Should we use antitrust policies on big agriculture?

Abstract

This paper discusses the benefits and costs of antitrust intervention in agriculture. We argue that over the long run, fixed costs have increased and marginal costs have decreased, which has created a tension between lower food prices and having a large number of farms. As opposed to policies of most industries, agricultural policy seems to place more importance upon producer surplus instead of consumer surplus, which runs directly counter to the goals of antitrust laws. While protecting small farms may potentially be an appropriate use of other policy instruments (such as the Farm Bill), using antitrust laws to break up large agricultural firms and/or protect small farms may result in higher food prices, which is regressive and exacerbates inequality. Furthermore, the application of antitrust law for the purpose of raising food prices and producer surplus is antithetical to its historic purpose.