Competition Policy and the Economic Approach
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Competition Policy and the Economic Approach

Foundations and Limitations

Edited by Josef Drexl, Wolfgang Kerber and Rupprecht Podszun

This outstanding collection of original essays brings together some of the leading experts in competition economics, policy and law. They examine what lies at the core of the ‘economic approach to competition law’ and deal with its normative and institutional limitations. In recent years the ‘more economic approach’ has led to a modernisation of competition law throughout the world. This book comprehensively examines for the first time, the foundations and limitations of the approach and will be of great interest to scholars of competition policy no matter what discipline.
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Chapter 2: Consumer Welfare, Total Welfare and Economic Freedom – On the Normative Foundations of Competition Policy

Viktor J. Vanberg

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2. Consumer welfare, total welfare and economic freedom – on the normative foundations of competition policy Viktor J. Vanberg 1. INTRODUCTION The debate about the ‘more economic approach’ and its role in the socalled ‘modernization of European competition law’1 centers around two principal issues. One issue concerns the normative foundations of competition policy, the question of what should be considered as its proper goal. The controversy here is essentially about whether competition policy should seek to advance consumer welfare or total welfare, or ought to aim, instead, at protecting ‘Wettbewerbsfreiheit’ or the ‘freedom to compete’, a goal that has been notably stressed in the German ordo-liberal tradition. The other issue is about how economics as an empirical science can help to improve the effectiveness of competition policy in achieving its presumed goal. The controversy here is about whether competition policy should adopt an ‘effects-based approach’ that takes account of the specific effects in each particular case as opposed to the conventional ‘form-based approach’ that works with general prohibitions of certain types or forms of business practices (Schmidtchen 2007a: 96 et seq.).2 In the ongoing debate on the merits and demerits of the ‘modernization of European competition law’ the two issues are usually not explicitly separated from each other, and they are, to be sure, interdependent. They are, however, analytically distinct and the failure carefully to distinguish between them is a major source of ambiguities in the arguments that have been exchanged between critics and advocates of the ‘more economic approach’....

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