Authors libby rittenberg 854

Economists Robert W. Crandall and Clifford Winston have asked a very
important question: Has all of this effort enhanced consumer welfare?
They conclude that the Department of Justice and the Federal Trade
Commission would best serve the economy by following a policy of benign
neglect in cases of monopolization, proposed mergers, and efforts by firms
to exploit technological gains by lowering price. The economists conclude
that antitrust actions should be limited to the most blatant cases of pricefixing or mergers that would result in monopolies. In contrast, law
professor Jonathan Baker argued in the same journal that such a
minimalist approach could be harmful to consumer welfare. One argument
he makes is that antitrust laws and their enforcement create a deterrence
effect.
A recent paper by Orley Ashenfelter and Daniel Hosken analyzed the
impact of five mergers in the consumer products industry that seemed to
be most problematic for antitrust enforcement agencies. In four of the five
cases prices rose following the mergers and in the fifth case the merger
had little effect on price. While they do not conclude that this small study
should be used to determine the appropriate level of government
enforcement of antitrust policy, they state that those who advocate less
intervention should note that the price effects were not negative, as they
would have been if these mergers were producing cost decreases and
passing them on to consumers. Those advocating more intervention
should note that the price increases they observed after these mergers
were not very large.
Sources: Orley Ashenfelter and Daniel Hosken, “The Effect of Mergers on
Consumer Prices: Evidence from Five Selected Cases,” National Bureau of
Economic Research Working Paper13859, March 2008; James B. Baker,
Attributed to Libby Rittenberg and Timothy Tregarthen
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