The Antitrust Duty to Charge Low Prices

Over the past forty years, antitrust has come to embrace a goal of consumer welfare maximization that cannot be achieved solely through condemnation of collusive or exclusionary conduct. To address cases in which firms achieve the power to raise prices and harm consumers without engaging in collusive or exclusionary conduct, antitrust should impose a general duty on businesses to charge a price no higher than economic cost. Courts would not need to set prices to enforce this duty, because violations would be punishable only by nominal damages, and shame, rather than by an injunction setting a reasonable price. Although the effect of this duty on prices and consumer welfare is likely to be modest, the nonlinear relationship between price and total welfare suggests that a substantial improvement in total welfare could result.