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Odudu, Okeoghene --- "The Distributional Consequences of Antitrust" [2006] ELECD 540; in Marsden, Philip (ed), "Handbook of Research in Trans-Atlantic Antitrust" (Edward Elgar Publishing, 2006)

Book Title: Handbook of Research in Trans-Atlantic Antitrust

Editor(s): Marsden, Philip

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781845421816

Section: Chapter 23

Section Title: The Distributional Consequences of Antitrust

Author(s): Odudu, Okeoghene

Number of pages: 17

Extract:

23 The distributional consequences
of antitrust
Okeoghene Odudu1


The purpose of this contribution is to set out a framework in which it can
be seen that decisions to apply (or not to apply) antitrust to a particular
practice have consequences for the distribution of wealth across society.
Depending on whether or not the antitrust rules apply to certain practices
in a market economy, wealth is either transferred from one group to
another, or remains with one group instead of being transferred to another.
Applying antitrust to a particular practice has distributional consequences;
by the same token, not applying antitrust to a particular practice also has
distributional consequences.2 The underlying question is the extent to
which this transfer, or non-transfer, of wealth from one group to another
is relevant in antitrust.

1 Antitrust as concerned with allocative inefficiency
The seemingly ubiquitous justification for antitrust laws is that they exist to
remedy certain problems of allocative inefficiency. Competitive markets
enable society to have more and society is better off when more is had.3
Whilst society is better off with more, if industry output is reduced, the pro-
ducers can demand a higher price for each unit. Although producers sell
fewer goods if they demand a higher price, it is profitable to sell fewer goods
if the increased price more than compensates for lost sales.4 This contrived
scarcity of output is problematic, as demand from consumers willing to pay
more than the cost of production, but less than the ...