Monopsony and the Sherman Act: Consumer Welfare in a New Light

Abstract

The Weyerhaeuser case presents the scenario of a firm that successfully engages in exclusionary conduct, obtains a monopsony, and yet does not have any potential to injure the end users of its products. Rather, the conduct has the immediate effect of injuring competitors, and the longer-term effect of injuring input sellers. Commentators have argued that the antitrust laws are indifferent to latter injuries because they are concerned only with "consumer welfare." This essay demonstrates that Congress was, and the courts have been, far from indifferent to the plight of sellers exploited by monopsonies. This essay shows that Sherman Act cases referring to "consumer welfare" have not indicated that they meant end-user welfare rather than aggregate welfare. Finally, this essay argues that promoting consumer welfare is a goal of the Sherman Act, but only a goal, and that making end-user welfare the touchstone under the Act could have extraordinarily undesirable consequences.

Keywords: antitrust, monopsony, welfare

JEL Classification: K21, L41