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The Lawful Acquisition and Exercise of Monopoly Power and Its Implications for the Objectives of Antitrust

David Evans () and Keith Hylton

CPI Journal, 2008, vol. 4

Abstract: The antitrust laws of the United States have, from their inception, allowed firms to acquire significant market power, to charge prices that reflect that market power, and to enjoy supra-competitive returns. This article shows that this policy, which was established by the U.S. Congress and affirmed repeatedly by the U.S. courts, reflects a tradeoff between the dynamic benefits that society realizes from allowing firms to secure significant rewards, including monopoly profits, from making risky investments and engaging in innovation; and the static costs that society incurs when firms with significant market power raise prices and curtail output.

Date: 2008
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