Friday, February 9, 2007
Posted by D. Daniel Sokol
Dennis Carlton and Michael Waldman have a new working paper on an increasingly hot topic in antitrust- aftermarkets. Their paper suggests that judicial interventions in aftermarkets may come with risks.
"Competition, Monopoly and Aftermarkets"
Johnson School Research Paper Series No. 10-06
ABSTRACT: 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.