Why Economists Should Support Populist Antitrust Goals

Mark Glick (), Gabriel Lozada and Darren Bush
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Mark Glick: University of Utah
Gabriel Lozada: University of Utah
Darren Bush: University of Houston

No inetwp195, Working Papers Series from Institute for New Economic Thinking

Abstract: Antitrust economists have generally supported the Consumer Welfare Standard as a guide to antitrust policy questions because of its origins in Marshall's consumer surplus approach and the general economic surplus approach to welfare economics. But welfare economists no longer support the surplus approach because decades of research pertaining to the surplus approach have uncovered numerous inconsistencies and serious ethical challenges. However, the surplus approach to welfare survives in industrial organization textbooks and among industrial organization economists that specialize in antitrust. We argue in this paper that the Consumer Welfare Standard is not a reliable standard and should be abandoned. We cite several reasons: (1) it limits antitrust goals a priori without any defensible justification, (2) it considers all transfers of surplus between stakeholders in antitrust cases to be welfare neutral, (3) it is biased in favor of big business and the rich, and (4) the accumulation of inconsistencies and problems documented by welfare economists renders the theory completely unreliable. In a final section of the paper, we preliminarily contend that modern research in welfare economics concerning the factors that influence human welfare could be used to inform a more progressive standard for determining antitrust goals.

Keywords: Consumer Welfare Standard; Consumer Surplus; Antitrust; Law and Economics; Compensating Variation; Equivalent Variation; Kaldor Hicks; Pareto Efficiency. (search for similar items in EconPapers)
JEL-codes: D61 K1 L4 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2022-12-06
New Economics Papers: this item is included in nep-com, nep-hme, nep-pke and nep-reg
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:thk:wpaper:inetwp195

DOI: 10.36687/inetwp195

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