On Distributive Justice by Antitrust: The Robin Hood Cartel

On Distributive Justice by Antitrust: The Robin Hood Cartel

 

Maarten Pieter Schinkel

University of Amsterdam - Department of Economics; Tinbergen Institute

Abstract

Inequality concerns in antitrust may justify redistribution agreements: allowing market power that leads to a fairer wealth allocation. We consider a simple example that illustrates the trade-offs involved. Permitting competitors to jointly set prices gives them the ability to price discriminate: charging higher than competitive prices to the rich, and lower to the poor. Despite loosing on the poor and creating deadweight-losses, such a `Robin Hood cartel' is profitable, provided equality is valued enough. Yet the antitrust plan will only give to the poor what is minimally required for permission to profit maximally from its takings from the rich. Society can do much better for its disadvantaged groups, also when the distribution agreement is fully philanthropic.