Prospective Welfare Analysis - Extending Willingness-to-Pay Assessment to Embrace Sustainability

Abstract

In this paper we outline how a future change in consumers’ willingness-to-pay can be accounted for in a consumer welfare effects analysis in antitrust. This is not sufficiently addressed in current consumer welfare assessment tools. Existing paradigms conceive of consumer preferences as static factors. Key to our solution is the prediction of preferences of new consumers and changing preferences of existing consumers in the future. We offer suggestions on how to conceptionalize and operationalize this. Depending on the particular case, various economic techniques may be used to extract and extrapolate consumers’ current and future preferences or to assess how consumer preferences will change under varying scenarios (such as additional information on environmental impact). This increases the scope of the consumer welfare paradigm and can help to solve conceptual issues regarding the integration of sustainability into antitrust enforcement. It allows to keep consumer surplus as a quantitative gauge, which safeguards the coherence of the substantive toolkit. Moreover, it allows to apply the consumer welfare concept in cases where the competitive restraint relates to product features that do not bear on social costs but address non-economic ethical posits that may change over time.