June 2, 1999 OPEN LETTER TO PRESIDENT CLINTON FROM 240 ECONOMISTS ON ANTITRUST PROTECTIONISM

Concerned about a growing number of antitrust cases instigated by rival business firms, 240 distinguished economists signed an open letter to President Clinton that called for an end to speculative antitrust enforcement efforts. The ad, sponsored by The Independent Institute, appeared in the June 2, 1999, editions of The Washington Post and The New York Times. AN OPEN LETTER TO PRESIDENT CLINTON FROM 240 ECONOMISTS ON ANTITRUST PROTECTIONISM Dear President Clinton: Antitrust is supposed to be about protecting consumers against higher prices and other consequences of monopoly power. Accordingly, the Justice Department's Antitrust Division, the Federal Trade Commission, and state attorneys general are vested with authority to defend competition and protect the well-being of consumers. The current spate of heightened antitrust activism seems to suggest that anti-competitive business practices abound. Headline-grabbing cases against Microsoft, Intel, Cisco Systems, Visa and MasterCard, along with a flurry of merger investigations now under way, would appear to demonstrate the need for a vigorously enforced antitrust policy that will create checks and balances to eliminate consumer harm. However, consumers did not ask for these antitrust actions -- rival business firms did. Consumers of high technology have enjoyed falling prices, expanding outputs, and a breathtaking array of new products and innovations. High technology markets are among the most dynamic and competitive in the world, and it is a tribute to open markets and entrepreneurial genius that American firms lead in so many of these industries. But, these same developments place heavy pressures on rival businesses, which must keep pace or lose their competitive races. Rivals can legitimately respond by improving their own products or by lowering prices. Increasingly, however, some firms have sought to handicap their rivals' races by turning to government for protection. Where antitrust authorities respond to these protectionist demands, the workings of markets are short-circuited. Antitrust protectionism means that market decisions about how to compete for consumers' favor are displaced by bureaucratic and political decisions. More of the energies of firms are directed to politics, less to production and innovation. Successful innovators are penalized, scale economies are lost, and competition is thwarted, not enhanced. Instead of preventing prices from rising, antitrust protectionism keeps prices from falling. Many of these cases are based on speculation about some vaguely specified consumer harm in some unspecified future, and many of the proposed interventions will weaken successful U.S. firms and impede their competitiveness abroad. The cost-benefit test for antitrust has not been met. We urge antitrust authorities to abandon antitrust protectionism and refrain from such speculative enterprises when actual consumer harm cannot be shown. Donald L. Alexander Western Michigan University William R. Allen University of California, Los Angeles Lee J. Alston University of Illinois Ryan C. Amacher University of Texas, Arlington Gary M. Anderson California State University, Northridge William L. Anderson North Grenville College D. T. Armentano University of Hartford George B. N. Ayittey American University Howard Baetjer, Jr. George Mason University Charles W. Baird California State University, Hayward Ray Ball University of Rochester King Banaian St. Cloud State University William Barnett, II Loyola University L. Dwayne Barney Boise State University Daniel K. Benjamin Clemson University James T. Bennett George Mason University Bruce L. Benson Florida State University David E. Bernstein George Mason University Michael L. Bognanno Temple University Cecil E. Bohanon Ball State University Ben W. Bolch Rhodes College Thomas E. Borcherding Claremont Graduate University Samuel Bostaph University of Dallas Donald J. Boudreaux Foundation for Economic Education Charles H. Breeden Marquette University Andrzej Brzeski University of California, Davis Richard C. K. Burdekin Claremont McKenna College Henry N. Butler University of Kansas Colin D. Campbell Dartmouth College Noel D. Campbell North Georgia College & State University Thomas F. Cargill University of Nevada Phillip P. Caruso Western Michigan University Ronald A. Cass Boston University Jeffrey R. Clark University of Tennessee William M. Clark University of Oklahoma Carl P. Close The Independent Institute R. Morris Coats Nicholls State University John Cochran Metropolitan State College Lloyd R. Cohen George Mason University Roy E. Cordato Campbell University