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Extending Monopoly Power under Joint Production: A Case Study of the Red Cross and the Blood Centers of America

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  • Lybecker Kristina M.
  • Lemke Robert J.

Abstract

This article provides a case study on joint production technologies in the market for blood products. The discussion and analysis are motivated by a patent for a plasma-scrubbing technology, acquired solely by the Red Cross. This example of joint production is used to illustrate questions surrounding the leveraging of monopoly power. Specifically, could the Red Cross utilize its monopoly over one jointly produced good (scrubbed plasma) to extend market power to a non-monopolized good (red blood cells) when competing with the Blood Centers of America? The case considers the potential for a dual monopoly (by the Red Cross in both markets), limit pricing on the part of the Red Cross in the market for red blood cells, and a shared market in which the Red Cross is a monopoly in the market for plasma but competes with the Blood Centers of America in the market for red blood cells.

Suggested Citation

  • Lybecker Kristina M. & Lemke Robert J., 2007. "Extending Monopoly Power under Joint Production: A Case Study of the Red Cross and the Blood Centers of America," Journal of Industrial Organization Education, De Gruyter, vol. 2(1), pages 1-23, October.
    • Handle: RePEc:bpj:jioedu:v:2:y:2007:i:1:n:2
    DOI: 10.2202/1935-5041.1016
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    References listed on IDEAS

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    1. Jay Pil Choi, 1996. "Preemptive R&D, Rent Dissipation, and the "Leverage Theory"," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(4), pages 1153-1181.
    2. Jay Pil Choi, 2004. "Tying and innovation: A dynamic analysis of tying arrangements," Economic Journal, Royal Economic Society, vol. 114(492), pages 83-101, January.
    3. Whinston, Michael D, 1990. "Tying, Foreclosure, and Exclusion," American Economic Review, American Economic Association, vol. 80(4), pages 837-859, September.
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