Rethinking Antitrust in the Presence of Transaction Costs: Coasian Implications

Rethinking Antitrust in the Presence of Transaction Costs: Coasian Implications This article analyzes how transaction costs influence the ability to charge nonlinear prices and how market structure and industry behavior affect those transaction costs. The failure to recognize that nonlinear pricing produces a different equilibrium than linear pricing together with a recognition that the pricing mechanism can be altered by conduct under antitrust review explains why the usual antitrust analysis can be misleading. The paper illustrates its points using merger simulations with nonlinear pricing. Finally, the paper analyzes how to identify situations where market power might arise and applies the analysis to exclusive dealing, credit cards and FRAND royalties. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Rethinking Antitrust in the Presence of Transaction Costs: Coasian Implications

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Publisher
Springer US
Copyright
Copyright © 2015 by The Author(s)
Subject
Economics / Management Science; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-015-9453-4
Publisher site
See Article on Publisher Site

Abstract

This article analyzes how transaction costs influence the ability to charge nonlinear prices and how market structure and industry behavior affect those transaction costs. The failure to recognize that nonlinear pricing produces a different equilibrium than linear pricing together with a recognition that the pricing mechanism can be altered by conduct under antitrust review explains why the usual antitrust analysis can be misleading. The paper illustrates its points using merger simulations with nonlinear pricing. Finally, the paper analyzes how to identify situations where market power might arise and applies the analysis to exclusive dealing, credit cards and FRAND royalties.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Feb 24, 2015

References

  • An economic interpretation of FRAND
    Carlton, DW; Shampine, AL

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