Advertisement

Review of Industrial Organization

, Volume 5, Issue 2, pp 59–73 | Cite as

Economic efficiency, antitrust and rate-of-return

  • John P. Formby
  • W. James Smith
  • Paul D. Thistle
Issues In Antitrust Policy, Southern Economic Association Conference

Abstract

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.

Keywords

Economic Consequence Industrial Organization Economic Efficiency Factor Utilization Antitrust Policy 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. 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
  2. Averch, Harvey and Leland L. Johnson. "Behavior of the Firm Under Regulatory Constraint,"American Economic Review, 52 (December 1962): 1052–1069.Google Scholar
  3. 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
  4. Baxter, William F. "Powers, Prosecutorial Discretion, and the ‘Common Law’ Nature of Antitrust Law,"Texas Law Review, 60 (April 1982): 661–703.Google Scholar
  5. Becker, Gary S. "Crime and Punishment: An Economic Approach,"Journal of Political Economy, 76 (March/April 1968): 169–217.CrossRefGoogle Scholar
  6. Bork, Robert H.The Antitrust Paradox: A Policy at War with Itself. (New York, NY: Basic Books, 1978).Google Scholar
  7. Breit, William and Kenneth G. Elzinga. "Private Antitrust Enforcement: The New Learning,"Journal of Law and Economics, 28 (May 1985): 405–444.CrossRefGoogle Scholar
  8. Daughety, Andrew F. "Regulation and Industrial Organization,"Journal of Political Economy, 92 (October 1984): 932–53.CrossRefGoogle Scholar
  9. Mueller, Dennis C. "The Persistence of Profits Above the Norm,"Economica, 44 (November 1977): 369–380.Google Scholar
  10. Posner, Richard A.Antitrust Law: An Economic Perspective. (Chicago, IL: University of Chicago Press, 1976).Google Scholar
  11. Scherer, Fredrick M.Industrial Market Structure and Economic Performance. (Boston, MA: Houghton-Mifflin, 1980).Google Scholar
  12. 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
  13. ——, 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

Copyright information

© Industrial Organization Society 1990

Authors and Affiliations

  • John P. Formby
    • 1
  • W. James Smith
    • 2
  • Paul D. Thistle
    • 1
  1. 1.University of AlabamaUSA
  2. 2.University of Colorado at DenverUSA

Personalised recommendations