Welfare Economics and Antitrust Policy: A Selective Summary

• Published date: 01 December 2023
• DOI: http://doi.org/10.1177/0003603X231200937
• Author: Richard S. Markovits
• Date: 01 December 2023
• Subject Matter: Articles

https://doi.org/10.1177/0003603X231200937

The Antitrust Bulletin

2023, Vol. 68(4) 551 –589

© The Author(s) 2023

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DOI: 10.1177/0003603X231200937

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Article

Welfare Economics and Antitrust

Policy: A Selective Summary

Richard S. Markovits*

Abstract

This Article summarizes the most salient components of my study WELFARE ECONOMICS AND

ANTITRUST POLICY. It (1) distinguishes moral-rights (justice) analysis from moral-good analysis, (2)

defines and examines the relevant extensions of the liberal conception of justice, (3) defines various

egalitarian conceptions of the moral good and argues that libertarianism is not morally defensible and

would not in any event have many of the extensions some claim it has, (4) defines various categories

of antitrust-policy-coverable conduct (including natural and contrived oligopolistic conduct of various

sorts and predatory conduct of various sorts), (5) defines the components of the gap between a

product’s price and marginal cost that need to be distinguished respectively in individualized-pricing

and across-the-board-pricing situations, (6) defines “investment competition” and identifies the

determinants of its intensity, (7) explains why markets cannot be defined non-arbitrarily, (8) defines

“the impact of a choice on economic efficiency” and lists various categories of economic inefficiency

that can be generated, (9) delineates the protocol for predicting the economic efficiency of a choice

that is ex ante economically efficient (which considers the impact of choices on many categories of

economic inefficiency that conventional analyses ignore, takes economically efficient account of the

fact that the individual exemplars of Pareto imperfections that would cause economic inefficiency in

an otherwise-Pareto-perfect economy can counteract as well as compound each other’s misallocative

tendencies, and considers how to take appropriate account of the fact that both analysis and its

financing are allocative-costly), (10) examines the policy-relevance of a choice’s impact on economic

efficiency, and (11) executes some preliminary antitrust-policy analyses.

Keywords

economic efficiency, egalitarian, investment competition, liberalism, price competition, third-best

economic-efficiency analysis

The Articles in this issue execute antitrust-policy analyses or focus on one or more positions I take in my

two-volume study Welfare economics and antitrust Policy. It therefore seems appropriate to begin this

issue with accounts of (1) the most salient features of my approach to antitrust-policy analysis and (2) the

most significant antitrust-policy conclusions my study reaches. This Article contains three sections. The

*School of Law, University of Texas, Austin, TX, USA

Corresponding Author:

Richard S. Markovits, School of Law, University of Texas, Austin, TX 78712, USA.

Email: rmarkovits@law.utexas.edu

1200937ABXXXX10.1177/0003603X231200937The Antitrust BulletinMarkovits

research-article2023

552 The Antitrust Bulletin 68(4)

1. At least five types of Foundationalist arguments can be distinguished. Arguments that purport to derive a universally appli-

cable optimal moral norm from the concept of “morality” are termed “foundationalist” with a lower-case “f.” Arguments

that purport to derive such a concept from the notion of human flourishing are termed “Aristotelian.” Arguments that

purport to derive such a concept from the notion of human freedom are termed Kantian. Arguments that purport to derive

such a concept from the notion of human nature are termed Natural-Rights arguments. And arguments that purport to derive

such a concept from a combination of the concept of morally appropriate disinterestedness and purportedly-universally-

accurate understandings of human preferences and the ways in which societies, economies, and political systems function

are termed Rawlsian.

first delineates definitions of (1) various moral-analysis-related concepts and the (morally defensible)

liberal and egalitarian moral norms that I think the United States and many other countries and confedera-

tions that have antitrust policies are committed to instantiating and one (to my mind) morally indefensible

purported moral norm (libertarianism), (2) various categories of antitrust-policy-coverable conduct, (3)

concepts that refer to the components of the gap between a seller’s price and conventional marginal cost

and to the determinants of the intensity of investment-competition in an arbitrarily defined portion of

product-space (ARDEPPS)—see Section 3 for my reasons for substituting the acronym ARDEPPS for

the term “market,” (4) two concepts that relate to the motivation for or a particular consequence of an

exemplar of antitrust-policy-coverable conduct that are legally relevant and policy-relevant (the concepts

of “specific anticompetitive intent” and the concept of “lessening competition” as it should be understood

in the antitrust-law/policy-analysis context), and (5) various concepts and one theorem that relate to eco-

nomic-efficiency analysis. The second section provides a brief overview of the protocol for economic-

efficiency prediction or post-diction (hereinafter “prediction”) that the study employs and explains how

this protocol differs from the economic-efficiency-prediction protocol used by virtually all economists

(including all economists who analyze the economic efficiency of antitrust-policy-coverable conduct and

antitrust policies). The third section explains why the antitrust-policy-analysis protocol my study uses is

not “market-oriented”—does not require any allegedly relevant market to be defined and, relatedly, does

not make any use of estimates of the magnitudes of market-aggregated parameters (such as the market

share of one or more alleged or actual perpetrator[s] of antitrust-policy-coverable conduct or the concen-

tration of the seller-side of any [allegedly relevant] market).

