The Durapolist Puzzle: Monopoly Power in Durable-Goods Market
AbstractThis Article studies the durapolist, the durable-goods monopolist. Durapolists have long argued that, unlike perishable-goods monopolists, they face difficulties in exercising market power despite their monopolistic position. During the past thirty years, economists have extensively studied the individual arguments durapolists deploy regarding their inability to exert market power. While economists have confirmed some of these arguments, a general framework for analyzing durapolists as a distinct group of monopolists has not emerged. This Article offers such a framework. It first presents the problems of durapolists in exercising market power and explains how courts have treated these problems. It then analyzes the strategies durapolists have devised to overcome difficulties in acquiring and maintaining monopoly power and the legal implications of these strategies. This Article's major contributions are (a) expanding the conceptual scope of the durapolist problem, (b) presenting the durapolist problem as an explanation for many common business practices employed by durapolists, and (c) analyzing the legal implications of strategies employed to overcome the durapolist problem.
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Bibliographic InfoPaper provided by University of Michigan John M. Olin Center for Law & Economics in its series University of Michigan John M. Olin Center for Law & Economics Working Paper Series with number umichlwps-1000.
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-07-26 (All new papers)
- NEP-COM-2004-07-26 (Industrial Competition)
- NEP-LAW-2004-07-26 (Law & Economics)
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