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Monopoly: Strategies and Antitrust. Why Monopolies Arise Barriers to entry ( ownership of key resource, cost advantage, know-how, reputation, patent,

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Presentation on theme: "Monopoly: Strategies and Antitrust. Why Monopolies Arise Barriers to entry ( ownership of key resource, cost advantage, know-how, reputation, patent,"— Presentation transcript:

1 Monopoly: Strategies and Antitrust

2 Why Monopolies Arise Barriers to entry ( ownership of key resource, cost advantage, know-how, reputation, patent, brand name, entry deterrent strategies) Anticompetitive Behavior Natural Monopoly Regulated Monopoly

3 Monopolies Strategies Maintain/enhance barriers to entry Reduce elasticity of demand Anticompetitive Behavior

4 Entry Deterrent Strategy: Raise Costs Pilot certification

5 Entry Deterrent Strategy: Raise Costs Computer/Telecom peripherals

6 Antitrust Laws Re. Anticompetitive Monopolistic Behavior Attempts to monopolize markets Cartel behavior: cooperation among competitors to: Merger Guidelines Fix quantities Fix prices Divide markets

7 Antitrust Cases Attempt to monopolize Price Fixing Mergers Cable television: AT&T, Comcast Satellite television: DirecTV, Echostar MicrosoftIntel RocheRhone Poulenc BASFTakeda

8 Media Mergers http://www.newscorp.com/ ? AOL-Time Warner NewsCorp Sky

9 Mergers: Efficiency Gain vs. Dead Weight Loss Pc Pm Demand MR Qm Mc Qc Efficiency gain DWL Price Quantity/t

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