Economic and Legal Concepts of Competition

I. Economic Concepts of Competition OMPETITION is the selective mechanism of private-enterprise economy. Given free choice by buyers and sellers, there is always some profit to be made by producing more efficiently than one's rivals and bidding trade away from them, to the point where everyone's profits have been eroded to the bare minimum. The only way to escape the pauper's fate is for the business enterprise to seek out innovations in products, processes, or sources of supply which yield new profits, whereupon the cycle is repeated. The action of business enterprise is perpetual flight from the zero-profit abyss. To alter the metaphor, and borrowing from the language of tax enforcement, it is in the interest of enterprise either to avoid or evade the unending pressure on profits-avoidance by innovation, evasion by stopping the pressure or at least weakening it; and the degree of success in evasion is what we call the degree of monopoly. The power to attain economies of production and distribution may be lumped in with the power to limit competition-by those who are interested only in protecting their incomes, which either kind of power can do. But if we are interested in the results of one kind of power or another-and if we aren't, we have no particular expertise-then of course there is solid body of economic theory to let us conclude that it makes good deal of difference for the national income whether businessmen predominantly avoid or evade the competitive pressure toward zero profits. If the size and growth of the national income are matter of first-rate importance, this distinction between one or another power is vital. It is worth while reflecting on another loaded word. The Chief Justice of the United States once called our basic anti-trust statute a charter of