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125 U. Pa. L. Rev. 699 (1976-1977)
Economies as an Antitrust Defense Revisited

handle is hein.journals/pnlr125 and id is 717 raw text is: University of Pennsylvania Law Review FOUNDED 1852 Formerly American Law Register VOLUME 125 APRIL 1977 NUMBER 4 ECONOMIES AS AN ANTITRUST DEFENSE REVISITED OLIVER E. WILLIAMSONt The merger of two firms is commonly viewed from an anti- trust standpoint in terms of its anticompetitive effects on price. Sometimes, however, a merger will also result in real increases in efficiency that reduce the average cost of production of the combined entity below that of the two merging firms. The ne- glect, obfuscation, or even perverse interpretation of such econ- omies was characteristic of antitrust enforcement in the early sixties and beyond. Indications exist, however, that economies are now being valued more positively. When I first addressed the question of economies as an antitrust defense in 1968,1 I had misgivings over whether public policy would really benefit from explicit consideration of the issue. The alternative of keeping the economies defense in the background and relying instead on someone connected with the enforcement process to intrude whenever antitrust actions of a strongly efficiency impairing kind were contemplated seemed to have merit. After all, antitrust enforcement officials and the courts were not altogether insensitive to efficiency considera- tions, and the potential operational problems of the courts' en- t Professor of Economics, Law, and Public Policy, University of Pennsylvania. S.B. 1955, Massachusetts Institute of Technology; M.B.A. 1960, Stanford University; Ph.D. 1963, Carnegie-Mellon University. Research on this Article was supported by the Cen- ter for the Study of Organizational Innovation at the University of Pennsylvania. 1 Williamson, Economies as an Antitrust Defense: The Welfare Tradeoffs, 58 Am. ECON. REv. 18 (1968).

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