The Antitrust Paradigm

Throughout US history, economic stakeholders have sparred over the merits of monopoly and competition.

Vigorous competition became the preferred path to American economic success following an 1837 US Supreme Court decision in a dispute over exclusive rights to operate a bridge in a particular area. One justice argued that investors would avoid infrastructure projects like roads, canals and railroads if competition curtailed profits. But the prevailing opinion posited that monopolies would inhibit competing firms from introducing innovations. Subsequent nation-building proved the wisdom of the ruling: Competition did not dry up investment or drive up lender interest rates. Economic gains in the United States occurred through the promotion of competition.

The Sherman Antitrust Act of 1890, though, contained vague wording. It left antitrust interpretations to the courts, thus igniting disagreements over how best to achieve prosperity. In the 1940s, the establishment of enforcement directives instituted “free and unfettered competition as the rule of trade.” The rules did not include specific standards but rather an umbrella...