The concept of perfect competition as the law of economics: addressing the homonymy problem

Abstract

The rapid expansion of economic analysis is visible in many areas of law. In some of them – in antitrust in particular – economic reasoning is already perceived as the dominant discourse. This article is an attempt to contemplate a reverse analysis. Instead of addressing the legal domain from the perspective of economics, it tries to explore the economic discipline through the lens of a lawyer. The analysis is directed at one of the main principles of neoclassical economics – the concept of perfect competition: partly to explore its constitutive role in economic reasoning, but also in order to articulate the misconception with which some economists approach legal regulation of economic relations. It attempts to explain why economic analysis is bound to address broader societal problems in a purely pragmatic way, quantifying the whole spectrum of societal values, reducing them to the common economic denominator of efficiency. This feature of economics is embedded in its epistemology and should not be perceived as its normative claim. In other words, the fact that welfare economics reduces the social interests to cost–benefit calculus does not automatically characterise it as being irresponsive to the social embeddedness problem.