Crandall and Winston Release Study Analyzing the Effects of U.S. Antitrust Policy on Consumer Welfare

December 19, 2003

A study published by Robert Crandall and Clifford Winston of the Brookings Institution in the Journal of Economic Perspectives examines the record of U.S. antitrust enforcement in promoting consumer welfare gains. Crandall and Winston argue that almost any action by a firm can have both procompetive and anticompetitive consequences and that, given this range of theoretical possibilities, the case for a tough and broad antitrust policy must rest on empirical evidence that shows that such policies have worked in the broad social interest.

Crandall and Winston review the budgets and actions of the federal government's antitrust authorities and synthesize the available research regarding the economic effects of three major areas of antitrust policy and enforcement: changing the structure or behavior of monopolies; prosecuting firms that engage in anticompetitive practices, namely, price fixing and other forms of collusion; and reviewing proposed mergers. The authors find little empirical evidence that past interventions have provided much direct benefit to consumers or significantly deterred anticompetitive behavior. Crandall and Winston caution that until the economics profession can provide some hard evidence that identifies where the antitrust authorities are significantly improving consumer welfare and can explain why some enforcement actions and remedies are helpful and others are not, those authorities would be well advised to prosecute only the most egregious anticompetitive violations.

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