The Structure-Conduct-Performance Paradigm and Antitrust

This paper will discuss the relevance of the structure-conductperformance approach to antitrust and demonstrate its practical utility in analyzing an important case.After sketching out the main elements of the approach, the paper will apply it to the facts of United States v. IBM..The structure-conduct-performance approach was developed by Joe Bain, 2 although many persons have added to and enriched his basic outline.The main goals set for antitrust by this approach are elements of performance.Bain himself and most who have followed his lead put their main emphasis on the extent to which concentration elevates price above minimum average cost due either to higher than normal profits or increased costs. 3 The rationale for this concern may be the effect that such elevated prices have either on efficiency or on the distribution of wealth.The classic dead weight loss due to allocative inefficiency 4 received little emphasis in Bain, which I believe is correct.Not only are all estimates of this welfare loss minuscule, but the true loss in efficiency is ambiguous because of second best considerations.In any case, it seems certain that Congress never thought in terms of