Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Saturday, February 2, 2008

Should Competition Law Promote Efficiency? Some Reflections of an Economist on the Normative Foundations of Competition Law

Posted by D. Daniel Sokol

Wolfgang Kerber, Philipps University Marburg - Department of Business Administration and Economics asks, Should Competition Law Promote Efficiency? Some Reflections of an Economist on the Normative Foundations of Competition Law.

ABSTRACT:  The discussion on the normative foundations of competition law is not well-developed. Economic efficiency cannot be the final answer to this normative question. There are different concepts of efficiency with their specific problems and deficits. The discussion in economics, which is narrowed down to total welfare standard vs. consumer welfare standard, does not sufficiently grasp the complexity of the normative problems. In the paper the normative key concepts are clarified, which economists use in regard to competition policy - such as static and dynamic efficiency as well as the problem of redistribution through market power. Afterwards an alternative approach is briefly presented, which - based on constitutional economics - allows for a broader normative discussion of the goals of competition law. The decisive difference is that here the preferences (and values) of the citizens of a society are the relevant normative criterion, from which the goals of competition laws should be derived. From that perspective it is argued that it is unlikely that the citizens would agree on a total welfare standard or a pure consumer welfare standard. It might also be possible to defend the protection of certain rights of market participants as a goal of competition law as well as the consideration of notions of fairness, as long as these normative notions reflect widely-held values of the citizens. Most important is that a broader interdisciplinary discussion on the goals of competition law is necessary.

http://lawprofessors.typepad.com/antitrustprof_blog/2008/02/should-competit.html

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