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


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.


Economic Consequence Industrial Organization Economic Efficiency Factor Utilization Antitrust Policy 
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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

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