American Gothic: How Chicago Economics Distorts 'Consumer Welfare' in Antitrust
35 Pages Posted: 8 Nov 2019 Last revised: 14 Aug 2020
Date Written: July 1, 2019
Since the publication of Robert Bork’s The Antitrust Paradox, lawyers, judges, and many economists have defended “Consumer welfare” (CW) as a standard for decisions about antitrust goals and enforcement priorities. This paper argues that the CW is actually an empty concept and is an inappropriate goal for antitrust. Welfare economists concede that there is no credible measurable link between price and output and human well-being. This means that the concept of CW does not legitimate limited antitrust enforcement, nor does it justify the exclusion of other antitrust goals that require more active enforcement practices. This paper contends that antitrust policy is not welfare based at all, and that if it were, antitrust policy and enforcement would differ significantly from the Chicago School vision. Without the fiction that economists can establish that in the short run lower price and higher output measurably increases welfare more than other goals, recent defenses of the CW standard resolve down to arguments based on unsupported assumptions.
Keywords: Consumer Welfare, Goal of Antitrust Law, New Brandeis School, Chicago School of Economics
JEL Classification: K21, L40, N12
Suggested Citation: Suggested Citation
https://doi.org/10.36687/inetwp99 , Available at SSRN: https://ssrn.com/abstract=3482111 or http://dx.doi.org/10.2139/ssrn.3482111