Vertical Mergers and Monopoly Leverage

Posted: 22 May 1998

See all articles by Steven C. Salop

Steven C. Salop

Georgetown University Law Center

Abstract

Monopoly leverage involves using a monopoly in one market to achieve market power or monopoly in a second adjacent market. The concept of monopoly leverage has a long history in antitrust. Bowman, Bork , and other Chicago-school commentators successfully criticized the simple theory of monopoly leverage as failing to recognize that there may be only a single monopoly profit available to the monopolist, even if it integrates. More recent economic theories have addressed the single monopoly critique and have demonstrated a variety of circumstances in which monopoly leverage is a rational strategy that harms consumers. This contribution to the New Palgrave Dictionary of Economics and the Law sets out this analysis and a methodology for evaluating anticompetitive allegations involving monopoly leverage and vertical mergers.

JEL Classification: K21, L40

Suggested Citation

Salop, Steven C., Vertical Mergers and Monopoly Leverage. The New Palgrave Dictionary of Economics and the Law, Peter Newman, ed., May 1998. Available at SSRN: https://ssrn.com/abstract=91152

Steven C. Salop (Contact Author)

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States
202-662-9095 (Phone)
202-662-9497 (Fax)

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