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Consumer Surplus as the Appropriate Standard for Antitrust Enforcement

  • Russ Pittman

In this paper, I argue that such transfers are likely overall to be quite regressive, and thus that a consumer surplus standard rather than a total welfare standard may be appropriate for antitrust. Two common arguments against this standardâ€â€that most mergers are in markets for intermediate goods, and that a consumer welfare standard implies a tolerance for monopsonyâ€â€are examined and found wanting. I argue in addition that, even if a total welfare standard is used, both the finance literature on merger outcomes and the structure of the U.S. enforcement agencies suggest that the use of a consumer surplus standard by the agencies is more likely to achieve that goal.

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Article provided by Competition Policy International in its journal CPI Journal CPI 3(2).

Volume (Year): 3 (2007)
Issue (Month): ()
Pages:

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Handle: RePEc:cpi:cpijrn:3.2.2007:i=4927
Contact details of provider: Web page: https://www.competitionpolicyinternational.com

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  18. Kenneth Heyer, 2006. "Welfare Standards and Merger Analysis: Why not the Best?," EAG Discussions Papers 200608, Department of Justice, Antitrust Division.
  19. Shleifer, Andrei & Vishny, Robert W, 1988. "Value Maximization and the Acquisition Process," Journal of Economic Perspectives, American Economic Association, vol. 2(1), pages 7-20, Winter.
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  24. Baker, Jonathan B & Shapiro, Carl, 2007. "Reinvigorating Horizontal Merger Enforcement," Competition Policy Center, Working Paper Series qt4x44j66x, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
  25. Louis Kaplow, 2004. "On the (Ir)Relevance of Distribution and Labor Supply Distortion to Government Policy," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 159-175, Fall.
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