What's wrong with New Zealand's public benefit test?

Abstract

New Zealand courts and regulatory authorities have since 1994 adopted an extreme neoliberal version of the public benefit test, treating wealth transfers from consumers to monopolists as welfare‐neutral. This abandonment of the long‐established consumer‐welfare or balancing‐weights standards used in most other OECD jurisdictions rests upon a misconstruction of the alleged inability of economists to reach consensus on how to evaluate changes in income distribution. The intellectual cul‐de‐sac occupied by “new welfare economics” should leave policymakers free to attack monopoly profits without having to endure utilitarian criticisms from neoliberal economists. In doing so. New Zealand policymakers would be acting in accordance with strong economic arguments for restraining monopoly, drawn from the wider mainstream of the economic literature and requiring no utilitarian underpinning.

Notes

School of Economics and Finance, Victoria University of Wellington, [email protected].