Working Paper: CEPR ID: DP16916
Authors: Roman Inderst; Stefan Thomas
Abstract: In this paper, we outline how a future change in consumers’ willingness-to-pay can be accounted for in a consumer welfare effects analysis in antitrust. Key to our solution is the prediction of preferences of new consumers and changing preferences of existing consumers in the future. The dimension of time is inextricably linked with that of sustainability. Taking into account the welfare of future cohorts of consumers, concerns for sustainability can therefore be integrated into the consumer welfare paradigm to a greater extent. As we argue in this paper, it is expedient to consider changes in consumers’ willingness-to-pay, in particular if society undergoes profound changes in such preferences, for example, caused by an increase in generally available information on environmental effects of consumption, and a rising societal awareness about how consumption can have irreversible impacts on the environment. We offer suggestions on how to conceptionalize and operationalize the projection of such consumers’ changing preferences in a “prospective welfare analysis.” This increases the scope of the consumer welfare paradigm and can help to solve conceptual issues regarding the integration of sustainability into antitrust enforcement while keeping consumer surplus as a quantitative gauge.
Keywords: antitrust; consumer welfare; sustainability
JEL Codes: A13; K21; K32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased awareness of environmental issues (F64) | changes in consumers' willingness to pay (WTP) (D11) |
| changes in consumers' willingness to pay (WTP) (D11) | consumer welfare analysis (D61) |
| increased information availability (D83) | changes in consumers' willingness to pay (WTP) (D11) |
| shifting societal norms regarding sustainability (Q01) | changes in consumers' willingness to pay (WTP) (D11) |
| future consumers' preferences (D11) | changes in consumers' willingness to pay (WTP) (D11) |
| changes in consumers' willingness to pay (WTP) (D11) | higher WTP for sustainable products (Q21) |