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Antitrust Divestiture in Network Industries

Howard Shelanski and J. Gregory Sidak

No 61, Working paper from Regulation2point0

Abstract: The landmark Microsoft case raises challenging questions concerning antitrust remedies. In this Article, we propose a framework for assessing the costs and benefits of different remedies, particularly divestiture, in monopoli-zation cases involving network industries. Our approach can assist a court or enforcement agency not only in analyzing the welfare effects of divestiture, but also in choosing more generally among alternative kinds of remedies. The framework would, for example, apply to a court's choice between damages and injunctive remedies or between behavioral injunctions and structural injunctions. After developing our framework, we apply it to the divestiture proposals made by the government and others in the Microsoft case. We argue that those proposals leave open important questions that must be answered before dives-titure can be shown to be either the best remedial alternative or to create likely net gains in economic welfare.

Date: 2001-10
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