Abstract

In this paper, we discuss whether the consumer welfare (CW) standard needs to be replaced or revised in order for antitrust law to deal effectively with the economic challenges of the platform economy. We argue that both the general and platform-specific assaults on the CW standard are misguided, that the CW standard is capable of addressing the economic concerns that critics have raised, and that the proposed alternatives would make things worse—not better.

Highlights

  • We live an age of populism (Goldberg 2018)

  • We mean firms “whose core mission is to enable and to generate value from interactions between users” (Belleflamme and Peitz 2018). We argue that both the general and platform-specific assaults on the consumer welfare (CW) standard are misguided, that the CW standard is capable of addressing the economic concerns critics have raised, and that the proposed alternatives would make things worse—not better

  • Absent satisfactory answers to them, no-fault antitrust—or anything close to it—would likely be a recipe for arbitrary and welfare-reducing government regulation. There is another problem with no-fault antitrust law that suggests that it would have—at best—an uneasy relationship with U.S antitrust law, the unease has little to do with the CW standard itself: U.S antitrust law proscribes certain kinds of conduct and otherwise leaves parties free to compete in the marketplace

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Summary

Introduction

Though public opinion polls suggest moderate concern about corporate power and big business (Gallup 2018), established political figures from the left and right are trying to revive an anti-monopoly agenda They often appeal to the “romantic” tradition of the US antimonopoly movement in the gilded age (Langlois 2018). As platform-based firms grow and tip towards monopoly, they become “massive employers” (Naidu et al 2018) that obtain the ability and incentive to act as monopsonists in labor markets: reducing wages, increasing automation, and eventually hurting employees (Sunstein 2018) Nothing of this, it is said by some, can be remedied in a CW-driven antitrust system in which the liability standard prohibits only conduct that leads to output reduction and price increases. In part 5 , we explain why the alternatives to CW that have been suggested by its critics would not be an improvement

CW’s Various Critics
Overstating the Chicago School Legacy
Price Fixation and Antitrust Reductionism
Price Fixation and the CW Blind Spots
The Supposed Blind Spots
Antitrust Reductionism
Lessons from the American Express Case
No‐Fault Antitrust for Platforms
Conduct‐Based Rules for Platforms
False Positives and False Negatives
Conclusion
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