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Why Economists Should Support Populist Antitrust Goals

Author

Listed:
  • Mark Glick

    (University of Utah)

  • Gabriel A. Lozada

    (University of Utah)

  • Darren Bush

    (University of Houston)

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.

Suggested Citation

  • Mark Glick & Gabriel A. Lozada & Darren Bush, 2022. "Why Economists Should Support Populist Antitrust Goals," Working Papers Series inetwp195, Institute for New Economic Thinking.
    • Handle: RePEc:thk:wpaper:inetwp195
    DOI: 10.36687/inetwp195
    as

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    File URL: https://doi.org/10.36687/inetwp195
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    References listed on IDEAS

    as
    1. Chipman, John S & Moore, James C, 1978. "The New Welfare Economics, 1939-1974," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(3), pages 547-584, October.
    2. Alan P. Kirman, 1992. "Whom or What Does the Representative Individual Represent?," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 117-136, Spring.
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    Cited by:

    1. Kovacs, Oliver, 2024. "Exaptationary Industry 4.0: Graphene as pathfinder?," Technological Forecasting and Social Change, Elsevier, vol. 200(C).

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    More about this item

    Keywords

    Consumer Welfare Standard; Consumer Surplus; Antitrust; Law and Economics; Compensating Variation; Equivalent Variation; Kaldor Hicks; Pareto Efficiency.;
    All these keywords.

    JEL classification:

    • K1 - Law and Economics - - Basic Areas of Law
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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