Hipster Antitrust Meets Public Choice Economics: The Consumer Welfare Standard, Rule of Law, and Rent-Seeking
- Author(s): Elyse Dorsey, Jan Rybnicek, Joshua Wright
- Date Posted: 2018
- Law & Economics #: 18-20
- Availability: Full text (most recent) on SSRN
Hipster Antitrust calls for the outright rejection of the consumer welfare standard as the lodestar of antitrust law in favor of a vague “public interest” test that requires courts and agencies to consider a variety of social and political goals. It also advocates for focusing antitrust primarily upon simplistic and, in some cases, long-rejected, proxies of market performance such as market structure and firm size rather than on assessing actual anticompetitive effects. In short, Hipster Antitrust seeks to dismantle the well-defined, objective, and economics-based approach to antitrust developed through case law for decades, to eliminate the rule of law associated with that approach, and to send antitrust jurisprudence careening back to its Stone Age. It does so while attacking corporate America generally and with rhetorical flourish that nostalgically yearns for a return to the trustbusting days of antitrust’s infancy. A primary theme of Hipster Antitrust is concern with regulatory capture and oversized corporate influence on regulation and market outcomes. We share those concerns. Yet, ironically, by expanding antitrust enforcers’ discretion dramatically and removing institutional safeguards ensuring accountability, Hipster Antitrust would usher in a new era of rent-seeking by corporations hoping to misuse the antitrust laws to gain advantages over competitors. In doing so, Hipster Antitrust regrettably ignores the important lessons of public choice theory and trades the current antitrust regime, which promotes consumer welfare, for one that invariably benefits businesses and maximizes corporate welfare.