Freedom to Trade and the Competitive Process

Although antitrust courts sometimes stress the competitive process, they have not deeply explored what that process is. Inspired by the theory of the core, we explore the idea that the competitive process is the process of sellers and buyers forming improving coalitions. Much of antitrust can be seen as prohibiting firms’ attempts to restrain improving trade between their rivals and customers. In this way, antitrust protects firms’ and customers’ freedom to trade to their mutual betterment. *This paper has been long in gestation, but at the time of its release Professor Farrell is on leave serving as Director of the Bureau of Economics, Federal Trade Commission. The opinions in this paper are those of the authors as individuals and are not intended to represent those of the Federal Trade Commission or any Commissioner. We thank David Gilo, Fred Kahn, Louis Kaplow, Douglas Melamed, Ariel Porat, Ed Rock, Carl Shapiro and seminar participants at Tel Aviv University for helpful comments.