One type of violation of the antitrust laws is the abuse of monopoly power.
Topic
Abuse of monopoly power under antitrust laws
Framework
Answer / Explain
Main Point
The antitrust laws do not exist to eliminate monopolies or high prices alone; instead, they target and prohibit the abuse of monopoly power, specifically when it is used to exclude competition and thus harm consumer welfare. ( - last paragraph)
P1: Definition and Requirements for Abuse of Monopoly Power
The paragraph defines monopoly power as the ability to set prices above the competitive level without losing too many customers, and explains that antitrust laws only come into play if (1) a firm has monopoly power and (2) abuses it to exclude competition.
P2: Market Share and Pricing Constraints
Explains that a firm’s ability to raise prices depends on whether customers have substitute options. If a firm owns a large market share in substitutable products, it gains monopoly power, so market share becomes a helpful (but rough) measure for courts.
P3: High Prices vs. Abuse—Not All Monopolies Break the Rules
Discusses how simply having high prices (supracompetitive prices) or high market share—even driving competitors out through low prices—isn’t illegal. The law cares more about harm to consumer welfare than the existence of high prices or monopolies by themselves.