What are the pros and cons of antitrust enforcement?

Answer 1

If markets functioned perfectly, there wouldn't be any need for regulation. There would be enough buyers and sellers in any market that none of them would have market power, there wouldn't be any externalities, and everyone would have perfect information, and as a result, everyone's incentives would cause their local choices to guide the market to the most efficient social outcome. In practice, lots of markets are dominated by one or a small number of firms, there are lots of negative and positive externalities, and consumers aren't always well-informed. The idea behind regulation (in theory at least) is that in some markets, under regulation the market will come closer to the outcome of a perfect market than if it were left unregulated - prices will be lower, avoiding deadweight loss, firms will invest heavily into research and development rather than building up piles of cash or paying dividends, etc. The case against regulation: Regulation is created and enforced by the government, which often isn't actually incentivized to create the most efficient outcome. Governments are driven by politics and are heavily influenced by lobbying, the media, and irrational consumer sentiment. And especially with the rate of change of technology, the government often lags behind the development of new markets and important changes in old markets. Even if the government was good at regulating, there are some more reasons why regulation might not be necessary in cases where one firm is dominating a market: A firm that appears to be a monopoly based on a narrow definition of the market might actually compete in a more general market, providing an incentive for them to price competitively and invest in future developments (airlines compete against other forms of transportation, Facebook competes against email, etc). Also, the threat of entry by a new competitor can motivate a firm to keep prices down and keep research going, even when that competitor doesn't exist yet. Foreign competitors often can't be regulated by a government very well, and so regulating domestic firms can put them at a disadvantage in the global economy. Even when a firm is monopolizing a market and can charge prices far above what they'd be in a competitive environment, there's an argument that this serves as a reward and can incentivize a large amount of research and development when the market is new. For example, if a new market starts out competitive, and founders and investors behind many of the companies know that the value of winning the market is very high (because they will be able to charge monopoly rents), in theory, that will cause much of the surplus that is expected to be generated later to get invested immediately. This causes technological development to happen much faster than it otherwise would, and the monopoly profits go toward "paying back" this investment. Under this view, anti-trust regulation discourages investment and slows down progress in new markets. For example, Facebook stock prices are lower than they otherwise would be because of the expectation of future regulation - this means the company has less money to invest in development than it otherwise would.

Answer 2

One pro for monopolies is that you have no competition and one con is that you'll have to run everything your self