The Paradox of the Exclusion of Exploitative Abuse

CCP Working Paper No. 08-1

20 Pages Posted: 11 Jan 2008  

Bruce Lyons

University of East Anglia

Date Written: December 2007

Abstract

Monopoly pricing is a textbook market failure that is taught in the first year of any economics course. The implied welfare loss (or 'exploitative abuse') justifies a whole range of competition policy towards cartels, mergers and regulated industries. Yet there is widespread hostility to prosecuting the same exploitative abuse in the textbook monopoly case (i.e. under Article 82EC)! This paper seeks to understand this paradox. I conclude that, while there are important problems with prosecuting Article 82 exploitation cases (because of problems relating to measurement, market dynamics, multi-sided markets and remedy issues), it is important to keep open the possibility of prosecution; for example, in the forthcoming Article 82 Guidelines.

Keywords: exclusionary abuse, exploitative abuse, monopoly pricing, welfare loss

JEL Classification: D42, I38, L41

Suggested Citation

Lyons, Bruce, The Paradox of the Exclusion of Exploitative Abuse (December 2007). CCP Working Paper No. 08-1. Available at SSRN: https://ssrn.com/abstract=1082723 or http://dx.doi.org/10.2139/ssrn.1082723

Bruce Lyons (Contact Author)

University of East Anglia ( email )

Norwich Research Park
Norwich, Norfolk NR4 7TJ
United Kingdom

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