The Attack on Antitrust Policy and Consumer Welfare PDF Download

Author: Kwoka, Jr. (John E.)
Publisher:
ISBN:
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Languages : en
Pages : 13

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Book Description
In their paper “The Effect of Antitrust Policy on Consumer Welfare,” Robert Crandall and Clifford Winston advance an argument that others have previously made - namely, that antitrust policy in the United States is, on balance, welfare reducing. While past arguments have typically been ideological in nature or at most anecdotal in their support, Crandall and Winston (hereafter, CW) purport to provide empirical evidence: “This paper synthesizes the available scholarly evidence regarding the effect of antitrust policy on consumer prices and in deterring anti-competitive behavior.” They conclude that deadweight loss is small, the extent of anticompetitive activity is “quite limited,” and it is the market rather than antitrust which is responsible for “spurring competition and curbing anti-competitive abuses.” Providing empirical evidence on the question of the effects of antitrust policy is a commendable objective. Along with many other observers, this author has long noted the absence of systematic evidence or even many good case studies that establish the effects. This is in sharp contrast, for example, to regulation and deregulation, whose effects are often and well studied in economics. In the case of regulation, however, the effects are usually both broad and deep, so that empirical work can discern the incremental effect of policy. Much antitrust, in contrast, works at the margins of conduct, often presents difficult counterfactuals, and in any case has effects easily swamped by other forces impinging upon the firm or industry. For these reasons, modeling and data adequate to the task of assessing antitrust policy have been hard to develop. Crandall and Winston have not developed new modeling techniques or data. Instead, what they offer as “empirical evidence” is a review of selectively chosen examples of the application of antitrust, which they criticize for reasons both relevant and irrelevant to their point, and are ultimately inconclusive anyway, together with statistical work that appears to show the ineffectiveness of antitrust but in reality is based on a flawed model and data incapable of discerning any effect. This comment is intended to highlight these aspects of the CW attack on antitrust policy and consumer welfare.