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http://ssrn.com/abstract=2236462
 
 

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The Goals of Antitrust: Welfare Trumps Choice


Joshua D. Wright


Federal Trade Commission; George Mason University School of Law

Douglas H. Ginsburg


George Mason University School of Law

March 20, 2013

Fordham Law Review, Forthcoming
George Mason Law & Economics Research Paper No. 13-22

Abstract:     
The promotion of economic welfare as the lodestar of antitrust law -- to the exclusion of social, political, and protectionist goals -- transformed and gave intellectual coherence to a body of law Robert Bork had famously described as paradoxical. Welfare-based standards have benefitted consumers and the economy and have led to greater predictability in judicial and agency decision making. In the latest of numerous challenges to the welfarist understanding of antitrust, Neil Averitt and Robert Lande propose their "consumer choice" standard as an alternative they claim takes better account of the nonprice dimensions of the competitive process. Adoption of the consumer choice framework would have seriously detrimental consequences for consumers, however. Both economic theory and empirical evidence are replete with examples of business conduct that simultaneously reduces choice and increases consumer welfare through lower prices, increased innovation, or higher quality products and services. Moreover, the welfarist approach already incorporates the tradeoffs between price and quality that consumers face. The flaw of the choice standard is that it altogether rejects the economic approach to dealing with those tradeoffs and instead imposes a structural presumption that the number of firms or brands in competition is directly correlated with consumer welfare. Shifting to defendants the burden of justifying any reduction in consumer choice would be merely a revival of the long ago repudiated inhospitality tradition in antitrust that should and likely will be rejected by the enforcement agencies and the courts.

Number of Pages in PDF File: 20

Keywords: Areeda, Broadcast Music, Clayton Act, Columbia Broadcasting System, Continental T.V., Inc. v. GTE Sylvania, demand, discrimination, FTC, Federal Trade Commission, Hovenkamp, liability, maintenance, modernization, price-fixing, resale, restraint, Section 5, Sherman, small businesses, supply, surplus

JEL Classification: K21, K23, L11, L41, L42, L43, L44

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Date posted: March 20, 2013  

Suggested Citation

Wright, Joshua D. and Ginsburg, Douglas H., The Goals of Antitrust: Welfare Trumps Choice (March 20, 2013). Fordham Law Review, Forthcoming; George Mason Law & Economics Research Paper No. 13-22. Available at SSRN: http://ssrn.com/abstract=2236462

Contact Information

Joshua D. Wright (Contact Author)
Federal Trade Commission ( email )
601 New Jersey Ave., NW
Washington, DC 20580
United States
George Mason University School of Law ( email )
3301 Fairfax Drive
Arlington, VA 22201
United States
Douglas H. Ginsburg
George Mason University School of Law ( email )
3301 Fairfax Drive
Arlington, VA 22201
United States

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