Breaking up Consumer Welfare’s Antitrust Policy Monopoly

66 Pages Posted: 1 Feb 2023 Last revised: 27 Oct 2023

See all articles by Mark Glick

Mark Glick

University of Utah - College of Social & Behavioral Sciences - Department of Economics; Parsons Behle & Latimer

Darren Bush

University of Houston Law Center

Date Written: January 31, 2023

Abstract

Two recent papers by prominent antitrust scholars argue that a revived antitrust movement can help reverse the dramatic rise in economic inequality and the erosion of political democracy in the United States. Both papers rely on the legislative history of the key antitrust statutes to support their case. Not surprisingly, their recommendations have been met with alarm in some quarters and with skepticism in others. Such proposals by antitrust reformers are often contrasted with the Consumer Welfare Standard that pervades antitrust policy today. The Consumer Welfare Standard suffers from several defects: (1) It employs a narrow, unworkable measure of welfare; (2) It excludes important sources of welfare based on the assumption that antitrust seeks only to maximize wealth; (3) It assumes a constant and equal individual marginal utility of money; and (4) It is often combined with extraneous ideological goals. Even with these defects, however, if applied consistent with its theoretical underpinnings, the consideration of the transfer of labor rents resulting from a merger or dominant firm conduct is supported by the Consumer Welfare Standard. Moreover, even when only consumers (and not producers) are deemed relevant, the welfare of labor still should consistently be considered part of consumer welfare. In contrast, fostering political democracy—a prominent traditional antitrust goal that was jettisoned by the Chicago School—falls outside the Consumer Welfare Standard in any of its constructs. To undergird such important broader goals requires that the Consumer Welfare Standard be replaced with the General Welfare Standard. The General Welfare Standard consists of modern welfare economics modified to accommodate objective analyses of human welfare and purged of inconsistencies.

Suggested Citation

Glick, Mark A. and Bush, Darren, Breaking up Consumer Welfare’s Antitrust Policy Monopoly (January 31, 2023). U of Houston Law Center No. 2023-A-19, Available at SSRN: https://ssrn.com/abstract=4344245 or http://dx.doi.org/10.2139/ssrn.4344245

Mark A. Glick

University of Utah - College of Social & Behavioral Sciences - Department of Economics ( email )

1645 Central Campus Dr.
Salt Lake City, UT 84112
United States

Parsons Behle & Latimer

United States

Darren Bush (Contact Author)

University of Houston Law Center ( email )

4170 Martin Luther King Blvd.
Houston, TX 77204-6060
United States
713.743.3346 (Phone)

HOME PAGE: http://www.law.uh.edu/faculty/main.asp?PID=1365

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