Price Discrimination and Market Power

ISSUES IN COMPETITION LAW AND POLICY, Vol. 2, pp. 977-996, W. Collins, ed., American Bar Association, 2008

20 Pages Posted: 9 Jul 2011  

Benjamin Klein

University of California, Los Angeles (UCLA) - Department of Economics; Compass Lexecon

Date Written: 2008

Abstract

The relationship between price discrimination and market power is clarified by distinguishing between market power as defined in economics in terms of a firm’s elasticity of demand and market power as defined in antitrust law in terms of a firm’s ability to influence market outcomes. Price discrimination requires a less than perfectly elastic demand and hence implies the existence of some economic market power but is unrelated to the existence of antitrust market power. Once price discrimination is more generally recognized in antitrust law as an element of the normal competitive process, defendants will be more likely to use it as a legitimate business justification.

Keywords: price discrimination, market power

JEL Classification: L1, K21

Suggested Citation

Klein, Benjamin, Price Discrimination and Market Power (2008). ISSUES IN COMPETITION LAW AND POLICY, Vol. 2, pp. 977-996, W. Collins, ed., American Bar Association, 2008. Available at SSRN: https://ssrn.com/abstract=1657202

Benjamin Klein (Contact Author)

University of California, Los Angeles (UCLA) - Department of Economics ( email )

1999 Avenue of the Stars
Suite 1150
Los Angeles, CA 90067-4628
United States
310-728-2025 (Phone)
310-728-2070 (Fax)

HOME PAGE: http://www.econ.ucla.edu/people/Faculty/Klein.html

Compass Lexecon ( email )

1999 Avenue of the Stars
Suite 1150
Los Angeles, CA 90067-4628
United States
310-728-2025 (Phone)
310-728-2070 (Fax)

HOME PAGE: http://www.compasslexecon.com/professionals/bio?id=152

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