Posted by D. Daniel Sokol
Paolo Ramezzana, Compass Lexecon discusses Anticompetitive Exclusion in Related Markets
ABSTRACT: This paper shows how monopolization of a given market through exclusive contracts can affect the profitability of monopolization of another market in a model with two incumbent firms, each producing a distinct substitute or complementary good and each facing a distinct potential entrant. Externalities between incumbents operate through a “scale effect” and a “profit extraction effect”. With linear demand, when both potential entrants have intermediate levels of entry costs there exist multiple equilibria. In particular, when the goods are strong complements there exist an equilibrium with monopolization in both markets and an equilibrium with entry in both markets. When the goods are subsitutes or weak complements there exist two asymmetric equilibria, each with a different incumbent monopolizing its market while the other does not. The equilibrium is instead unique when at least one of the two potential entrants has very high or very low entry costs. I discuss implications for antitrust enforcement in markets for complementary inputs and for national antitrust policy-making in the presence of international trade in substitute goods.
Featured News
Uruguayan Antitrust Scrutiny Puts Major Meatpacking Deal Between Marfrig and Minerva on Hold
May 19, 2024 by
CPI
Alaska Airlines Seeks Dismissal of Consumer Lawsuit Over $1.9 Billion Hawaiian Airlines Buy
May 19, 2024 by
CPI
Idaho Attorney General Orders Split of Kootenai Health and Syringa Hospital
May 19, 2024 by
CPI
Court Rejects T-Mobile’s Appeal Bid in Antitrust Case Over Sprint Merger
May 19, 2024 by
CPI
Google Requests Judge, Not Jury, to Decide on Antitrust Case
May 19, 2024 by
CPI
Antitrust Mix by CPI
Antitrust Chronicle® – Ecosystems
May 9, 2024 by
CPI
Mapping Antitrust onto Digital Ecosystems
May 9, 2024 by
CPI
Ecosystems and Competition Law: A Law and Political Economy Approach
May 9, 2024 by
CPI
Ecosystem Theories of Harm: What is Beyond the Buzzword?
May 9, 2024 by
CPI
Open Ecosystems: Benefits, Challenges, and Implications for Antitrust
May 9, 2024 by
CPI