Unilateral Market Power
Unilateral Market Power
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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