Adam Smith, the Competitive Process, and the Flawed Consumer Welfare Standard

2019 ◽  
Author(s):  
Warren S. Grimes
Keyword(s):  
Adam Smith ◽  
Consumer Welfare ◽  
Competitive Process

Adam Smith, the Competitive Process, and the Flawed Consumer Welfare Standard

2020 ◽  
Vol 69 (1) ◽  
pp. 3-13
Author(s):  
Warren Grimes
Keyword(s):  
Adam Smith ◽  
Competition Law ◽  
Consumer Welfare ◽  
Allocation Of Resources ◽  
Competitive Process ◽  
Narrow Focus ◽  
Consumer Prices ◽  
Distribution Chain ◽  
The Impact

Abstract Scottish economist Adam Smith wrote in 1776 that the collective buying and selling of individuals would result in the preferred allocation of society’s resources. That insight has endured and is the basis for the competition law goal of fostering and protecting the competitive process. That goal, with venerable roots on both sides of the Atlantic, has been sidetracked by emergence of the consumer welfare standard, which is now preeminent in competition law analysis. The narrow focus of the consumer welfare standard has led to confusion and misdirected decisions that do not adequately protect the competitive process. I point to confusion about who is the buyer and who is the seller in many transactions, and describe why that classification should, in any event, be irrelevant in applying competition law. When competition is distorted, the central goal of protecting the process and ensuring a preferred allocation of resources is undermined, regardless of the impact on the consumer. The proper welfare standard is unconcerned with where the harm occurs. The standard focuses on anticompetitive conduct at any level of the distribution chain and regardless of whether the anticompetitive effects are directed upstream at sellers or downstream at buyers. The symmetric standard is rooted in competition law decisions on both sides of the Atlantic; it is sound in theory and, compared to the consumer welfare standard, is easier to explain and apply. It more comfortably honors the broader goals of competition, including promoting entry, innovation, and choices for both entrepreneurs and consumers. I assess how this symmetric welfare standard would apply to mergers and classic predatory or exclusionary conduct. The standard offers hope of simplifying analysis and better serving ancillary goals of competition. Fostering and preserving efficiency, enhancing output, and maintaining low consumer prices are among the highly valued benefits of the competitive process, but they are not determinative. The focus must remain on the central goal of preserving the competitive process.

scholarly journals Designing Competition Policy for Telecommunications

2008 ◽  
Vol 7 (4) ◽  
Author(s):  
Glen O. Robinson ◽  
Dennis L. Weisman
Keyword(s):  
Competition Policy ◽  
Consumer Welfare ◽  
Dynamic Efficiency ◽  
Short Term ◽  
Competitive Outcome ◽  
Static Efficiency ◽  
Competitive Process ◽  
Welfare Losses ◽  
Network Sharing

This paper explores the role of the essential facilities doctrine in circumscribing the scope of network sharing obligations in telecommunications. Among other things it argues that a proper application of the doctrine of essential facilities should recognize the prominence of dynamic over static efficiency in promoting consumer welfare. Regulators may be averse to recognizing these tradeoffs because unlike the behavior of prices the welfare losses from foregone innovation may be unobservable to the regulators' constituency. Moreover, an emphasis on dynamic efficiency requires the short-term regulator to take the "long view" – fostering the competitive process rather than emulating the competitive outcome.

Introduction

2021 ◽  
pp. 1-3
Author(s):  
Ariel Ezrachi
Keyword(s):  
Consumer Welfare ◽  
Western World ◽  
Competitive Markets ◽  
Market Failures ◽  
Goods And Services ◽  
Competitive Process ◽  
Competitive Activity ◽  
Competition Laws ◽  
Do So

‘Introduction’ provides an overview of the competitive process, which has generated much of the prosperity of the Western world. It is this process that delivers the abundance of choice, the lower prices, the increased innovation, and the better quality of goods and services. The antitrust and competition laws are designed to address risks, remedy possible market failures, and safeguard consumer welfare. Competition agencies and courts are tasked with enforcing the law. As they do so, they face the challenge of correctly identifying what amounts to an anti-competitive activity and curtailing it to ensure dynamic and competitive markets.

3. The goals and scope of competition and antitrust laws

2021 ◽  
pp. 28-37
Author(s):  
Ariel Ezrachi
Keyword(s):  
South Korea ◽  
Competition Law ◽  
Consumer Welfare ◽  
Antitrust Law ◽  
Competitive Process ◽  
Eu Competition Law ◽  
Antitrust Laws ◽  
The World ◽  
Competition Laws ◽  
The Eu

‘The goals and scope of competition and antitrust laws’ evaluates the goals and scope of competition and antitrust laws. Competition laws seek to protect the competitive process in the marketplace from companies that seek to distort it. By safeguarding free and fair markets, competition laws promote consumer welfare as well as efficiencies in the marketplace. While key competition law principles are similar across the world, competition laws are not internationally uniform, but are instead customized by each jurisdiction. A comparison can be made between US Federal Antitrust Law and the EU competition law. There are also other jurisdictions that apply competition laws, including China, Japan, and South Korea.

Adam Smith in Context

2004 ◽  
Author(s):  
Leonidas Montes
Keyword(s):  
Adam Smith

Adam Ferguson and the Idea of Civil Society

2019 ◽  
Author(s):  
Craig Smith
Keyword(s):  
Civil Society ◽  
Moral Philosophy ◽  
David Hume ◽  
Adam Smith ◽  
Scottish Enlightenment ◽  
Commercial Society ◽  
University Of Edinburgh ◽  
English Speaking ◽  
English Speaking World ◽  
The University

Adam Ferguson was a Professor of Moral Philosophy at the University of Edinburgh and a leading member of the Scottish Enlightenment. A friend of David Hume and Adam Smith, Ferguson was among the leading exponents of the Scottish Enlightenment’s attempts to develop a science of man and was among the first in the English speaking world to make use of the terms civilization, civil society, and political science. This book challenges many of the prevailing assumptions about Ferguson’s thinking. It explores how Ferguson sought to create a methodology for moral science that combined empirically based social theory with normative moralising with a view to supporting the virtuous education of the British elite. The Ferguson that emerges is far from the stereotyped image of a nostalgic republican sceptical about modernity, and instead is one much closer to the mainstream Scottish Enlightenment’s defence of eighteenth century British commercial society.

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