Imperfect competition is not necessarily a curse. It evokes an environment in which firms compete on multiple dimensions to satisfy heterogeneous consumer preferences. This can create a tension between competing social goals. Inevitably, we must decide which of these goals should guide competition law. In making this decision, we must accept that it is impossible to reconcile these goals or to rank them in an order that applies to everyone, at all times. Thus, the choice of which objective to pursue is a moral choice. However, we can still give competition law a specific goal, since other policies may pursue other goals. The objective of competition law should be selected by considering the main characteristics of competition law rules. These rules are stable, technical, and their violation carries severe penalties. I argue that the value that best fits these characteristics is a narrow notion of total welfare.

By Paolo Buccirossi1

 

“Imperfect” is an adjective loaded with a negative sentiment: something undesirable as opposed to what is perfect. At first glance, this is also true when “imperfect” is associated with “competition.” The ideal market is one in which competition is perfect, since this would lead to an outcome that guarantees the maximization of social welfare. Departing from this setting would imply a waste of resources. Yet, Joan Robinson in her Imperfect Competition explains that competition is imperfect because consumers have “a numbe

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