The Costs and Benefits of Antitrust Enforcement: Identification and Measurement

The article assesses the costs and ben its of antitrust enforcement. The analysis commences with an investigation of why competition is typically worth protecting, followed by a collection of empirical evidence, which shows that competition actually needs protection by antitrust policy in order to hinder firms to permanently abuse market power to the detriment of consumers. In a complementary third step, it is assessed whether the benefits of antitrust enforcement likely exceed its costs. In this respect, the article provides guidance to the identification and measurement of the various cost and benefits components that need to be taken into account. A particular focus lies on an assessment of two identified options to measure the benefits of antitrust enforcement: An intervention-based approach, which tries to quantify the benefits created by interventions of the competition authority, and a deterrence-based approach, which tries to quantify the extent to which the threat of antitrust interventions alone forecloses the use of anticompetitive strategies by firms.