Variety, Mergers, and Consumer Well-Being: Towards a Capability Approach to Merger Law
41 Pages Posted: 17 Jul 2014 Last revised: 10 Dec 2014
Date Written: October 15, 2013
Revisions incorporated into the Horizontal Merger Guidelines in 2010 claim that the Department of Justice and the Federal Trade Commission consider anticompetitive effects to product “variety” when evaluating mergers. The Guidelines do not, however, explain the methodology or tools that can and should be used to evaluate such effects. At the same time, there is an ongoing normative debate over antitrust’s consumer welfare standard, one strain of which is a disagreement over the meaning of the word “welfare.” This Article considers how variety effects could be evaluated — first, under normative welfare economics, and then under an alternative to welfare economics, the Capability Approach. The Capability Approach is a normative framework for evaluating individual well-being that stands in contrast to welfare economics. Rather than assess individual well-being in terms of an individual’s utility as determined from the individual’s subjective perspective, as welfare economics attempts to do, the Capability Approach evaluates individual well-being in terms of an individual’s capability to achieve the kind of life that the individual has reason to value. Ultimately, this is an assessment of what an individual is able to be and to do.
Keywords: antitrust, mergers, product differentiation, variety, consumer welfare, total welfare, well-being, quality of life, normative welfare economics, Capability Approach, Capabilities Approach
JEL Classification: D21, D40, D41, D42, D43, D60, D63, I30, I31, K21, L10, L12, L13, L41, 031
Suggested Citation: Suggested Citation