Toward a Broader Concept of Competition Policy

Abstract

This chapter consists of four parts. First, market power is defined generally and, while three types of market power are identified (long-run, short-run and rival-oriented market power), the focus is exclusively on the first two. In addition, interrelationships between long-run and short-run market power are described. The reach of antitrust policy with respect to the two types of market power is discussed in the second section. This consists of recasting Professor Machlup’s argument in order to establish that the reach of antitrust policy with special reference to interfirm coordination in the exercise of the market power is limited. The third part presents a matrix depicting the relevance of antitrust policy to the exercise of the three options associated with short-run market power. The resulting gaps provide an opportunity to relate instruments of persuasion (for instance, incomes policy, administrative guidance) or direct control to antitrust in the development and coordination of a broader concept of competition policy.