Observations on the Multiple Dimensions of Market Power

03 August 2005
By Dr. Alan (Jeff) Daskin and Dr. Lawrence Wu

In this article published in the Summer 2005 issue of Antitrust, NERA Senior Vice President Dr. Lawrence Wu and Vice President Dr. Alan (Jeff) Daskin examine the various aspects of market power, an often-used term that is subject to much debate and interpretation among economists, courts, agencies, and practitioners. The authors discuss popular definitions of market power used in antitrust and competition policy while analyzing the economic foundations upon which these definitions are based. The concept of a competitive benchmark, the profitability of pricing above competitive levels, and the ability to set prices above competitive levels over a long period of time are important considerations when evaluating whether market power raises antitrust concerns.

This article was published in Antitrust, Summer 2005, Vol. 19, Number 3.