Aaron Director, who died on Saturday at the age of 102, was one of the most important economists of the twentieth century. Although he thought and taught about a lot of issues, his most important contribution was to analysis of antitrust law. It is hard to imagine, unless you read it, how utterly incoherent the economic analysis of antitrust was when Director took it on in the 1950s. The approach was simple: if it did not look like the model of perfect competition, it had to be monopoly. Director's approach to this mess was ruthlessly simple. He kept asking the question: How is it profitable?

Here is a simple example. Resale price maintenance is the practice of a manufacturer setting the (usually minimum) price that a retailer can charge for a good. Obviously, this is a way for the manufacturer to raise the price of a good. Director asked a simple question: if a manufacturer wants a higher retail price, why not just charge a higher wholesale price? A higher wholesale price is more profitable, for two reasons. First, a minimum resale price raises the retailer's margin, not the manufacturers. Second, it does no good to set a minimum retail price if you do not make sure that the retailers conform to the policy, and that means spending money.

Out of that simple questioning, an entire line of non-reasoning was destroyed, and all sorts of new questions asked. Director set the tone of all the work since, which is to begin by asking how you make money out of it.

He was one of the giants.