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Special Contribution


Four factors were influential in my decision to write this survey paper summarizing what economists believe theoretically and have found empirically to be the major economic (and noneconomic) effects of monopoly. First, in my work as an expert witness in antitrust cases representing both private parties and public bodies, I have found a glaring lacuna in the minds of some judges, a number of lawyers and most jurors in the area of antitrust economics. Second, this feeling has been fortified by my guest lectures in antitrust law courses; while the students are bright and the teacher dedicated, an acceptable level of competence in antitrust economics had successfully evaded its pursuers. Third, my reading of several law journals has convinced me that there are a large number of legally competent antitrust lawyers who are not very familiar with antitrust economics.

Finally, I was motivated by the growing realization that people do not regard antitrust violations as very serious. The July 1974 issue of SCIENCE DIGEST reported a cross-section study of Baltimore residents in which the respondents were asked to rate the seriousness of crimes from 9 (most serious) to 1 (least serious). The highest mean score recorded was "planned killing of a policeman" (8.474), and the lowest mean score was "being drunk in public places" (2.849). Of the 140 crimes listed three were of an antitrust genus. "Fixing prices of a consumer product like gasoline" ranked 126 from the top (4.629), "fixing prices of machines sold to businesses" ranked 127 (4.619), and "false advertising of a headache remedy" ranked 132 (4.083). Offenses such as "breaking a plate glass window in a shop," "refusal to make essential repairs in rental property," "shoplifting a carton of cigarettes from a supermarket," "driving while license is suspended," "lending money at illegal interest rates," "joining a riot," and "using pep pills" are each regarded as more serious than the antitrust violations!

In Part I we will explore in some detail the economic (and some noneconomic) effects of monopoly. In Part II we will examine briefly public policies toward monopoly.