L= (P

1
L (P C) S ______
____________________ d s P e
e (1 s ) m j i
2
L (P C) S (1 k) ____
____________________ d s P e
e (1 s ) m j i
3
Small, short term Few players with markets
for specific control over access to products
increases the market increases effective
market share ability to coordinate or
forebearL (P C) S (1 k)
______ _____________________________________
_______________ d s
P e e (1 s ) m
j i Extremely
low in Vertical integration Merger removes
best the short run creates clear
ability to potential competitor
foreclose inputs or pricing squeeze
competitors out abuse
4
Landes and Posner Example of The Sensitivity of
Market Power to Supply and Demand
Elasticities  Elasticity of Market
Share Necessary for Supply Firm to Charge
Price Above Marginal Cost
of High Low 20 10 5Elasticity of
2.5 .5DemandHigh 3 x 61 32 15High
3 x 46 23 12Low 1 x 44 22 11Low
1 x 23 12 6
5
(No Transcript)
6
(No Transcript)