This Note seeks to address a systemic and difficult issue in the field of antitrust, namely the problem of proving concerted action for the purpose of price-fixing claims in oligopolistic markets. While antitrust law has been markedly successful in eliminating express cartels, competition policy has been equally noteworthy for its failure to effectively address instances of parallel pricing that may have an economically analogous effect to explicit price-fixing. Though the law has long viewed this shortcoming as an inevitable consequence of market structure, this Note will articulate both a different conclusion and a novel solution.

An oligopoly is a market in which the level of concentration causes firms residing therein to operate strategically. In other words, an oligopolist must factor the expected reaction of its competitors into its first order condition for profit maximization. A firm operating in a monopolized market, or one subject to perfect competition, simply equates marginal revenue with marginal cost in setting price. Doing so in an oligopolized market is not profit-maximizing, however, as the profitability of a given price depends on the price being charged by other firms in the market. This is so because, in selling its goods, a firm will have a unilateral impact on the residual demand facing the other firms in the market...

 

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