The Role Of Capacity In Antitrust Analysis

Issues of productive capacity can play a role in nearly every aspect ofcompetition analysis. This article provides an overview of the economicliterature on capacity and the role that capacity has played in actual antitrustand competition law enforcement. The goal is to aid the analysis in matterswhere capacity issues potentially play a significant role. For the most part,the theoretical role of capacity in various aspects of competition analysis isambiguous and the empirical literature is similarly inconclusive. Moreover, inmany situations, measuring excess capacity may be quite difficult. Given thetheoretical and empirical ambiguity regarding the role of excess capacity, orthe lack thereof, the overall conclusion is that capacity issues should play arole in competition analysis only when there is strong case-specific evidenceregarding their effects.