SOCIETÀ ITALIANA DI DIRITTO ED ECONOMIA
Fabrizio Esposito (NOVA School of Law)
Gianmaria Pessina (University of Turin)
Abstract
This article delves into the ongoing conflict between the total welfare standard and the consumer welfare standard in economic law analysis. This longstanding debate gains heightened significance due to its influence on the activities and institutional structure of antitrust authorities. Our aim is to provide a robust theoretical foundation for the prominence of the consumer welfare standard while contributing to the broader discussion surrounding market regulation. Our core argument is grounded in a micro-founded examination of market allocations, aiming to find common ground with mainstream economics, “the total welfare standards supporter”. From our perspective, the consumer welfare standard emerges as a “rule-in-equilibrium,” a choice that self-interested, rational agents would make to coordinate their behaviour across multiple markets. Crucially, the institutionalization of the consumer welfare standard addresses the Monopoly Prisoner’s Dilemma—a social dilemma where participants seek competitive advantages while assuming monopolistic roles. The article introduces the partial-in-general equilibrium analysis or micro-in-macro (MnM) approach, showing that the consumer welfare standard effectively resolves the social dilemma while the total welfare standard. It follows that the consumer welfare standard is not a proxy of the total welfare standard selected to simplify antitrust enforcement; on the contrary, the consumer welfare standard justifies the emergence of antitrust institutions and related market regulation mechanisms.