Williamson’s Welfare Trade-Off Around the World

Fifty years ago, Williamson (Am Econ Rev 58:23, 1968) argued that an efficiency-enhancing merger that reduces production costs but increases market power could be saved from antitrust condemnation if the cost savings created by the merger offset the allocative inefficiency. In this paper, we discuss some extensions of Williamson’s basic welfare tradeoff, and explore the attitudes of several countries around the world toward merger efficiencies. In spite of its economic logic, Williamson’s analysis has not been embraced by most of the antitrust authorities around the world. We explore different reasons why antitrust authorities have failed to adopt an explicit social-welfare standard.