Abstract
Efficiency is the dominant economic concept underlying most academic and governmental studies of competition in the agrifood system, yet key issues deal with equity, fairness, economic discrimination, independence, justice, economic freedom and economic liberty. This chapter seeks to widen the economic view of the agrifood system to include ethics along with efficiency, and to include the interface between law and economics as manifested in antitrust and competition law. Antitrust law began with broad socioeconomic goals emphasizing “free and fair competition.” The original emphasis on fairness has essentially disappeared. Now aggregate economic efficiency dominates interpretation of this legislation. Without corrective legislation and a truly independent judiciary, recent legal interpretations will continue to shape the agrifood system, allowing it to become more integrated and concentrated. The need to rediscover the purposes for antitrust laws and their enforcement has never been more acute than now.
“Everything has changed but our ways of thinking, and if these do not change we drift toward unparalleled catastrophe.”
–Albert Einstein
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- 1.
Admittedly, the economic surplus concept can, and has been, expanded to include non-market effects. However, the typical application of economic surplus to agrifood competition issues has only considered primary market effects.
- 2.
Boulding’s (1970, p. 67) view is, “The weakness of the traditional marginal analysis which postulated that businessmen would maximize their profits was that the data on which decisions were supposed to be made often did not exist. If a firm does not know what effect a given decision will have on its profits, obviously it cannot maximize profits. We can never climb to the top of a mountain if we do not know whether we are going up or down.”
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Additional discussions of the limitations of welfare economics are in Boulding’s American Economic Association Presidential Address (1969) and subsequent book (1970).
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- 5.
This problem is compounded if price discrimination has occurred and the analyst has only average prices available, as the average price will not be on the appropriate marginal function. Estimation bias can be eliminated if data are also available on the distribution of (discriminatory) prices at each point in time. Such distributional data are rarely available, thus the empirical analyst may not know if there is theoretical bias in an empirical analysis based on average price data.
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USDA has filed numerous Amicus Curiae briefs in PSA litigation consistently stating their interpretation that a plaintiff need not show harm to competition under sections 202 (a-b) of the PSA. The Department of Justice has also filed similar Amicus Curiae briefs in PSA litigation.
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Haines (1919, pp. 1–2) continues: “For a long time it was assumed that the best interests of society were subserved by the regulation of prices and the control of business through the operation of the economic laws of supply and demand.” These days, representatives of giant agribusiness continue to claim that markets are competitive (without defining competition) and that prices are “determined by the laws of supply and demand.” Virtue (1920, p. 653) noted that this was a claim by the meat packers leading up to the 1921 PSA. Since one can say that “price is determined by supply and demand” even in a monopoly, it is ironic that a meaningless economic phrase continues to get traction in public debated about the industrialized agrifood system.
- 8.
The Noerr-Pennington doctrine is derived from the following two US Supreme Court decisions: Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 135 (1961), and United Mine Workers v. Pennington, 381 U.S. 657, 670 (1965).
- 9.
For a summary interpretation of Knight’s view of the role of uncertainty in a competitive economy, and his view of a welfare pyramid involving efficiency, power and freedom, see Taylor (2003).
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Taylor, C.R. (2013). Efficiency, Power and Freedom. In: James, Jr., H. (eds) The Ethics and Economics of Agrifood Competition. The International Library of Environmental, Agricultural and Food Ethics, vol 20. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-6274-9_5
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