It is sometimes said of these combination the monopolistic trusts that they reduce prices to the consumer by better methods of production, but all experience shows that this saving of cost goes to the pockets of the producer. The price to the consumer depends upon the supply, which can be reduced at pleasure by the combination.
These are clear expressions of concern for the distributional effects of market power. The second statement, in fact, suggests approval of efficiency only (more…)
The arrangement that a higher price results from restricted output involves the “which came first?” question. One might just as well say that restricted output is caused by raising the price or that a price increase and output reduction simultaneously results from a move up the demand curve. But I digress.
Therefore, the original goal of the Sherman act was to minimize the dead weight loss due to market power, that is, the welfare loss due to allocation of resources among industries. Equivalently, the goal is to (more…)
