Monopoly power

Federal regulation of railroad rates to ensure that railroads did not unfairly use their monopoly power. 

The Ethyl Corp. and DuPont held the TEL patent, and controlled the TEL monopoly. The company held the sole right to the only known material that could eliminate automotive knocking. And it used its influence in the gasoline market to manipulate prices. Over the next few years, the company wielded its monopoly power to maintain a 3—5 cent differential between its ethyl gasoline and the regular, unleaded gasoline sold by the rest of the industiy. 

We are also, both at state and Federal levels, dismantling the legal and regulatory structures that have maintained the monopoly power of yesterday s electricity sector. Twenty four states have already implemented some form of deregulation Industry and the states are taking the lead and moving forward, as they should. But federal legislation is still critical. 

The theoretical conclusion they reach is that the system of grants, or optional grants, especially those related to sales information, is an alternative that represents an improvement on the patent system inasmuch as it allows incentives to be attached to innovation without the need for a monopoly power. Further research will be necessary before this method can be adopted on a practical and experimental level. 

A major disadvantage is the large deadweight losses due to monopoly power associated with granting a patent. Also, in the presence of substantial insurance coverage, market valuations may not be accurate measures of value. On balance, there is strong case for considering alternatives to patents here. 

The pharmaceutical industry produces social goods characterized by high fixed costs, high information and regulatory costs, and relatively low marginal costs of production. While the existing patent system provides for limited monopoly power to reward innovation, it concurrently restricts access to medicines. The industry must balance their... 

Limits on monopoly power-the reaiities of pharmaceuticai pricing... 

Before we get into an outline of the theory of pharmaceutical economics, we need to establish pure competition as a competitive process. Traditional microeconomics has assumed implicitly that the natural state is one that is depicted by pure competition. Deviations from the natural state occur as a disequilibrium, by the establishment of monopoly power, or through other often cited market failures. In cases of disequilibrium, the tatonne-ment will bring us to the equilibrium ideal of pure competition. Interestingly, the model of pure competition never really describes the process of the tatormement (equilibration) but only the conditions necessary for the process to operate and the final equilibrium to result when the process has worked itself out. 

The monopoly power deviation arises because the nature of economic man causes him or her to attempt to break out of a pure competitive equilibrium, or the equilibrating tatonnement process, and maximize his or her own economic situation relative to the rest of the world. The economic man will... 

In non-market exploitation power is involved in an essential and obvious way. Hence I focus here on the relation between power and market exploitation. I discuss three ways in which market exploitation involves power relations through the power of the state to enforce property rights through the presence of monopoly power and through domination in the production process. In connection with the first issue I also discuss whether the state itself can be an exploiter. 

A second way in which power intervenes in exploitation is by the existence of "thin markets", that is in the presence of monopoly power. 1 argue in 4.2.3 that in such cases the exploited are not only driven "by the force of circumstances" to sell their labour-power, but may actually be coerced into doing so. More frequently, perhaps, the rate of exploitation-as distinct from the presence of some degree of exploitation - can be shaped in this way. Qearly, this is a form of market exploitation that is in some ways related to non-market exploitation, while also differing importantly from it. 

At the company level, the return on investment is defined by the internal rate of return (RR), the interest rate at which the net present value of all cashflows into and out of the firm equals zero. If the IRR across all companies in an industry is greater than the industry s cost of capital, then the industry returned more to its investors than was necessary to bring forth the investment dollars, and one would suspect that barriers to entry or other forms of monopoly power (perhaps obtained through patent protection) might exist in the industry (86). On the other hand, a low IRR relative to the cost of capital would, if companies... 

As Comanor has observed, studies of stock market rates of return indicate little about competition or monopoly in the pharmaceutical industry, [because] stock market values typically capitalize future returns into the value of the firm, which includes any prospective effects of monopoly power as well as other factors (86). Thus, a high value of intangible R D capital may reflect the monopoly-creating effect of R D in an industry with relatively strong patent protection. 

One route to such windows in other technologies has been acquisition of small companies employing them. While many of us may feel that this is a new route employed by major companies over the past few years, history will not bear this out. This can be demonstrated by the testimony in November 1949 of Crawford H. Greenewalt, then president of DuPont, before a Special Senate Subcommittee on Study of Monopoly Power. The subject on which Greenewalt was being questioned concerned the reasons for his company s thirty or more acquisitions over the period 1915 to 1944. A few extracts will, I believe, make my point ... 

One area of attention is the potential formation of a gas cartel similar to OPEC. Concern for maintaining a secure supply of reasonably priced natural gas, which until now has taken a back seat to its oil sister, will increasingly be viewed as a vital national interest. In the past, gas users have feared interruption in vital gas supplies for a variety of reasons such as contract disputes between Algeria and its customers (see Hayes, 2006), to political unrest in Indonesia (see von der Mehden and Lewis, 2006) to transit country risk such as Ukraine and Belarus for Russian exports (see Victor and Victor, 2006). In addition to supply interruption fears, major gas-consuming countries or regions worry that a key exporter such as Russia (to Europe) or group of exporters could exercise monopoly power to extract inflated rents for their product. 

Electricity distribution is by definition a so-called natural monopoly - i.e. it is not socio-economic efficient to build competing parallel infrastructures to provide this service. In order to prevent abuse of monopoly power, the industry is subject to extensive regulation from authorities. 

The introduction of killer products. Effective supply chain processes speed moneymaking products to market. Glitches that delay product introduction are tantamount to leaving money on the table. Also, such products require, according to Bill Gates of Microsoft as quoted in The Wall Street Journal article, monopoly power. This results only if you become an industry standard. Without the domination, your up-front investments will be total losses, not total profits. The supply chain may make the difference in establishing this position ahead of the competitor that is just behind you. 

Bakos [12] focuses on the impacts of one important aspect of e-business, that is, the reduced search cost for the buyers, on price and the efficiency of allocation of the electronic markets. He shows that electronic marketplaces will increase price competition and reduce seller monopoly power. Socially optimal allocation may be possible if search costs become low enough. 

Rivalry is the situation in which a Arm sees the opportunity or feels the pressure to improve its position. The forecast is a few very large supermarket chains (Rabobank, 2001). A small number of large supermarket chains on the market could reduce competition theoretically, because they can exert some level of monopoly power. However economic theory also predicts a situation in... 

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