocative efficiency, but it is a defective policy model because it deliberately omits productive efficiency. He reconciles these attitudes by combining perfectly competitive allocative efficiency with dynamically competitive productive efficiency in his analysis. However, these two kinds of competition do not readily mix. One is a static equilibrium concept, the other a dynamic disequilibrium concept. One assumes perfect knowledge and the absence of change; the other assumes imperfect knowledge, learning, and continual flux. Each kind of competition is built on assumptions which, if true, would preclude the existence of the other. Bork's policy conclusions require the simultaneous existence of both kinds of competition. If he drops dynamic competition from the analysis, a much more stringent antitrust policy is called for. If he drops static competition, economic theory does not justify even his strictures against mergers and cartels.

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  • Jack High, 1984. "Bork'S Paradox: Static Vs. Dynamic Efficiency In Antitrust Analysis," Contemporary Economic Policy, Western Economic Association International, vol. 3(2), pages 21-34, December.
    • Handle: RePEc:bla:coecpo:v:3:y:1984:i:2:p:21-34
    DOI: 10.1111/j.1465-7287.1984.tb00793.x
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    References listed on IDEAS

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    1. Demsetz, Harold, 1973. "Industry Structure, Market Rivalry, and Public Policy," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 1-9, April.
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    Cited by:

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    4. Jordan Reel & Walter E. Block, 2013. "Educational Vouchers: Freedom to Choose?," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 7(4), December.

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