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| Author: | Borenstein, S. |
| Title: | Exercising market power in proprietary aftermarkets |
| Journal: | Journal of Economics and Management Strategy
2000 : SUMMER, VOL. 9:2, p. 157-188 |
| Index terms: | MANAGEMENT MARKET ECONOMY ECONOMICS |
| Language: | eng |
| Abstract: | Over 20 recent antitrust cases have turned on whether competition in complex durable-equipment markets prevents manufacturers from exercising market power over proprietary aftermarket products and services. The authors show that the price in the aftermarket will exceed marginal cost despite competition in the equipment market. Absent perfectly contingent long-term contracts, firms will balance the advantages of marginal-cost pricing to future generations of consumers against the payoff from monoply pricing for current, locked-in equipment owners. |
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