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22 Loy. Consumer L. Rev. 336 (2009-2010)
Question: What Is the Real and Proper Antitrust Welfare Standard - Answer: The True Consumer Welfare Standard

handle is hein.journals/lyclr22 and id is 342 raw text is: QUESTION: WHAT IS THE REAL AND PROPER ANTITRUST WELFARE STANDARD? ANSWER: THE TRUE CONSUMER WELFARE STANDARD Steven C. Salop* I. Introduction T here has been long-standing antitrust controversy regarding the economic welfare standard for antitrust.1 Some commentators favor the aggregate economic welfare standard, (sometimes called the efficiency or total surplus standard); other commentators favor what I will refer to as the true consumer welfare standard (sometimes called the pure consumer welfare or consumer surplus standard). I am using the true qualifier because of the confusion that has resulted from Judge Robert Bork's usage of the term consumer welfare in referring to aggregate welfare.2 The aggregate economic welfare standard would condemn conduct only if it decreases the sum of the welfare of consumers (i.e., buyers) plus producers (i.e., sellers plus competitors); and without regard to any wealth transfers. Thus, efficiencies such as cost savings can trump demonstrable consumer injury. In contrast, the true consumer welfare standard would condemn conduct if it reduces the welfare of buyers, irrespective of its impact on sellers.3 Efficiency benefits count under the true * Professor of Economics and Law, Georgetown University Law Center. This is a slightly revised version of testimony to the Antitrust Modernization Commission (Nov. 8, 2005). I would like to thank Jonathan Baker, Dennis Carlton, Aaron Edlin, Joe Farrell, James Kearl, Andrew Gavil, John Kirkwood, Robert Lande, Robert Pitofsky and Rick Rule for helpful conversations and comments. This issue of the proper economic welfare standard may be different from the legal standard used to achieve maximization of the economic welfare standard. See, e.g., the recent symposium in 73 Antitrust L.J 2 (2006) on two legal standards for Section 2. 2 Robert H. Bork, THE ANTITRUST PARADOX 3 72-74 (1978). 1 Most analysis of competing welfare goals takes place in a simple