Antitrust Practices and Market Power Essay

1360 Words Jul 31st, 2013 6 Pages
Antitrust Practices and Market Power

Introduction The purpose of this paper is to look into a case of antitrust behavior being investigated involving Johnson and Johnson and Novartis AG, and to analyze and discuss the various antitrust practices that the organizations involved are accused of utilizing. Its purpose is also to discuss how the practices being deployed in this scenario can help any of the organizations to secure market power, which is defined by the ability of a firm to profitably raise the market price of a good or service over marginal cost (Market Power). Finally, it will also discuss the impact that an oligopoly in this case has on society, and will determine whether such scenarios are helpful or harmful to
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This conclusion has been drawn based on details provided in the web resource entitled "Guide to Antitrust Laws", which speaks to per se illegal offences, specifically Market and/or Customer Allocations (Guide to Antitrust Laws). With per se offences, certain forms of agreement among competitors could prove harmful to competition and consumers, and in this case, it is being investigated whether J&J and Novartis may have paid a competitor to stay out of the market (Guide to Antitrust Laws). If it is proven that the two companies actually entered into an agreement, it could easily be determined that they created a barrier to entry into the market for the generic drug manufacturer (McConnell, Economics 19th Edition). Novartis, in collusion with J&J, could also be thought to be engaging in Rent-Seeking Behavior, which is defined as any activity designed to transfer income or wealth to a particular firm or resource supplier at someone else’s, or even society’s, expense (McConnell, Economics 19th Edition). The decision of both companies to shut out the generic rivals effectively transfers income from the rival to Novartis, perhaps in exchange for some kind of monetary payout to J&J.

Analysis of the Impact of the Pharmaceutical Oligopoly on Society
It is my view that monopolies and oligopolies both have different impacts on society, though not always bad. In

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