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Faculty Research Working Paper Series
F.M. Scherer
Professor of Public Policy and Corporate Management in the Aetna Chair, Emeritus
phone: 617-497-4345
Prices and Profits in Dominant Firm Adjudication
Scherer, F.M. "Prices and Profits in Dominant Firm Adjudication." HKS Faculty Research Working Paper Series RWP08-051, October 2008.
Abstract
Written for a conference at the University of Lisbon, this paper analyzes policies toward prices and profits in competition policy actions targeting dominant or monopolistic enterprises. Its motivation came from dilemmas posed by the European Commission's recent actions with respect to the Microsoft Corporation. The paper traces reasons why competition policy enforcers have been reluctant to assess the reasonableness of prices and profits and to prescribe changes in price levels. It identifies cases in which such oversight is essential for effective policy implementation. Drawing upon the Microsoft experience, it asks whether governmental intervention with respect to intellectual property licenses and the royalties they carry jeopardizes technological progress. An optimistic conclusion is reached.
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