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Does Antitrust Policy Improve Consumer Welfare? Assessing the Evidence

  • Robert W. Crandall
  • Clifford Winston

This paper reviews the literature and assesses the effects of antitrust policy and enforcement on consumer welfare. We find no evidence that antitrust policy in the areas of monopolization, collusion, and mergers has provided much benefit to consumers and, in some instances, we find evidence that it may have lowered consumer welfare. We also do not find any evidence that antitrust policy has deterred firms from engaging in actions that could harm consumers. We identify various reasons for the apparent ineffectiveness of antitrust policy, offer preliminary policy recommendations, and suggest ways in which economists could more fully assess antitrust policy.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/089533003772034871
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Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 17 (2003)
Issue (Month): 4 (Fall)
Pages: 3-26

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Handle: RePEc:aea:jecper:v:17:y:2003:i:4:p:3-26
Note: DOI: 10.1257/089533003772034871
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  1. Aviv Nevo, 2003. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Microeconomics 0303006, EconWPA.
  2. Dennis W. Carlton & Gustavo E. Bamberger & Roy J. Epstein, 1995. "Antitrust and Higher Education: Was There a Conspiracy to Restrict Financial Aid?," RAND Journal of Economics, The RAND Corporation, vol. 26(1), pages 131-147, Spring.
  3. Lawrence J. White, 2002. "Trends in Aggregate Concentration in the United States," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 137-160, Fall.
  4. Sproul, Michael F, 1993. "Antitrust and Prices," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 741-54, August.
  5. William Comanor & F. M. Scherer, 1995. "Rewriting History: the Early Sherman Act Monopolization Cases," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 2(2), pages 263-290.
  6. Masten, Scott E & Snyder, Edward A, 1993. "United States versus United Shoe Machinery Corporation: On the Merits," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 33-70, April.
  7. Eckbo, B Espen & Wier, Peggy, 1985. "Antimerger Policy under the Hart-Scott-Rodino Act: A Reexamination of the Market Power Hypothesis," Journal of Law and Economics, University of Chicago Press, vol. 28(1), pages 119-49, April.
  8. Newmark, Craig M, 1988. "Does Horizontal Price Fixing Raise Price? A Look at the Bakers of Washington Case," Journal of Law and Economics, University of Chicago Press, vol. 31(2), pages 469-84, October.
  9. Ippolito, Pauline M & Overstreet, Thomas R, Jr, 1996. "Resale Price Maintenance: An Economic Assessment of the Federal Trade Commission's Case against the Corning Glass Works," Journal of Law and Economics, University of Chicago Press, vol. 39(1), pages 285-328, April.
  10. Pittman, Russell W, 1990. "Railroads and Competition: The Santa Fe/Southern Pacific Merger Proposal," Journal of Industrial Economics, Wiley Blackwell, vol. 39(1), pages 25-46, September.
  11. Baker, Jonathan B & Baresnahan, Timothy F, 1985. "The Gains from Merger or Collusion in Product-differentiated Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 33(4), pages 427-44, June.
  12. Burns, Malcolm R, 1977. "The Competitive Effects of Trust-Busting: A Portfolio Analysis," Journal of Political Economy, University of Chicago Press, vol. 85(4), pages 717-39, August.
  13. Baker, Jonathan B & Rubinfeld, Daniel L, 1999. "Empirical Methods in Antitrust Litigation: Review and Critique," American Law and Economics Review, Oxford University Press, vol. 1(1-2), pages 386-435, Fall.
  14. Eckbo, B Espen, 1992. " Mergers and the Value of Antitrust Deterrence," Journal of Finance, American Finance Association, vol. 47(3), pages 1005-29, July.
  15. Caroline M. Hoxby, 2000. "Benevolent Colluders? The Effects of Antitrust Action on College Financial Aid and Tuition," NBER Working Papers 7754, National Bureau of Economic Research, Inc.
  16. Gregor Andrade & Mark Mitchell & Erik Stafford, 2001. "New Evidence and Perspectives on Mergers," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 103-120, Spring.
  17. Schumann, Laurence & Reitzes, James D & Rogers, Robert P, 1997. "In the Matter of Weyerhaeuser Company: The Use of a Hold-Separate Order in a Merger with Horizontal and Vertical Effects," Journal of Regulatory Economics, Springer, vol. 11(3), pages 271-89, May.
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