Did lawyers associated with the University of Chicago contribute to our current crisis of monopoly capitalism and inequality?

See How Businesses Became People by ZEPHYR TEACHOUT, a professor of law at Fordham University. She reviews the book WE THE CORPORATIONS: How American Businesses Won Their Civil Rights by Adam Winkler. Excerpt:

"Beginning in the 1970s, a group of activist lawyers associated with the University of Chicago persuaded courts to gut well-established principles designed to protect open markets and decentralized power, and to replace them with an ideology of efficiency that has contributed to our current crisis of monopoly capitalism and inequality."

I emailed James Traina about this. He is a graduate student at the University of Chicago and recently wrote an excellent post for the "Pro Market" blog of the Stigler center called Are Markups Increasing? One of his conclusions was "market power has not meaningfully increased since 1980."

Here is what he said about the NY Times book review passage:

"Seems a bit off from the history that I know. My understanding is that in the 1970s, a group of law professors at UChicago led by Richard Posner started applying microeconomics to antitrust. Robert Bork also played a big role in mapping academic thought to legal practice. Before that, I'm not entirely sure on what courts based their decisions.

Microeconomics helped us clarify the tradeoffs at play, and gave economists and jurists direction on where to look for costs and benefits of mergers. The principle tradeoff was between anticompetitive costs versus efficiency benefits, and from a long and rigorous debate in academia, we eventually coalesced on the idea that vertical mergers tended to be good for consumers, and horizontal mergers should be analyzed on a case-by-case basis.

The two firms in a vertical merger aren't in direct competition, which rules out primary anticompetitive incentives. The thing to watch out for is vertical price squeeze, a secondary anticompetitive incentive where the upstream firm discounts its supply to the downstream firm, hurting competition in the downstream market. Empirically, that cost tends to be smaller than the efficiency gain. Once that idea permeated into antitrust rulings, a lot of vertical mergers went through.

I believe for horizontal mergers, the innovations were more on the empirical analysis. Once we started estimating their potential effects on prices, we found a lot of the proposed mergers were good for consumers. I suspect a big part of this trend was that the growth of information and communication technology allowed firms to scale up with big efficiency gains.

The big debate now is whether our models really captured all the effects. Even at the forefront of data analysis, predicting longterm effects is hard. So it's important that we look back now and ask whether we got it right, at least on average. That's part of what I'm trying to do in looking at markup trends!"