Antitrust as Corporate Governance

Summary

Consumers have been left out of the great debate over the mission of the firm, in which advocates of shareholder value maximization face off against advocates of corporate social responsibility, who would allow management leeway to allocate profits to groups other than shareholders, such as workers. The consumer welfare standard adopted by antitrust law in the 1970s should be read to require that the firm allocate its profits neither to shareholders nor to workers, but rather strive to have no profits at all, by charging the lowest possible prices for the best quality products. Such a profit minimization requirement, which, as federal law, would bind all state-level corporate law regimes, would preserve incentives for businesses to perform efficiently because any incentive payments necessary for efficiency count as costs, not profits, and could therefore be retained by firms.