One prominent contributor to the overall benefits of antitrust policy is cartel enforcement. Although the greatest benefits are probably achieved through the deterrence effect of cartel laws (which can hardly be measured), an analysis of customer losses due to actual cartelisation reveals important insights into the desirability of cartel enforcement from a consumer welfare perspective. One way to underpin this allegation is to argue that without successful cartel enforcement, the respective cartel would have continued to exist, causing welfare losses. In other words, the direct benefits of detecting a cartel can be approximated by the net present value of the yearly benefits for society in the future.
The desirability of such an analysis notwithstanding, it is important to note that not all customer losses are relevant for an antitrust policy that strictly follows a total welfare standard. Especially the consumers who only pay more for their products are not reflected in the total welfare loss, as their loss in surplus is just redistributed to the producers. The total welfare loss of a cartel agreement is created by the customers who would have bought the product at the competitive price but refrain from buying the product at the elevated cartel price. This total welfare loss is reflected in the so-called deadweight loss.
KeywordsDeadweight Loss Resale Price Maintenance Market Definition Merger Control Downstream Firm
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