The last few decades have witnessed a scientific revolution in the field of industrial organization in the form of transaction cost economics (TCE). This revolution has radically altered economists’ understanding and interpretation of both partial and complete economic integration. Not surprisingly, this sea change has substantially influenced antitrust law and policy, impelling the Supreme Court to reverse or greatly modify various precedents.
This essay supplements the received historiography of the TCE revolution. It contends that Robert Bork played a hitherto underappreciated role in that revolution. In particular, the essay contends that in 1966, before the official onset of the transaction cost revolution, Bork helped rediscover Ronald Coase’s 1937 article, The Nature of the Firm, and employed Coase’s reasoning to offer TCE justifications for various forms of partial integration. Bork explained how exclusive territories, customer restrictions, and horizontal minimum price fixing that accompanied otherwise valid joint ventures were voluntary efforts to overcome the social costs of reliance on atomistic markets. In so doing, Bork articulated and applied numerous tools of TCE, tools that reflected departures from the then-dominant applied price theory version of industrial organization.
79 Antitrust Law Journal 953-982 (2014)
Meese, Alan J., "Robert Bork's Forgotten Role in the Transaction Cost Revolution" (2014). Faculty Publications. 1703.