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The Paradox of the Exclusion of Exploitative Abuse

Author

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  • Bruce Lyons

    (Centre for Competition Policy and School of Economics, University of East Anglia)

Abstract

Monopoly pricing is a textbook market failure that is taught in the first year of any economics course. The implied welfare loss (or 'exploitative abuse') justifies a whole range of competition policy towards cartels, mergers and regulated industries. Yet there is widespread hostility to prosecuting the same exploitative abuse in the textbook monopoly case (i.e. under Article 82EC)! This paper seeks to understand this paradox. I conclude that, while there are important problems with prosecuting Article 82 exploitation cases (because of problems relating to measurement, market dynamics, multi-sided markets and remedy issues), it is important to keep open the possibility of prosecution; for example, in the forthcoming Article 82 Guidelines.

Suggested Citation

  • Bruce Lyons, 2008. "The Paradox of the Exclusion of Exploitative Abuse," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2008-01, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    • Handle: RePEc:uea:ueaccp:2008_01
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    Citations

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    Cited by:

    1. Oliver Budzinski, 2009. "Modern Industrial Economics and Competition Policy: Open Problems and Possible Limits," Working Papers 93/09, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.

    More about this item

    Keywords

    exclusionary abuse; exploitative abuse; monopoly pricing; welfare loss;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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