IDEAS home Printed from https://ideas.repec.org/a/kap/revind/v55y2019i3d10.1007_s11151-019-09708-3.html
   My bibliography  Save this article

Williamson’s Welfare Trade-Off Around the World

Author

Listed:
  • Germán Bet

    (University of Florida)

  • Roger D. Blair

    (University of Florida)

Abstract

Fifty years ago, Williamson (Am Econ Rev 58:23, 1968) argued that an efficiency-enhancing merger that reduces production costs but increases market power could be saved from antitrust condemnation if the cost savings created by the merger offset the allocative inefficiency. In this paper, we discuss some extensions of Williamson’s basic welfare tradeoff, and explore the attitudes of several countries around the world toward merger efficiencies. In spite of its economic logic, Williamson’s analysis has not been embraced by most of the antitrust authorities around the world. We explore different reasons why antitrust authorities have failed to adopt an explicit social-welfare standard.

Suggested Citation

  • Germán Bet & Roger D. Blair, 2019. "Williamson’s Welfare Trade-Off Around the World," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(3), pages 515-533, November.
    • Handle: RePEc:kap:revind:v:55:y:2019:i:3:d:10.1007_s11151-019-09708-3
    DOI: 10.1007/s11151-019-09708-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11151-019-09708-3
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11151-019-09708-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Farrell, Joseph & Shapiro, Carl, 1990. "Horizontal Mergers: An Equilibrium Analysis," American Economic Review, American Economic Association, vol. 80(1), pages 107-126, March.
    2. Joseph Farrell & Michael Katz, 2006. "The Economics of Welfare Standards in Antitrust," CPI Journal, Competition Policy International, vol. 2.
    3. Neven, Damien J. & Roller, Lars-Hendrik, 2005. "Consumer surplus vs. welfare standard in a political economy model of merger control," International Journal of Industrial Organization, Elsevier, vol. 23(9-10), pages 829-848, December.
    4. Scherer, F. M., 2012. "Merger Efficiencies and Competition Policy," Working Paper Series rwp12-048, Harvard University, John F. Kennedy School of Government.
    5. Russell Pittman, 2007. "Consumer Surplus as the Appropriate Standard for Antitrust Enforcement," EAG Discussions Papers 200709, Department of Justice, Antitrust Division.
    6. Russ Pittman, 2007. "Consumer Surplus as the Appropriate Standard for Antitrust Enforcement," CPI Journal, Competition Policy International, vol. 3.
    7. Farrell Joseph & Shapiro Carl, 2010. "Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-41, March.
    8. Besanko, David & Spulber, Daniel F, 1993. "Contested Mergers and Equilibrium Antitrust Policy," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 9(1), pages 1-29, April.
    9. Fridolfsson, Sven-Olof, 2007. "A Consumer Surplus Defense in Merger Control," Working Paper Series 686, Research Institute of Industrial Economics.
    10. Pingping Shan & Guofu Tan & Simon Wilkie & Michael Williams, 2012. "China’s Anti-Monopoly Law: What is the Welfare Standard?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 41(1), pages 31-52, August.
    11. Scherer, Frederic Michael, 2012. "Merger Efficiencies and Competition Policy," Scholarly Articles 9830356, Harvard Kennedy School of Government.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dennis L. Weisman, 2020. "Complementarities as an antitrust defense," Competition and Regulation in Network Industries, , vol. 21(4), pages 344-366, December.
    2. David E. M. Sappington & Dennis L. Weisman, 2021. "Vertical Merger Policy: Special Considerations in Regulated Industries," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 59(2), pages 393-407, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Motta, Massimo & Tarantino, Emanuele, 2021. "The effect of horizontal mergers, when firms compete in prices and investments," International Journal of Industrial Organization, Elsevier, vol. 78(C).
    2. Katalin Katona & Marcel Canoy, 2013. "Welfare standards in hospital mergers," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(4), pages 573-586, August.
    3. Miguel González-Maestre & Lluís M. Granero, 2016. "Merger policy in innovative industries," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 15(3), pages 131-147, December.
    4. Jovanovic, Dragan & Wey, Christian, 2012. "An equilibrium analysis of efficiency gains from mergers," DICE Discussion Papers 64, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    5. Russell Pittman, 2007. "Consumer Surplus as the Appropriate Standard for Antitrust Enforcement," EAG Discussions Papers 200709, Department of Justice, Antitrust Division.
    6. Marc Fusaro & Richard Ericson, 2010. "The Welfare Economics of “Bounce Protection” Programs," Journal of Consumer Policy, Springer, vol. 33(1), pages 55-73, March.
    7. Yannis Katsoulacos & Eleni Metsiou & David Ulph, 2016. "Optimal Substantive Standards for Competition Authorities," Journal of Industry, Competition and Trade, Springer, vol. 16(3), pages 273-295, September.
    8. Luis Gautier & Mahelet G. Fikru, 2022. "The Welfare Impact of New Firm Acquisitions," Journal of Industry, Competition and Trade, Springer, vol. 22(3), pages 535-559, December.
    9. Tarantino, Emanuele & Motta, Massimo, 2016. "The Effect of a Merger on Investments," CEPR Discussion Papers 11550, C.E.P.R. Discussion Papers.
    10. Cosnita, Andreea & Tropeano, Jean-Philippe, 2009. "Negotiating remedies: Revealing the merger efficiency gains," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 188-196, March.
    11. Mason, Robin & Weeds, Helen, 2013. "Merger policy, entry, and entrepreneurship," European Economic Review, Elsevier, vol. 57(C), pages 23-38.
    12. Medvedev, A., 2004. "Structural Remedies in Merger Regulation in a Cournot Framework," Discussion Paper 2004-006, Tilburg University, Tilburg Law and Economic Center.
    13. Choné, Philippe & Linnemer, Laurent, 2008. "Assessing horizontal mergers under uncertain efficiency gains," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 913-929, July.
    14. Lagerlof, Johan N.M. & Heidhues, Paul, 2005. "On the desirability of an efficiency defense in merger control," International Journal of Industrial Organization, Elsevier, vol. 23(9-10), pages 803-827, December.
    15. Chiara Fumagalli & Massimo Motta & Emanuele Tarantino, 2020. "Shelving or developing? The acquisition of potential competitors under financial constraints," Economics Working Papers 1735, Department of Economics and Business, Universitat Pompeu Fabra.
    16. Tsuyoshi Toshimitsu, 2019. "Analysis of Merger Control in a Network Products Market," Manchester School, University of Manchester, vol. 87(5), pages 678-693, September.
    17. Andreea Cosnita‐Langlais & Jean‐Philippe Tropeano, 2023. "Merger selection, evidence provision, and the timing of merger control," Bulletin of Economic Research, Wiley Blackwell, vol. 75(1), pages 209-222, January.
    18. Stephen Martin, 2019. "Economies as an Antitrust Defense: The Welfare Tradeoffs—Introduction to the Special Issue," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(3), pages 327-338, November.
    19. Helder Vasconcelos, 2013. "Can the failing firm defence rule be counterproductive?," Oxford Economic Papers, Oxford University Press, vol. 65(2), pages 567-593, April.
    20. Andrei Medvedev, 2007. "Structural Remedies in Merger Regulation in a Cournot Framework," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2007-16, Centre for Competition Policy, University of East Anglia, Norwich, UK..

    More about this item

    Keywords

    Merger; Antitrust; Welfare standard; Efficiencies;
    All these keywords.

    JEL classification:

    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:revind:v:55:y:2019:i:3:d:10.1007_s11151-019-09708-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.