American Gothic: How Chicago School Economics Distorts 'Consumer Welfare' in Antitrust

2019 ◽  
Author(s):  
Mark Glick
Keyword(s):  
Consumer Welfare ◽  
Chicago School ◽  
American Gothic

scholarly journals American Gothic: How Chicago Economics Distorts “Consumer Welfare” in Antitrust

2019 ◽  
pp. 1-35
Author(s):  
Mark Glick
Keyword(s):  
Well Being ◽  
Consumer Welfare ◽  
Chicago School ◽  
Antitrust Policy ◽  
Lower Price ◽  
Antitrust Enforcement ◽  
American Gothic ◽  
School Vision ◽  
Short Run

Since the publication of Robert Bork’s The Antitrust Paradox, lawyers, judges, and many economists have defended “Consumer welfare” (CW) as a standard for decisions about antitrust goals and enforcement priorities. This paper argues that the CW is actually an empty concept and is an inappropriate goal for antitrust. Welfare economists concede that there is no credible measurable link between price and output and human well-being. This means that the concept of CW does not legitimate limited antitrust enforcement, nor does it justify the exclusion of other antitrust goals that require more active enforcement practices. This paper contends that antitrust policy is not welfare based at all, and that if it were, antitrust policy and enforcement would differ significantly from the Chicago School vision. Without the fiction that economists can establish that in the short run lower price and higher output measurably increases welfare more than other goals, recent defenses of the CW standard resolve down to arguments based on unsupported assumptions.

scholarly journals Original Intent and the Sherman Antitrust Act: A Re-examination of the Consumer-Welfare Hypothesis

1993 ◽  
Vol 53 (2) ◽  
pp. 359-376 ◽  
Author(s):  
Christopher Grandy
Keyword(s):  
Consumer Welfare ◽  
Chicago School ◽  
Legislative Process ◽  
Legislative History ◽  
Original Intent

An important tenet of the Chicago School of antitrust asserts that the Sherman Act's framers sought to foster consumer welfare. This article challenges that interpretation by re-examining the legislative history. That history suggests that a consumer-welfare standard did not survive the legislative process and that, if anything, Congress focused on the behavior of producers.

A Premature Postmortem on the Chicago School of Antitrust

2019 ◽  
Vol 93 (4) ◽  
pp. 759-776 ◽  
Author(s):  
Daniel A. Crane
Keyword(s):  
Economic Analysis ◽  
Consumer Welfare ◽  
Chicago School ◽  
Vested Interest ◽  
Antitrust Enforcement ◽  
Political Pressure ◽  
The Creation ◽  
Laissez Faire ◽  
Near Term

The Chicago School of antitrust is often thought to have killed off antitrust enforcement beginning in the late 1970s. In fact, although Chicago school prescriptions were significantly more laissez-faire than the structuralist school Chicago replaced, antitrust enforcement did not die under Chicago's influence. Rather, by directing antitrust to focus on technical economic analysis, Chicago contributed to the creation of a large and entrenched class of antitrust professionals—economists and lawyers—with a vested interest in preserving antitrust as a legal and regulatory enterprise. Today, Chicago School's consumer welfare standard and specific enforcement prescriptions are coming increasingly under political pressure and may be replaced or supplemented in the near term. But Chicago's redirection of antitrust toward technical economic analysis and technocratic reasoning seems likely to remain a durable legacy.

scholarly journals Moving Away from Consumer Welfare in the Antitrust of Digital Platforms

2021 ◽  
Vol 15 (3) ◽  
pp. 97-105
Author(s):  
Alexander I. Kovalenko ◽  
Keyword(s):  
Consumer Welfare ◽  
Chicago School ◽  
The United States ◽  
Barriers To Entry ◽  
Digital Platforms ◽  
Consumer Prices ◽  
History Of ◽  
Antitrust Regulation ◽  
The Relationship ◽  
Competitive Forces

This article aims to characterize the new theoretical and methodological reversal observed today in the American antitrust regulation of digital platforms. To this end, the author retrospectively describes the history of the development of the theory and methodology of antitrust regulation in the United States. The article describes the ideas of economic structuralism of the “Harvard school”. Further, the author reveals the theoretical and methodological revolution associated with the theory of prices; describes the fundamental differences between the “Harvard” and “Chicago” schools in terms of assessing the relationship between market structure and the intensity of competition. The article reveals the formation of the doctrine of consumer welfare as the dominant one in antitrust regulation. The consequences of the application of the doctrine of consumer welfare in antitrust regulation are described: the narrowness of ideas about barriers to entry, public welfare; breadth of understanding of competitive forces; ignoring the structural and sectoral characteristics of competition; absolutization of indicators of consumer prices and output volumes. The author gives a negative assessment of the effectiveness of the application of the doctrine of consumer welfare in the antitrust regulation of digital platforms. The paper explains how the focus on consumer welfare has been used by digital platforms to generate gigantic market power. In this context, a criticism of the ideas of the Chicago School in relation to digital markets is presented. Reanimation of ideas and methods of economic structuralism in decision-making within the framework of antimonopoly regulation of monopolistic activities of digital platforms is argued.

How Chicago Economics Distorts “Consumer Welfare” in Antitrust

2019 ◽  
Vol 64 (4) ◽  
pp. 495-513
Author(s):  
Mark Glick
Keyword(s):  
Well Being ◽  
Consumer Welfare ◽  
Chicago School ◽  
Antitrust Policy ◽  
Lower Price ◽  
Antitrust Enforcement ◽  
School Vision ◽  
Short Run

Since the publication of Robert Bork’s The Antitrust Paradox, lawyers, judges, and many economists have defended “consumer welfare” (CW) as a standard for decisions about antitrust goals and enforcement priorities. This article argues that the CW is actually an empty concept and is an inappropriate goal for antitrust. Judge Bork adopted CW from economics where welfare unambiguously measured utility or well-being. Welfare economists concede that there is no credible measurable link between price and output and human well-being. This means that the concept of CW does not legitimate limited antitrust enforcement nor does it justify the exclusion of other antitrust goals that require more active enforcement practices. This article contends that antitrust policy is not welfare based at all and, that if it were, antitrust policy and enforcement would differ significantly from the Chicago School vision. Without the fiction that economists can establish that in the short run lower price and higher output measurably increase welfare more than other goals, recent defenses of the CW standard resolve down to arguments based on unsupported assumptions.

FROM CHOICE TO WELFARE: THE CONCEPT OF THE CONSUMER IN THE CHICAGO SCHOOL OF ECONOMICS

2016 ◽  
Vol 14 (2) ◽  
pp. 507-535 ◽  
Author(s):  
NIKLAS OLSEN
Keyword(s):  
Economic Efficiency ◽  
Modern Society ◽  
Consumer Welfare ◽  
Chicago School ◽  
Postwar Period ◽  
Aggregate Wealth ◽  
Market Solutions

This article examines the role of the consumer in the writings on regulation launched by the Chicago school from the 1930s to the 1980s. It shows how Chicago school scholars used the concept of the consumer to shape and justify their calls for deregulation, as they continually claimed to offer market solutions that protect and benefit the consumer. The focus is on how the scholars at issue executed a shift from choice to welfare in their consumer concept as they began more decisively to embrace deregulation in the postwar period. From initially having described consumers as individual agents, capable of ensuring democracy and freedom in modern society by expressing their choices on a partly regulated market, they began to portray consumers as a coherent, homogeneous and predictable mass, acting on a deregulated market and serving merely as a tool of so-called consumer welfare, understood as economic efficiency and aggregate wealth.

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