I. Definitions

A. Definitions of Concepts That Play a Role in Moral Analysis, of Various Relevant

Defensible Moral Norms, and of One Morally Indefensible Decision-Criterion

My study of antitrust-policy analysis proceeds on the assumption that in the polities with which I am

concerned antitrust-policy-coverable conduct and antitrust policies are to be morally evaluated by their

impact on the instantiation of the liberal conception of justice and, if the antitrust-policy-coverable

conduct or the antitrust-policy response at issue is not mandated or prohibited by the liberal conception

of justice, by the conduct’s or policy’s impact on a pure or mixed egalitarian conception of the moral

good. In my terminology, the preceding conclusions reflect my assumption that the polities in question

are liberal-moral-rights-based polities that are committed not only to giving lexical priority to the

instantiation of the liberal conception of justice but also to the instantiation of an appropriate (see

below) pure or mixed egalitarian conception of the moral good (to the extent that this second objective

can be secured without violating any liberal moral right).

My study proceeds on this normative assumption not because I think one can demonstrate through

Foundationalist argument1 (1) the universal moral correctness of engaging in a bifurcated prescrip-

tive-moral discourse that distinguishes discourse about “the just” (about moral rights and obliga-

tions) from moral discourse about “the moral good,” (2) the universal moral correctness of giving

lexical priority to justice-conclusions over moral-good conclusions, (3) the moral optimality of the

Markovits 553

liberal conception of justice, or (4) the moral optimality of egalitarian conceptions of the moral good

but because when I apply the philosophically informed empirical protocols I argue should be used to

derive conclusions about a polity’s moral type and commitments to the U.S. Declaration of

Independence, the U.S. Constitution and its various Amendments, the Charter of Fundamental Rights

of the European Union, the contemporary German constitution, and the contemporary French consti-

tution and its historical antecedents, the conclusion that emerges is that (these polities)/(that confed-

eration) are/is committed to giving lexical priority to the instantiation of the liberal conception of

justice and to making decisions that instantiate some egalitarian conception of the moral good when

the choice that would do so is not prohibited by the polity’s commitment to instantiating the liberal

conception of justice.2

I hasten to add that, even if you are not convinced that the above polities/confederation have the

moral commitments I claim they have, my study’s and this section’s moral-norm discussions should be

of interest because (1) antitrust policies must be morally evaluated from the perspective of some moral

norm(s), (2) the liberal conception of justice and the various egalitarian conceptions of the moral good

I will distinguish are morally defensible, and (3) this section will also explain why the various criteria

that many antitrust-policy analysts use to evaluate antitrust policies (libertarian decision-criteria and

criteria that assume that the only morally relevant desideratum/desiderata is/are economic efficiency,

consumer welfare, or seller-competition) cannot bear moral scrutiny.

I recognize that the expressions italicized in the preceding paragraphs require elucidation. I will start

by illustrating the distinction I draw between prescriptive-moral discourse about “the just” (about

moral rights and obligations) and prescriptive-moral discourse about “the moral good.” To illustrate the

difference between these two categories of prescriptive-moral discourse, I will examine a situation in

which one moral-rights bearer is in a position to render assistance to another moral-rights bearer who

is a victim of an automobile accident that has taken place. In any moral-rights-based polity, two sorts

of moral questions can be asked about the moral desirability of the potential assistance-provider’s pro-

viding assistance: (1) does the potential assistance-provider have a moral obligation to render assis-

tance, and (2) would it be morally good for the potential assistance-provider to render assistance. In a

liberal-moral-rights-based society, the answer to the moral-obligation question will depend on whether

the potential assistance-provider has promised to provide assistance, is in an intimate relationship with

the injured party (or perhaps has a status-relationship to the injured party that is normally associated

with intimacy), was a culpable cause-in-fact of the potential assistance-recipient’s injury or possible

injury, or was uniquely well-placed to provide assistance to the injured or at-risk party that would sig-

nificantly reduce the probability that that party would suffer an opportunity-to-lead-a-life-of-moral-

integrity-imperiling loss without subjecting himself or herself to a significant risk of sustaining such a

loss or devoting so much time and effort to the assistance-effort for the imposition of a duty to provide

the assistance to reduce the probability that the assistance-provider and others would take their lives

morally seriously by undermining their perceptions that they are the authors of their own lives.

Regardless of whether the potential assistance-provider has a moral duty to provide the assistance (but

admittedly less-morally-saliently if the potential assistance-provider does have such a duty), one can

ask whether, from the perspective of various conceptions of the moral good, it would be morally good

for the potential assistance-provider to provide assistance in the situation in question. An evaluator’s

relevant moral-good assessment will depend on both the conception of the moral good to which the

evaluator subscribes or has been instructed to use (see the following text) and the facts of the matter

that that conception implies are relevant to the moral goodness of the relevant potential assistance-

provider’s providing assistance.

2. I have collected excerpts from all these documents that (to my mind) support these conclusions. Space-constraints have led

me to omit this material from this Article. I would be happy to supply the pertinent excerpts to anyone who e-mails me a

request for them.