Author(s)
Howard H. Chang, David S. Evans and Richard Schmalensee
Source
AEI-Brookings Joint Center Working Paper; MIT Sloan Working Paper 4263-02, August 2002
Summary
This paper looks at competition policy and consumers during the Clinton administration.
Policy Relevance
Policy makers will harm consumers if they assume that any business practice that hurts a firm's competitors also hurts consumers.
Main Points
- Economic consensus supports the view that antitrust law should protect competition, not competitors.
- The Supreme Court has favored the rule that antitrust authorities must prove that a firm harmed consumers.
- This rule likely allows more false acquittals than false convictions.
- False acquittals are not as bad because, over time, other businesses learn how to offer consumers more choices.
- During the Clinton administration, officials asked the courts to assume that a firm hurts consumers when it hurt competitors.
- This is economically unsound because practices that take business away from rivals, such as reducing prices, actually help consumers.
