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European dominant position and american monopolization: a unifying approach from basic game theory

Author

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  • Pier Luigi Parcu

    (Studio Economico Parcu & Associati, Roma (ltaly))

Abstract

In this paper I use basic game theory tools to explore the logical consequences of some fundamental legal definitions of European and American antitrust. In a competition game, in which there is a true monopolistic/dominant firm (MDF) and competition law is respected, thus limiting the legitimate set of choices of the MDF, I state in a formal theorem that an MDF has a strictly independent dominant strategy, so its choices should never be a source of ex post regret. Other players in the competition game, anticipating implementation of the dominant strategy, will optimize their behaviour taking it into account and thus be more able to select an optimal solution among all possible outcomes. This definition has some practical value: the 'surprise' choice of a non-dominant strategy becomes a hint of an illegal abuse ofdominant position or monopolisation offence, also this idea is formalized in a theorem.

Suggested Citation

  • Pier Luigi Parcu, 2006. "European dominant position and american monopolization: a unifying approach from basic game theory," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 59(237), pages 171-192.
  • Handle: RePEc:psl:bnlaqr:2006:22
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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/9866/9748
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    References listed on IDEAS

    as
    1. Michele Grillo & Lara Magnani, 2004. "Valutazione antitrust delle concentrazioni in mercati oligopolistici," Mercato Concorrenza Regole, Società editrice il Mulino, issue 1, pages 217-238.
    2. Richard J. Gilbert & Michael L. Katz, 2001. "An Economist's Guide to U.S. v. Microsoft," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 25-44, Spring.
    3. Motta,Massimo, 2004. "Competition Policy," Cambridge Books, Cambridge University Press, number 9780521016919, September.
    4. Benjamin Klein, 2001. "The Microsoft Case: What Can a Dominant Firm Do to Defend Its Market Position?," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 45-62, Spring.
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    Cited by:

    1. Massimiliano Vatiero, 2015. "Dominant market position and ordoliberalism," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 62(4), pages 291-306, December.

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    More about this item

    Keywords

    Competition; Firm; Firms; Law;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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