On Distributive Justice by Antitrust: The Robin Hood Cartel

26 Pages Posted: 22 Jun 2021 Last revised: 12 Jul 2021

See all articles by Maarten Pieter Schinkel

Maarten Pieter Schinkel

University of Amsterdam - Department of Economics; Tinbergen Institute

Date Written: June 18, 2021

Abstract

Inequality concerns in antitrust could justify market power in return for a fairer allocation by weighing the consumer welfare of disadvantaged groups more heavily. A simple example illustrates the trade-offs involved in exempting redistribution agreements from cartel law. Permitting competitors to jointly set prices gives them the ability to price discriminate: overcharging the rich and giving lower than competitive prices to the poor. Provided society values redistribution enough, such a `Robin Hood cartel' is profitable, despite losing money on the poor and creating deadweight-losses. Yet the poor will be given only what is minimally required for permission to take profit-maximizing from the rich. A full-payout plan does not necessarily reduce total deadweight-losses. In essence, assigning a larger relative consumer welfare weight to the poor discounts inefficiencies on the rich.

Keywords: inequality, fairness, antitrust, cartel, price discrimination, taxation

JEL Classification: D63, K21, L41

Suggested Citation

Schinkel, Maarten Pieter, On Distributive Justice by Antitrust: The Robin Hood Cartel (June 18, 2021). Amsterdam Law School Research Paper No. 2021-16, Amsterdam Center for Law & Economics Working Paper No. 2021-06, Available at SSRN: https://ssrn.com/abstract=3869561 or http://dx.doi.org/10.2139/ssrn.3869561

Maarten Pieter Schinkel (Contact Author)

University of Amsterdam - Department of Economics ( email )

Roetersstraat 11
1018 WB Amsterdam
Netherlands
+31 20 525 7132 (Phone)
+31 20 525 5318 (Fax)

Tinbergen Institute ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

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