Market Power and Inefficiency: A Contracts Perspective
AbstractThis paper surveys the economics of market power from the perspective of contract theory. Various practices that might be of competition policy concern including price discrimination, quantity discounts, bundling, vertical integration, and contracts with customers -- are discussed in terms of constraints on profit maximization, chiefly arising from incomplete information and credible commitment problems. First, the exploitation of pure monopoly power over final consumers or downstream, firms is discussed. Then motives for anticompetitive behavior towards rival firms are considered, including avoidance of profit dissipation, extraction of rival surplus, and exploitation of customer disunity. Copyright 1996 by Oxford University Press.
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Bibliographic InfoArticle provided by Oxford University Press in its journal Oxford Review of Economic Policy.
Volume (Year): 12 (1996)
Issue (Month): 4 (Winter)
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- Armstrong, M, 2008.
Open Access publications from University College London
http://discovery.ucl.ac.u, University College London.
- Armstrong, Mark, 2001. "The theory of access pricing and interconnection," MPRA Paper 15608, University Library of Munich, Germany.
- Eduardo Saavedra, . "Opportunistic Behavior and Legal Disputes in the Chilean Electricity Sector," ILADES-Georgetown University Working Papers inv130, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
- Julien Forder & Ann Netten, 2000. "The price of placements in residential and nursing home care: the effects of contracts and competition," Health Economics, John Wiley & Sons, Ltd., vol. 9(7), pages 643-657.
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