Amidst the hoopla of the triumphant release of Budweiser Black Crown, the King of Beers learned that its $20.1 billion offer to purchase Grupo Modelo — maker of Corona, that beer people put lemons in — had been given the kibosh by the good folks at the Department of Justice.
One of the key DoJ players in the blockages is our own LU alum WilliamBaer, who had this to say:
This is the sort of product that matters to consumers. If you have a very slight price increase that happens because of this deal, it could mean that consumers will pay billions of dollars more.
Now, reaching for the back of my envelope, the average American guzzles down about 30 gallons of beer per year, about a half gallon per week. Now, if the price per gallon goes up $0.10, that would entail about $3 per person per year times 300 million people, or about a billion dollars (assuming the demand for beer is pretty inelastic, of course).
On the down side of all this consumer largess, young folks will probably be saddled with more STDs!
Thanks you to the formerly bearded “Mr. T” for the tip. Those of you in the 400 class should take a look. Very interesting stuff.
Whether one looks at the texts of the antitrust statutes, the legislative intent behind them, or the requirements of proper judicial behavior, therefore, the case is overwhelming for the judicial adherence to the single goal of consumer welfare in the interpretation of the antitrust laws.
That’s from the late Robert Bork, who died earlier this week. I’m putting this one in a “people you should know” category. Bork was a Yale law professor and sometimes Justice Department official who is most famous for having his nomination to the Supreme Court shot down for being too conservative, or too wacky, or too something. Whatever the reasons, the confirmation hearings and their aftermath are stuff of legend. (As was Bork’s beard!).
But for economists Bork’s greatest influence was certainly in the area of antitrust, and in particular his book, The Antitrust Paradox, from whence the above quotation was plucked. Indeed, Bork is a seminal figure in the law and economics movement. Note that Bork contends that consumer welfare is the end of antitrust policy, not the protection of firms from competition, not whether a given market is competitive or not, not even total welfare (!). Think about that.