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Competition Policy and Price Fixing$
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Louis Kaplow

Print publication date: 2013

Print ISBN-13: 9780691158624

Published to Princeton Scholarship Online: October 2017

DOI: 10.23943/princeton/9780691158624.001.0001

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Unilateral Market Power

Unilateral Market Power

(p.346) 14 Unilateral Market Power
Competition Policy and Price Fixing

Louis Kaplow

Princeton University Press

This chapter examines unilateral market power. The exercise of such power sometimes constitutes a competing explanation for price elevation in oligopolistic industries. This possibility raises three questions: whether exercising unilateral market power is also usually socially undesirable and thus should be prohibited by competition law; if it is not, how one can distinguish it from coordinated price elevation; and how one should err in cases of uncertainty. Analysis focuses both on industries with homogeneous goods and on those with differentiated products, the former of which are more relevant for present purposes because coordinated pricing is generally thought to be difficult when differentiation is substantial.

Keywords:   unilateral market power, coordinated price elevation, homogeneous goods, differentiated products, differentiation

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