Market Power Revisited

This chapter proposes three different definitions for the market power in the antitrust case, such as dynamic monopoly power, static monopoly power and market power. The chapter presents simple economic models to analyse which definition of the three market powers is consistent with predatory pricing or tying. The prerequisite market power is simply market power in the predatory pricing case or static monopoly power in the tying case. Dynamic monopoly power defined as the market power from an antitrust perspective by the Antitrust Modernization Commission should not be the prerequisite market power in the case of the abuse of dominance or the violation of Section 2 of the Sherman Act. A possession of substantial market power or monopoly power is typically understood as a prerequisite in abuse of dominance in Korea and EU or violation of Section 2 of the Sherman Act in the United States. However, the antitrust law does not clearly indicate the meaning of market power or monopoly power. This chapter proposes three different definitions for the market power in the antitrust case and analyses which definition of the three market powers is consistent with predatory pricing or tying.