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GENERAL AND PARTIAL EQUILIBRIUM THEORY IN BORK'S ANTITRUST ANALYSIS
Author(s) -
FINK RICHARD H.
Publication year - 1984
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/j.1465-7287.1984.tb00792.x
Subject(s) - partial equilibrium , general equilibrium theory , economics , mathematical economics , general theory , externality , markov perfect equilibrium , sequential equilibrium , neoclassical economics , microeconomics , game theory , equilibrium selection , nash equilibrium , repeated game
In applying economic theory to evaluate antitrust laws, Judge Robert Bork explicitly favors a partial equilibrium over a general equilibrium approach. He believes the general model assumes away too many real‐world aspects to be usefully employed as a criterion by which to judge real‐world laws. However, Bork's partial equilibrium replacement, the Oliver Williamson trade‐off model, implicitly contains many of the same assumptions as general equilibrium theory. Equilibrium prices in all industries, an absence of external effects, and well‐defined demand curves are assumptions of both general equilibrium theory and the Williamson trade‐off model. If one theory is judged inadequate because of these assumptions, so should the other. Bork's analysis is more consistent with market process theory than with his own partial equilibrium approach. Market process theory assumes neither the absence of externalities, nor the presence of well‐defined demand and equilibrium prices in all industries.