Tuesday, October 8, 2024

Antitrust in the Edgeworth Box: Monopoly

Antitrust in the Edgeworth Box: Monopoly

 

Francesca Busetto

affiliation not provided to SSRN

Giulio Codognato

affiliation not provided to SSRN

Sayantan Ghosal

University of Warwick - Department of Economics; University of Glasgow - Adam Smith Business School

Damiano Truchet

University of Warwick

 

Abstract

What is the appropriate economic welfare standard for antitrust in general equilibrium? In this paper, we address this question in an Edgeworth box economy model of monopoly where one commodity is held only by the monopolist, represented as an atom, and the other is held only by small traders, represented by an atomless part. In this framework, we reconcile the different approaches characterizing the so-called Chicago School, on one hand, and the so-called New Brandeis School, on the other. Moreover, we readapt to our context a paradox, first formulated by Shitovitz (1997), which shows that the Brandeisian “curse of bigness” overwhelms the direct exercise of market power by the monopolist.

https://lawprofessors.typepad.com/antitrustprof_blog/2024/10/antitrust-in-the-edgeworth-box-monopoly.html

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