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…)
