Antitrust by Interior Means

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

If a firm is a nexus of contracts, then it is just the sum of its counterparties. It follows that when a firm monopolizes a particular market and exploits its power to impose unfavorable terms on a counterparty, the firm necessarily exploits one counterparty for the benefit of another, because the additional profits the firm generates from the unfavorable terms must be paid out eventually to some other counterparty of the firm. One alternative to attacking monopoly power through breakup of large firms or limits on anticompetitive conduct in the marketplace is therefore to prevent any one counterparty of the firm from so dominating firm governance as to be able to induce the firm to oppress other counterparties for its benefit. Creating a balance of power in firm governance, by giving all counterparties the right to elect board members, would eliminate the internal forces that induce firms to exercise monopoly power. But it would not prevent firms from engaging in productive, pie-expanding, behavior, because such behavior tends to expand the business that the firm does with all of its counterparties—or at least enables the firm to use a share of the gains to compensate those counterparties that lose out—and therefore benefits them all.
Original languageAmerican English
Title of host publicationThe Intersections between Competition Law and Corporate Law and Finance
StateAccepted/In press - 2021

Keywords

  • How Antitrust Really Works: A Theory of Input Control and Discriminatory Supply
  • Ramsi Woodcock
  • SSRN

Fingerprint

Dive into the research topics of 'Antitrust by Interior Means'. Together they form a unique fingerprint.

Cite this