Monopoly's Hidden Justice: How Lax Antitrust Enforcement May Stimulate Charitable Giving and Overcome the Political Economy Barriers to Redistributive Taxation

Abstract:     
Antitrust law and competition policy are typically analyzed from a microeconomic perspective, with an emphasis on the effects of monopolies and other restraints of trade on economic efficiency. Rarely do concerns of distributive justice enter into scholarly discussion of industrial regulation; when such concernes to emerge, it is usually to justify breaking up monopolies that benefit the rich. This Article argues that because of the connections between industrial policy and the U.S. tax code, monopolies may actually tend to enhance distributive justice. Thus, a properly calibrated antitrust policy would need to offset the deleterious efficiency outcomes of monopoly using the positive results in terms of distributive justice.

The easiest way to achieve optimal distributive justice would be to tax the middle class and give to the poor, but as the Article argues, at least in a stylized view of American political economy, such redistributive taxation is difficult to implement. Policy-makers concerned with achieving "Rawlsian" justice may therefore wish to explore roundabout approaches to redistrubtion. A lax antitrust policy towards industries that cater to middle class consumers but are characterized by ownership concentration, coupled with provisions of the tax code that encourage chartiable giving only by the very rich, may be just such an approach. Whether to avoid taxes or public scorn, monopolists have always tended to give sizable amounts of money to charities. When the government cannot tax the middle class, it may wish to use monopolists in place of the IRS to effect redistributive goals.

Accepted Paper Series