Rethinking Antitrust.(ISSUES & INSIGHTS)(EDITORIALS)

Competition: For analysis, the latest Economic Report of the President is a treasure trove. It's especially sound in its views on antitrust policy.

Most everyone who has followed the government's antitrust case against Microsoft figured the Bush administration would bring a new position on the case and on antitrust policy in general. Supporters thought his master's degree in business from Harvard would lead him to pick top-flight economists to advise him of the folly of persecuting Microsoft. And his critics would say, "Of course -- he's in the hip pocket of big business."

As has been the case more often than not, Bush's supporters have it right. The president chose a first-rate economist in Glenn Hubbard to head his Council of Economic Advisers. And the council's view of antitrust policy shows why going after Microsoft wasn't sound policy.

The key to achieving the most benefits for consumers, stresses the report, is dynamic competition. And key to such competition is innovation. But, it adds, the old signpost that a lack of such competition suggests government intervention needs rethinking.

Dominant market share doesn't necessarily prove that a monopoly exists, the report notes. The first entrant in a market may achieve dominance in the beginning because of the newness of the product. Then later it may maintain dominance because ...