Jim F. Couch University of North Alabama K. Chris Cox Nicholls State University Eleanor D. Craig University of Delaware Robert G. Crawford Brigham Young University Jerry W. Dauterive Loyola University David G. Davies Duke University Louis De Alessi University of Miami Arthur S. De Vany University of California, Irvine Michael E. DeBow Samford University Henry G. Demmert Santa Clara University Matthew S. DePoint St. Cloud State University Arthur M. Diamond, Jr. University of Nebraska Thomas J. DiLorenzo Loyola College in Maryland William R. Dougan Clemson University William M. Doyle, Jr. University of Dallas Michael Eames Santa Clara University Robert B. Ekelund, Jr. Auburn University Jerome R. Ellig George Mason University Edward W. Erickson North Carolina State University Paul Evans Ohio State University William P. Field, Jr. Nicholls State University Darren Filson Claremont Graduate University William A. Fischel Dartmouth College Arthur A. Fleisher, III Metropolitan State College Fred E. Foldvary Santa Clara University Robert L. Formaini University of Texas, Dallas William J. Frazer University of Florida Lowell E. Gallaway Ohio University Gary M. Galles Pepperdine University Roger W. Garrison Auburn University David E. R. Gay University of Arkansas R. Richard Geddes Fordham University William D. Gerdes North Dakota State University Joseph A. Giacalone St. John's University Adam Gifford, Jr. California State University, Northridge Thomas W. Gilligan University of Southern California Micha Gisser University of New Mexico Rodolfo A. Gonzalez San Jose State University Peter Gordon University of Southern California Richard L. Gordon Pennsylvania State University Gerald A. Gunderson Trinity College David D. Haddock Northwestern University Simon Hakim Temple University J. Daniel Hammond Wake Forest University Steve H. Hanke Johns Hopkins University Ronald W. Hansen Univerity of Rochester Scott E. Harrington University of South Carolina C. Lowell Harriss Columbia University Robert F. Hebert Auburn University Frank L. Hefner College of Charleston Robert H. Heidt Indiana University David R. Henderson Hoover Institution Robert S. Herren North Dakota State University Robert Higgs The Independent Institute Peter J. Hill Wheaton College George W. Hilton University of California, Los Angeles Randall G. Holcombe Florida State University John B. Horowitz Ball State University Ronald A. Howard Stanford University Laurence R. Iannaccone Santa Clara University Gail A. Jensen Wayne State University Dennis A. Johnson University of South Dakota Ronald N. Johnson Montana State University Benjamin Klein University of California, Los Angeles Daniel B. Klein Santa Clara University Alan E. Koczela George Mason University Robert Krol California State University, Northridge Lawrence A. Kudlow American Skandia Life Assurance Corp. Timur Kuran University of Southern California David N. Laband Auburn University Deepak K. Lal University of California, Los Angeles Steven E. Landsburg University of Rochester Don C. Lavoie George Mason University Robert A. Lawson Capital University Dwight R. Lee University of Georgia Gary D. Libecap University of Arizona Wesley J. Liebeler University of California, Los Angeles Stan J. Liebowitz University of Texas, Dallas Anthony K. Lima California State University, Hayward Jody Lipford Presbyterian College Dennis E. Logue Dartmouth College Edward J. Lopez University of North Texas John R. Lott, Jr. University of Chicago William R. Luckey Christendom College Hugh H. Macauley Clemson University Paul G. Mahoney University of Virginia Michael T. Maloney Clemson University Yuri N. Maltsev Carthage College Henry G. Manne George Mason University Stephen E. Margolis North Carolina State University Nelson Mark Ohio State University Michael L. Marlow California State Polytechnic University John G. Matsusaka University of Southern California Thomas H. Mayor University of Houston Nolan McCarty Columbia University Fred S. McChesney Cornell University Deirdre N. McCloskey University of Iowa Paul W. McCracken University of Michigan Thomas Means San Jose State University Roger E. Meiners University of Texas, Arlington David I. Meiselman Virginia Tech University Lloyd J. Mercer University of California, Santa Barbara Tracy C. Miller Grove City College Jeffrey D. Milyo Tufts University Jeffrey A. Miron Boston University William C. Mitchell University of Oregon Michael Montgomery University of Maine Carlisle E. Moody College of William & Mary Ronald L. Moomaw Oklahoma State University Thomas Gale Moore Hoover Institution Andrew P. Morriss Case Western Reserve University Michael Valdez Moses Duke University Craig M. Newmark North Carolina State University William