Economic Reality versus Consumer Perceptions of Monopoly

Abstract

When a Senate committee considered regulating access to a popular National Football League (NFL) broadcast in 2007, the context was familiar to marketers: accusations of abusing monopoly power. The specific issue of NFL telecasts was eventually resolved outside the public policy arena, but it raises a more general question: What "monopolies" should governments regulate? Antitrust laws in the United States arose from a desire to protect competition. However, public policy is beginning to apply them in marketplaces that are monopolies only in the sense that consumers perceive a lack of competition, even though, in actuality, competitors are free to operate. Examples range from the NFL to iPod to De Beers. The authors refer to the dominant suppliers in these markets as "psychological monopolies" created by consumer beliefs and feelings, not by economic reality. The authors argue that the regulation of such monopolies is misguided.

Service Captivity: No Choice, No Voice, No Power

“…Monopoly service captivity is based on issues that are supposed to be governed by antitrust law; consumers need to be protected from monopolies. The services in this captive level occupy primarily two domains: municipal services and for-profit monopoly providers (Sundie, Gelb, and Bush 2008). Legal service captivity describes those services which consumers are required to interact with due to federal, state or local laws.…”

Dynamic pricing in regulated automobile insurance markets with heterogeneous insurers: Strategies nice versus nasty for customers

“…Similarly, Carlin (2009) discusses a case in which the complexity in retail financial market makes consumers more ignorant and provides the incentive for firms to adopt price increase strategy. In addition, consumers in Taiwan may have the illusion of psychological monopoly (Sundie et al, 2008) in mind without seeking the second insurer or agent.…”

The regulatory challenge to branding: An interpretation of UK competition authority investigations 1950–2007

“…For example, the actions of some tobacco companies when marketing their brands has been questioned (Liberman and Clough 2002), leading to calls for tighter control of the marketing of tobacco brands. These forms of branding regulation are outside the frame of reference for this study which examines antitrust or competition law et al 1997, Gundlach and Phillips 2002, Fontenot and Hyman 2004, Sundie et al 2008 have identified that US antitrust law presents a significant challenge to marketing practice and emphasise the benefits and problems of compliance with antitrust law (Yoffie and Kwak 2001). Limited international work has also developed assessing both individual competition law judgments and remedies Pressey 2004, Ashton andKeasey 2005) and the treatment of marketing within UK competition law judgements (Ashton and Pressey 2008).…”