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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
American Law Register

VOLUME 125                APRIL 1977                 NUMBER 4
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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