Economic efficiency, antitrust and rate-of-return
This paper examines the economic consequences of using excessive rates-of-return to detect and prosecute cartels. We find that this policy leads to inefficient factor utilization, but always increases output and welfare. The rate-of-return policy may yield greater social gains than a welfare-based antitrust policy.
KeywordsEconomic Consequence Industrial Organization Economic Efficiency Factor Utilization Antitrust Policy
Unable to display preview. Download preview PDF.
- Alchian, Armen A. and Ruben A. Kessel. "Competition, Monopoly and the Pursuit of Money," inAspects of Labor Economics, edited by H. Gregg Lewis. (Princeton: NBER-Princeton University Press, 1962).Google Scholar
- Averch, Harvey and Leland L. Johnson. "Behavior of the Firm Under Regulatory Constraint,"American Economic Review, 52 (December 1962): 1052–1069.Google Scholar
- Baumol, William J. and Alvin K. Klevorick. "Input Choices and Rate-of-Return Regulation: An Overview of the Debate,"Bell Journal of Economics and Management Science, 1 (August 1970): 162–190.Google Scholar
- Baxter, William F. "Powers, Prosecutorial Discretion, and the ‘Common Law’ Nature of Antitrust Law,"Texas Law Review, 60 (April 1982): 661–703.Google Scholar
- Bork, Robert H.The Antitrust Paradox: A Policy at War with Itself. (New York, NY: Basic Books, 1978).Google Scholar
- Mueller, Dennis C. "The Persistence of Profits Above the Norm,"Economica, 44 (November 1977): 369–380.Google Scholar
- Posner, Richard A.Antitrust Law: An Economic Perspective. (Chicago, IL: University of Chicago Press, 1976).Google Scholar
- Scherer, Fredrick M.Industrial Market Structure and Economic Performance. (Boston, MA: Houghton-Mifflin, 1980).Google Scholar
- Smith, W. James and Michael B. Vaughan. "Economic Welfare, Price, and Profit: The Deterrent Effect of Alternative Antitrust Regimes,"Economic Inquiry, 24 (October 1986): 615–629.Google Scholar
- ——, and John P. Formby, "Cartels and Antitrust: The Role of Fines in Deterring Violations at the Margin,"Southern Economic Journal, 53 (April 1987): 985–996.Google Scholar