Institutions in the Marketplace of Ideas

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First Amendment, free speech, speech institutions, New Institutional First Amendment


If any area of constitutional law has been defined by a metaphor, the First Amendment is the area, and the “marketplace of ideas” is the metaphor. Ever since Justice Holmes invoked the concept in his Abrams dissent, academic and popular understandings of the First Amendment have embraced the notion that free speech, like the free market, creates a competitive environment in which the best ideas ultimately prevail. But as with the free market for goods and services, there are discontents who point to the market failures that make the marketplace metaphor aspirational at best, and inequitable at worst.

Defenders of the free economic market have responded to these criticisms by developing a thicker understanding of how the market actually functions. Their most successful model is the New Institutional Economics, which incorporates and explains the transaction costs and institutions that populate and effectively regulate that market. The marketplace of ideas model, however, remains faithfully wedded to a neoclassical view that depends on a perfectly costless and efficient exchange of ideas. It is thus vulnerable to the same criticisms economists answered decades ago, and it fails to take into account the rich view of market mechanisms and institutions they have developed since. First Amendment scholars led by Frederick Schauer have begun to lay the groundwork for a solution by describing an “Institutional First Amendment” that would accord special treatment to certain institutions like schools and the press.

But just as the marketplace of ideas fails to account for institutions, the Institutional First Amendment fails to account for the marketplace of ideas. As it turns out, the two theories are not only reconcilable but complementary. This Article brings them together, using the New Institutional Economics to describe the “speech institutions”—such as schools and universities—that play the same cost-reducing role in the marketplace of ideas as other institutions do in the market for goods and services. Courts should defer to the speech rules of marketplace-of-ideas-enhancing institutions for the same reason and to the same degree that economists defer to the private norms of market-enhancing institutions. The Article then tests the descriptive and normative validity of this “New Institutional First Amendment,” finding that it both explains and justifies much of the Court’s school speech doctrine, including its 2007 ruling in Morse v. Frederick. It also justifies the special status of universities as speech institutions, and suggests an explanation for some of the current weaknesses in commercial speech doctrine. By addressing the “economic” objections to the marketplace metaphor, the Article attempts to better describe, explain, and rehabilitate the marketplace of ideas.

Library of Congress Subject Headings

Freedom of speech, Constitution. 1st Amendment