Antitrust in bilateral monopoly

Andrey Shastitko and Natalia Pavlova

Voprosy Ekonomiki, 2017, issue 8

Abstract: The existing practice of implementing antitrust law to bilateral monopolies in Russia shows signs of inconsistency. Traditional theoretical approaches differ in their estimations of the characteristics and attainability of equilibrium on such markets, but overall more or less converge on the idea of antitrust regulation of such markets to be unjustified. But approaching the problem in the context of transaction cost economics, taking into account the externalities appearing both upstream and downstream from the bilateral monopoly market in case of a suboptimal result, leads to viewing the antitrust authority as a discrete institutional alternative of internalizing such externalities by creating the incentives to develop a hybrid governance mechanism for transactions between the sides of contractual relationship characterized by sufficiently high switching costs. Taking into account the wide occurrence of bilateral monopolies in the Russian economy, the choice of a uniform approach to regulation is critical in terms of creating transparent legal environment and adjusting companies’ incentives.

Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:nos:voprec:y:2017:id:34

DOI: 10.32609/0042-8736-2017-8-75-91

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