Abstract

http://ssrn.com/abstract=179358
 
 

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Defensive Leveraging in Antitrust


Robin Feldman


University of California Hastings College of the Law


Georgetown Law Journal, Vol. 87, June 1999

Abstract:     
Antitrust commentators have struggled to explain why firms engage in leveraging behavior and whether leveraging damages competition. The literature has focused on whether a firm with a monopoly in one market can use leveraging to gain additional monopoly profit from a second market. This article introduces the theory of defensive leveraging. According to the theory, leverage behavior should not be analyzed solely as an attempt to reap additional monopoly profit from a second market. Rather, it may be an attempt to prevent erosion of the primary monopoly. The article analyzes the life cycle of a monopoly and explains how defensive leveraging helps a monopolist extend the life of its primary monopoly by preventing splintering and next generation substitution. The article then applies defensive leveraging theory to three market examples: Microsoft's behavior in the market for Internet browsers, competition between physician and nonphysician health care providers, and Eli Lilly's behavior in the market for cephalosporins.


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Date posted: September 8, 1999  

Suggested Citation

Feldman, Robin, Defensive Leveraging in Antitrust. Georgetown Law Journal, Vol. 87, June 1999. Available at SSRN: http://ssrn.com/abstract=179358

Contact Information

Robin Feldman (Contact Author)
University of California Hastings College of the Law ( email )
200 McAllister Street
San Francisco, CA 94102
United States

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