Authors: Einer Elhauge
Center for Business and Government, John F. Kennedy School of Government
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While existing doctrine on monopoly power is not as problematic, it too suffers from great ambiguities, including difficulty dealing with the ubiquitous pricing discretion of firms in modern brand-differentiated markets, vague references to a "substantial" degree of a power that itself only exists when substantial, and an underlying split over whether pricing discretion or market share is the underlying variable whose substantiality matters. The author shows that proper economic analysis of how to judge the exclusionary conduct that must be causally connected to that monopoly power explains why monopoly power requires showing both (a) a market share above 50% and (b) an ability to either influence marketwide prices or impose significant marketwide foreclosure that impairs rival efficiency. It is further argued that these proposed standards would not only provide a more coherent and desirable standard for guiding lower courts and juries, but better explain the actual pattern of Supreme Court case results.
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