Workable Antitrust Policy
One of the schools of thought in the economics of antitrust was called “workable competition.” The adherents to this school believed that markets were prone to cartelization and that concentration was death on competition, but that occasionally competition might prove “workable.” These scholars were suspicious of almost every industrial practice they saw. One of the manifestations of their work came to be known as the “structure-conduct-performance paradigm.” The thesis was that you could tell whether competition was feasible from the structure of the market. If the top four firms had fifty percent or so of the sales, we should abandon hope of competition – unless, perhaps, the government should be able to break up the largest firms and restore workable competition. The vision was supported by data showing that the most concentrated industries were also the most profitable – and monopoly profit seemed the only source of the higher returns.