Williamson’s Welfare Trade-Off Around the World
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Fifty years ago, Williamson (Am Econ Rev 58:23, 1968) argued that an efficiency-enhancing merger that reduces production costs but increases market power could be saved from antitrust condemnation if the cost savings created by the merger offset the allocative inefficiency. In this paper, we discuss some extensions of Williamson’s basic welfare tradeoff, and explore the attitudes of several countries around the world toward merger efficiencies. In spite of its economic logic, Williamson’s analysis has not been embraced by most of the antitrust authorities around the world. We explore different reasons why antitrust authorities have failed to adopt an explicit social-welfare standard.
KeywordsMerger Antitrust Welfare standard Efficiencies
JEL ClassificationL4 L44
We thank Jessica Haynes, the late David Kaserman, and D. Daniel Sokol for past collaboration. We also thank Tirza Angerhofer for her research assistance, Stephen Martin, David Sappington, and Larry White for helpful comments and suggestions, and D. Daniel Sokol for some much needed advice.
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