The Economics of Welfare Standards in Antitrust

Joseph Farrell, Michael Katz, Nov 01, 2006

There has been considerable debate concerning whether consumer surplus or total surplus should be the welfare standard for antitrust. This debate misses two critical issues. First, antitrust is not straightforwardly welfarist. It does not maximize but protects, and it does not forbid all actions that seem likely to lower some welfare measure. Second, the enforcement process involves multiple steps and multiple decision makers. The authors conclude that, while some popular arguments for a consumer surplus standard are weak, other arguments have some merit.

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• Farrell and Katz (Nov. 2006)