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Fred Smith [2], founder and president of the Competitive Enterprise Institute [3], explains — in today’s edition of the Washington Times [4] — one of principal problems with the antitrust theory that still motivates bureaucrats such as those at the Federal Trade Commission (FTC). Here’s a key paragraph:
Antitrust theory ignores the permeability of the boundaries of all
markets. True, the first company to break into a market can charge
higher prices and realize higher profits. After all, it takes time for
established competitors to adapt to meet a newcomer’s challenge. And
the changes are obvious even to a casual observer — witness traditional
supermarkets’ adoption of organic foods. But potential new competitors
are always waiting in the wings.
Elsewhere in his op-ed, Fred correctly reasons that the FTC’s attempt to block the merger of Whole Foods with Wild Oats was preposterous.