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The Antitrust Regulation Harms Consumers

Author

Listed:
  • Georgi Kiranchev

    (University of National and World Economy, Sofia, Bulgaria)

Abstract

This article examines the effects of antitrust regulation. It is always assumed that this regulation has the purpose and function of protecting the interests of consumers. The other function of regulation is to protect competition, and it is assumed that this also indirectly protects consumer interests, because the dogma ‚the more competition the better‘ is accepted without reservation. We will demonstrate that antitrust regulation can harm consumer interests and will consistently prove the following theses in general: Antitrust regulation leads to a new, forced market equilibrium from which no participant has an interest in deviating. Regulation results in an equilibrium that is less profitable for consumers but more profitable for players that are not subject to antitrust regulation. In maximising their profit, players will offer quantities to the market such that the price on the market will increase and the total quantity offered will decrease. The efficiency of production decreases as a result of regulation. Although anti-monopoly regulation leads to a redistribution of market shares and profits, it generally leads to an increase in the equilibrium price for consumers and thus harms their interests.

Suggested Citation

  • Georgi Kiranchev, 2024. "The Antitrust Regulation Harms Consumers," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 4, pages 722-739, December.
  • Handle: RePEc:nwe:eajour:y:2024:i:4:p:722-739
    as

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    File URL: https://www.unwe.bg/doi/eajournal/2024.4/EA.2024.4.02.pdf
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    References listed on IDEAS

    as
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    3. Mark Armstrong & David E.M. Sappington, 2006. "Regulation, Competition and Liberalization," Journal of Economic Literature, American Economic Association, vol. 44(2), pages 325-366, June.
    4. Bhagwati, Jagdish N. & Srinivasan, T. N., 1982. "The welfare consequences of directly-unproductive profit-seeking (DUP) lobbying activities : Price versus quantity distortions," Journal of International Economics, Elsevier, vol. 13(1-2), pages 33-44, August.
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    More about this item

    Keywords

    consumer protection; Nash Equilibrium; antitrust regulation; protection of competition;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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