The Durapolist Puzzle: Monopoly Power in Durable-Goods Market
University of Arizona
Yale Journal on Regulation, Vol. 21, pp. 67-118, 2004
This Article studies the durapolist, the durable-goods monopolist. Durapolists have long argued that, unlike perishable-goods monopolists, they face difficulties in exercising market power despite their monopolistic position. During the past thirty years, economists have extensively studied the individual arguments durapolists deploy regarding their inability to exert market power. While economists have confirmed some of these arguments, a general framework for analyzing durapolists as a distinct group of monopolists has not emerged. This Article offers such a framework. It first presents the problems of durapolists in exercising market power and explains how courts have treated these problems. It then analyzes the strategies durapolists have devised to overcome difficulties in acquiring and maintaining monopoly power and the legal implications of these strategies. This Article's major contributions are (a) expanding the conceptual scope of the durapolist problem, (b) presenting the durapolist problem as an explanation for many common business practices employed by durapolists, and (c) analyzing the legal implications of strategies employed to overcome the durapolist problem.
Number of Pages in PDF File: 52
Keywords: Antitrust, Durable Goods, Monopoly, Pricing, Time Inconsistency, Tying
JEL Classification: D11, D91, K21, L11, L12, L41, L68
Date posted: June 18, 2007 ; Last revised: March 31, 2008