Monopoly is a situation in which one company has gained control of the market for a particular good or service. Monopoly is in direct conflict with the values of liberalism which emphasize competition among numerous producers. Monopolistic trade practices is trade practice which has or is likely to have the effect of maintaining the price of the good or charges for the services at an unreasonable level by limiting, restricting or otherwise controlling the production, supply or distribution of goods or services. Monopoly and Monopolization are Fundamental But Separate Concepts in U.S. Antitrust Law. Monopoly is characterized by a lack of economic competition for the good or service that they provide and a lack of substitute for such good or service. British East India Company was created as a legal trading monopoly in 1600.
Monopolistic trade practices also covers the unreasonable prevention or lessening of competition. The general prohibitions against monopolization and attempted monopolization are contained in section 2 of the Sherman Act and against monopolization in section 7 of the Clayton Antitrust Act of 1915.
Monopolize refers to the process by which a firm gains greater market share than normal under perfect competition. Monopolies are generally formed through vertical integration and horizontal intergration through mergers. A monopoly is said to be coercive when the monopoly firm actively prohibits competitors from entering the same field.
Monopoly, manipulation, and the regulation of futures markets - Easterbrook, Frank H.
Abstract: The threat of monopoly and manipulation in the futures markets is assessed in order to determine whether entry into this market should be so heavily regulated.
The costs of monopoly in futures markets and the markets' responses to these costs are assessed. Precautions against monopoly taken by exchanges are examined, as well as some cases of actual or asserted monopolization. The evidence suggests that, although there are some episodes of monopoly and manipulation in futures markets, they are very few.
Bundling as a Way to Leverage Monopoly - Barry J. Nalebuff. Abstract: This paper shows how a monopolist generally can increase its profits by offering a discount on its monopolized product if the customer agrees to buy a competitively supplied good from it at a price premium. The Chicago School seemed to end the debate with their result that there is only one monopoly profit and thus there is no gain from bundling. The firm offers to scale back its monopoly price in return for getting a price premium in a second market. The reduction in monopoly price causes no first-order loss to the firm, while providing a first-order incentive for customers to voluntarily accept the deal.
Second-Sourcing as a Commitment: Monopoly Incentives to Attract Competition - Farrell, Joseph, Gallini, Nancy T. Abstract: The authors show that a new product monopolist may benefit from (delayed) competition if consumers incur setup costs. Setup costs create a dynamic consistency problem: the monopolist cannot guarantee low future prices once customers have incurred those costs. If setup costs are small, the monopolist can typically achieve the same level of profits without price commitment.
E.S. Varga and the Theory of State Monopoly
Capitalism
- Charlene Gannage.
This paper traces the development of the theory of state monopoly capitalism as presented
by the Soviet political economist, E.S. Varga. Following
the Moscow debate of 1947 Varga fell out of official favor and he was not rehabilitated
until 1953. His analysis of the capitalist state continued to evolve resulting in the
theory of state monopoly capitalism.
THE POTENTIAL DEMISE OF ANOTHER NATURAL MONOPOLY: NEW TECHNOLOGIES AND THE
ADMINISTRATION OF PERFORMING RIGHTS - Ariel Katz.
This is a second in a series of two articles in which I challenge the collective
administration of performing rights. In the first article, published in a recent issue of
this journal, I questioned the natural monopoly paradigm that dominates the analysis of
collective administration of performing rights.
Spatial Monopoly with Product Differentiation - Shin-kun Peng. Abstract: Most theoretical work on the behavior of spatial monopoly focuses on the single-product case, while, in reality, a firm usually produces (or sells) many differentiated products. I introduce a new model of spatial monopoly with a multiple-product firm where the firm chooses both the measure of product varieties and the price of each variety to maximize its profit. I also examine the monopolist’s optimal decision and its economic effects on the spatial economy with a fixed and variable market fringe, respectively. This finding is in contrast to the literature on a single-product spatial monopoly where those results are invariant across different pricing policies.
On the Existence of Spatial Monopolies Under Free Entry - Sebastien Steinmetz. Abstract: This paper studies the question of entry in the circular city model when the pre-entry market structure involves local monopolies. In contrast with Salop (1979), we show that the unit profit rate of incumbent monopolists is strictly positive and bounded above. The upper bound decreases with the size of gaps and with the number of incumbents.
Administrative Monopoly and the Anti-Monopoly Law: an examination of the debate in China - Gordon Y. M. Chan. Abstract: After more than a decade of preparation, China finally passed the Anti-Monopoly Law on 30 August 2007. This paper examines the debate over whether or not administrative monopoly should be included in the ambit of the Anti-Monopoly Law, which took place throughout the drafting process of this new law.
Administrative monopoly refers to the abusive use of administrative power by government agencies to engage in monopolistic activities. Owing to the administrative nature of this type of monopoly, the intent to regulate it by an economic law, such as the Anti-Monopoly Law, has stirred up much controversy. The enforcement mechanism of the Anti-Monopoly Law will have to be strengthened in order to prevent this new law from degenerating into 'a toothless tiger'. Furthermore, the competition law regime of China will benefit from in-depth research in overseas anti-monopoly practices.
Monopoly and Monopolization? Fundamental But Separate Concepts in U.S. Antitrust Law, Janice Rubin. Abstract: Antitrust doctrine holds that viable competition will best protect consumers; it is only concerned with the viability of individual competitors insofar as their fates affect marketplace competitiveness. Section 5 of the Federal Trade Commission Act, require two things: first, an inquiry into whether an entity is in fact a monopolist; and second, whether that monopolist has unlawfully monopolized the market(s) within which it operates. This Report will attempt to clarify the difference between the concepts of monopoly and monopolization; and will touch on the monopoly and monopolization thinking in the Antitrust Division of the Department of Justice (DoJ) and the Federal Trade Commission.