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Sample of monopoly8/13/2023 Market power and monopoly power are related but not the same. Thus, a small degree of market power is very common and understood not to warrant antitrust intervention. Virtually all products that are differentiated from one another, if only because of consumer tastes, seller reputation, or producer location, convey upon their sellers at least some degree of market power. Economists say the dry cleaner possesses market power, if only to a trivial degree. ![]() (6) For example, the unique location of a dry cleaner may confer slight market power because some customers are willing to pay a little more rather than walk an extra block or two to the next-closest dry cleaner. In our economy, few firms are pure price takers facing perfectly elastic demand. Market power is a seller's ability to exercise some control over the price it charges. Drawing on lessons from the hearings, along with existing jurisprudence and economic learning, this chapter discusses the Department's view on appropriate assessment of monopoly power in enforcing section 2. Accordingly, it is important to determine when monopoly power exists within the meaning of section 2.Īn understanding of monopoly power helps in crafting appropriate antitrust policy towards single-firm conduct. It significantly reduces the possibility of discouraging "the competitive enthusiasm that the antitrust laws seek to promote," (5) assures the vast majority of competitors that their unilateral actions do not violate section 2, and reduces enforcement costs by keeping many meritless cases out of court and allowing others to be resolved without a trial. This monopoly-power requirement serves as an important screen for evaluating single-firm liability. ![]() (3) As discussed in chapter 1, the mere possession of monopoly power does not violate section 2. (1) The possession of monopoly power is an element of the monopolization offense, (2) and the dangerous probability of obtaining monopoly power is an element of the attempted monopolization offense. Monopoly power can harm society by making output lower, prices higher, and innovation less than would be the case in a competitive market. Return to Table of Contents Chapter 2 MONOPOLY POWER I. Update: Justice Department Withdraws Report on Antitrust Monopoly Law ()
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