Competition, Monopoly and Aftermarkets
43 Pages Posted: 13 Jun 2006
Date Written: March 2006
Consider a durable goods producer that potentially has market power in the aftermarkets associated with its own 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 three models that illustrate how various 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.
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