Competition, Monopoly, and Aftermarkets

Carlton , Dennis W.; Waldman, Michael

Competition, Monopoly, and Aftermarkets

NBER Working Paper No. w8086

53 Pages Posted: 19 Jan 2001 Last revised: 20 Oct 2010

See all articles by Dennis W. Carlton

Dennis W. Carlton

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Michael Waldman

Cornell University - Samuel Curtis Johnson Graduate School of Management

There are 3 versions of this paper

Date Written: January 2001

Abstract

Consider a durable goods producer that potentially has market power in the aftermarkets associated with its products. An important question is to what extent, if any, should the antitrust laws restrict the firm's behavior in these aftermarkets? In this paper we explore a number of models characterized by either competition or monopoly in the new-unit market, and show that a variety of behaviors that hurt competition in aftermarkets can, in fact, be efficient responses to potential inefficiencies that can arise in aftermarkets. Our results should give courts pause before intervening in aftermarkets.

Suggested Citation: Suggested Citation

Carlton, Dennis W. and Waldman, Michael, Competition, Monopoly, and Aftermarkets (January 2001). NBER Working Paper No. w8086. Available at SSRN: https://ssrn.com/abstract=256911