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Should “Price Squeeze” Be A Recognized Form Of Anticompetitive Conduct?

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  • Dennis W. Carlton

Abstract

Should a “price squeeze” constitute anticompetitive conduct requiring investigation under the antitrust laws? A price squeeze occurs when a vertically integrated firm supplies an input to its downstream competitors at a price that generates a profit margin so low that the competitors exit the downstream market. I ask whether it is sensible to try to use antitrust laws to prevent such conduct or whether such an attempt would create more harm than benefit. The current case, linkLine Communications, Inc. v. SBC California, Inc., raises this exact question.

Suggested Citation

  • Dennis W. Carlton, 2008. "Should “Price Squeeze” Be A Recognized Form Of Anticompetitive Conduct?," Journal of Competition Law and Economics, Oxford University Press, vol. 4(2), pages 271-278.
    • Handle: RePEc:oup:jcomle:v:4:y:2008:i:2:p:271-278.
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    File URL: http://hdl.handle.net/10.1093/joclec/nhn012
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    Citations

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    Cited by:

    1. Calzada, Joan & Martínez-Santos, Fernando, 2014. "Broadband prices in the European Union: Competition and commercial strategies," Information Economics and Policy, Elsevier, vol. 27(C), pages 24-38.
    2. Zhijun Chen, 2021. "Price Squeezes as an Exploitative Abuse," Monash Economics Working Papers 2021-05, Monash University, Department of Economics.
    3. Yannelis, Demetrius, 2010. "Price Squeeze in Practice: Is it a Profitable Strategy?," 21st European Regional ITS Conference, Copenhagen 2010: Telecommunications at new crossroads - Changing value configurations, user roles, and regulation 40, International Telecommunications Society (ITS).
    4. Stephen Martin & Jan Vandekerckhove, 2010. "Market Performance Implications of the Transfer Price Rule," Purdue University Economics Working Papers 1238, Purdue University, Department of Economics.
    5. Horstmann, Niklas & Krämer, Jan & Schnurr, Daniel, 2015. "Upstream Competition and Open Access Regimes: Experimental Evidence," 26th European Regional ITS Conference, Madrid 2015 127149, International Telecommunications Society (ITS).
    6. Rey, Patrick & Jullien, Bruno & Saavedra, Claudia, 2014. "The Economics of Margin Squeeze," CEPR Discussion Papers 9905, C.E.P.R. Discussion Papers.
    7. Henry ERGAS & Eric RALPH & Emma LANIGAN, 2010. "Price Squeezes and Imputation Tests on Next Generation Access Networks," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(78), pages 67-86, 2nd quart.

    More about this item

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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