A. Niskanen Cato Institute Lydia D. Ortega San Jose State University Dale Osborne University of Texas, Dallas Evan Osborne Wright State University Allen M. Parkman University of New Mexico Ernest C. Pasour, Jr. North Carolina State University Judd W. Patton Bellevue University Mark J. Perry University of Michigan Mary Bennett Peterson General Motors Corporation William H. Peterson Campbell University Owen R. Phillips University of Wyoming Keith T. Poole Carnegie Mellon University Barry W. Poulson University of Colorado B. Michael Pritchett Brigham Young University Richard W. Rahn Novecon Corporation David W. Rasmussen Florida State University George G. Reisman Pepperdine University Alan Reynolds Hudson Institute Morgan O. Reynolds Texas A & M University Edward M. Rice University of Washington James R. Rinehart Francis Marion University Shawn Ritenour Southwest Baptist University Paul Craig Roberts Institute for Political Economy Jerry K. Rohacek University of Alaska Charles K. Rowley George Mason University Randall R. Rucker Montana State University Roy J. Ruffin University of Houston Gerard G. Russo University of Hawaii Kevin D. Sachs University of Cincinnati Joseph T. Salerno Pace University Michael T. Saliba Loyola University David S. Saurman San Jose State University E. S. Savas Baruch College, C.U.N.Y. Thomas R. Saving Texas A & M University Lawrence J. Sechrest Sul Ross State University Stephen Sheppard Oberlin College Stephen Shmanske California State University, Hayward William F. Shughart II University of Mississippi Olga Shvetsova Washington University Barry N. Siegel University of Oregon Randy T. Simmons Utah State University Gene R. Simonson California State University, Long Beach Gene Smiley Marquette University Vernon L. Smith University of Arizona Russell S. Sobel West Virginia University Lee C. Spector Ball State University Frank G. Steindl Oklahoma State University Paul B. Stephan University of Virginia Houston H. Stokes University of Illinois,Chicago Courtenay C. Stone Ball State University Daniel Sutter University of Oklahoma Shirley V. Svorny California State University, Northridge Charles Swanson Temple University Alexander T. Tabarrok The Independent Institute David J. Theroux The Independent Institute Clifford F. Thies Shenandoah University Henry Thompson Auburn University Richard H. Timberlake University of Georgia Robert D. Tollison University of Mississippi Mark Toma University of Kentucky George W. Trivoli Jacksonville State University Gordon Tullock University of Arizona Charlotte Twight Boise State University Michelle A. Vachris Christopher Newport College Karen I. Vaughn George Mason University Richard K. Vedder Ohio University Harry C. Veryser Walsh College Richard E. Wagner George Mason University Deborah L. Walker Loyola University Stephen J. K. Walters Loyola University Alan Rufus Waters California State University, Fresno Thayer Watkins San Jose State University Robert O. Welk Row Tek Economics John T. Wenders University of Idaho Samuel C. Weston University of Dallas Harry White Boise State University Lawrence H. White University of Georgia Richard W. Wilcke University of Louisville Thomas D. Willett Claremont Graduate University Arlington W. Williams Indiana University Mary L. Williams Widener University Peter M. Williams University of North Alabama Walter E. Williams George Mason University Bruce Yandle Clemson University DeVon L. Yoho Ball State University Ben T. Yu California State University, Northridge Thomas S. Zorn University of Nebraska Benjamin Zycher University of California, Los Angeles For further details, including information on the following books and other publications, please contact the Independent Institute: Winners, Losers & Microsoft: Competition and Antitrust in High Technology by Stan J. Liebowitz and Stephen E. Margolis, foreword by Jack Hirshleifer Antitrust and Monopoly: Anatomy of a Policy Failure by D. T. Armentano, foreword by Yale Brozen The Causes and Consequences of Antitrust: The Public-Choice Perspective edited by Fred S. McChesney and William F. Shughart II The Independent Institute 100 Swan Way, Oakland, CA 94621-1428 510-632-1366 * Fax 510-568-6040 info@independent.org * www.independent.org ************************************************************************** Subscribe to Freematt's Alerts: Pro-Individual Rights Issues Send a blank message to: freematt@coil.com with the words subscribe FA on the subject line. List is private and moderated (7-30 messages per week) Matthew Gaylor, 2175 Bayfield Drive, Columbus, OH 43229 (614) 313-5722 ICQ: 106212065 Archived at http://groups.yahoo.com/group/fa/ **************************************************************************