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The Lawful Acquisition and Exercise of Monopoly Power and Its Implications for the Objectives of Antitrust

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  • David Evans
  • Keith Hylton

Abstract

The antitrust laws of the United States have, from their inception, allowed firms to acquire significant market power, to charge prices that reflect that market power, and to enjoy supra-competitive returns. This article shows that this policy, which was established by the U.S. Congress and affirmed repeatedly by the U.S. courts, reflects a tradeoff between the dynamic benefits that society realizes from allowing firms to secure significant rewards, including monopoly profits, from making risky investments and engaging in innovation; and the static costs that society incurs when firms with significant market power raise prices and curtail output.

Suggested Citation

  • David Evans & Keith Hylton, 2008. "The Lawful Acquisition and Exercise of Monopoly Power and Its Implications for the Objectives of Antitrust," CPI Journal, Competition Policy International, vol. 4.
  • Handle: RePEc:cpi:cpijrn:4.2.2008:i=5155
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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.
    2. Benjamin Rene Kern & Juan Manuel Mantilla Contreras, 2014. "Mergers and the Incentives to Undertake Product Innovation Oriented R&D: First Steps Towards an Assessment Approach," MAGKS Papers on Economics 201417, Philipps-Universit├Ąt Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    3. Wolfgang Kerber, 2017. "Rights on Data: Competition, Innovation, and Competition Law: Dissecting the Interplay," MAGKS Papers on Economics 201742, Philipps-Universit├Ąt Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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