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Cyclical Market Power

47 Pages Posted: 23 Apr 2003  

Amitai Aviram

University of Illinois College of Law

Abstract

This paper examines temporal aspects of market power. It explores an industry - the Israeli PVC industry - in which the dominant firm's market power fluctuates cyclically, and identifies the conditions that result in such phenomena.

The existence of cyclical market power may lead the market participants to strategic behavior that is markedly different from that in markets with either steady market power or constantly declining market power. It is suggested that in markets characterized by cyclical market power, a dominant firm may find it both possible and profitable to combat the cyclical decline in its market power by "temporal leveraging" of its market power: policing a cartel in the downstream market in return for exclusivity in sales to the cartel members. Such a scheme may resist the criticism against the plausibility of most types of monopoly leveraging and exclusive dealing.

Keywords: market power, monopoly leveraging, antitrust, cyclical, temporal, dumping, PVC

JEL Classification: D21, K21, L41, L42, L65

Suggested Citation

Aviram, Amitai, Cyclical Market Power. George Mason Law & Economics Research Paper No. 03-17. Available at SSRN: https://ssrn.com/abstract=394643 or http://dx.doi.org/10.2139/ssrn.394643

Amitai Aviram (Contact Author)

University of Illinois College of Law ( email )

504 E. Pennsylvania Avenue
Champaign, IL 61820
United States

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