Monopolization, Innovation, and Consumer Welfare

Abstract

This article, published in 2001, considers the appropriate standards for monopolization cases in which the defendant has allegedly reduced innovation by refusing to deal with the plaintiffs. We note that claims of reduced innovation are problematic, particularly in dynamic markets, because economic theory does not often allow a confident prediction of what would have happened but for the defendant's conduct. Consequently, there is a danger that antitrust law will too readily shift the burden to the defendant to justify conduct simply because it has harmed a rival. We suggest that plaintiffs in such cases should be required to support their claims with a plausible theory and evidence, and that the burden should be greater in cases in which the defendant's conduct produced immediate consumer benefits.

Keywords: antitrust, monopolization, Microsoft, Intel, innovation

JEL Classification: K21, L12, L41, O31