On Distributive Justice by Antitrust: The Robin Hood Cartel
26 Pages Posted: 22 Jun 2021 Last revised: 12 Jul 2021
Date Written: June 18, 2021
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: Suggested Citation