 The antitrust prohibition of excessive pricingDavid Gilo and Yossi Spiegel International Journal of Industrial Organization, 2018, vol. 61, issue C, 503-541 Abstract: Excessive pricing by a dominant firm is unlawful in many countries. To assess whether it is excessive, the dominant firm’s price is often compared with price benchmarks. We examine the competitive implications of two such benchmarks: a retrospective benchmark where the price that prevails after a rival enters the market is used to assess whether the dominant firm’s pre-entry price was excessive, and a contemporaneous benchmark, where the dominant firm’s price is compared with the price that the firm charges contemporaneously in another market. We show that the two benchmarks restrain the dominant firm’s behavior when it acts as a monopoly, but soften competition when the dominant firm competes with a rival. Moreover, a retrospective benchmark promotes entry, but may lead to inefficient entry. Keywords: Excessive pricing; Antitrust; Retrospective benchmark; Contemporaneous benchmark; Dominant firm; Entry (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:61:y:2018:i:c:p:503-541 DOI: 10.1016/j.ijindorg.2018.05.003 Access Statistics for this article International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal More articles in International Journal of Industrial Organization from Elsevier |
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