Cartels pose a threat to consumer welfare from "summary" of The Antitrust Paradox by Robert Bork
Cartels are detrimental to consumer welfare due to their ability to restrict competition and raise prices. When firms engage in cartel behavior, they effectively eliminate the benefits of competition, such as lower prices and increased innovation. This harms consumers by limiting their choices and forcing them to pay higher prices for goods and services. By colluding with one another to set prices or allocate markets, cartel members are able to artificially inflate prices and reduce output. This results in a transfer of wealth from consumers to producers, as consumers are forced to pay more for goods and services that would otherwise be available at a lower price in a competitive market. In addition, cartels can stifle innovation by reducing incentives for firms to invest in research and development. Furthermore, cartels can have a lasting impact on market dynamics by creating barriers to entry for new competitors. By coordinating their actions, cartel members can effectively shut out potential rivals and maintain their market power. This limits consumer choice and innovation, as new entrants are unable to compete on a level playing field with established cartel members.- Cartels pose a significant threat to consumer welfare by restricting competition, raising prices, and limiting consumer choice. It is essential for antitrust authorities to actively investigate and prosecute cartel behavior in order to protect the interests of consumers and promote a competitive market environment. By addressing cartel activity, policymakers can work towards ensuring that consumers have access to a wide range of goods and services at competitive prices.
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