The Economic Framework for Assessing Comcast's Exclusionary Conduct
-77- FOR PUBLIC INSPECTION A. The Economic Framework for Assessing Comcast's Exclusionary Conduct 122. Antitrust economics considers exclusionary conduct to be anticompetitive if it impairs a rival's efficiency or its ability to impose price discipline. Such conduct can occur by raising a rival's costs, by degrading a rival's quality of service,256 or by depriving rivals of economies of scale.257 Anticompetitive effects may be realized regardless of whether the rival is driven out of the market entirely;258 they require that the rival faces increasing marginal costs or large upfront costs or both. If the conduct forces the rival to operate on a higher portion of its marginal cost curve, then such conduct would achieve partial foreclosure, and the rival would not be able to constrain prices as effectively. In the extreme case, when the conduct prevents the rival from covering its average variable costs, the conduct would induce exit and thereby achieve complete foreclosure. 123. Exclusionary strategies can take several forms, and such strategies can be used to extend monopoly power from one market into another, or to maintain monopoly power in a !pven market. When the markets in question are vertically aligned, exclusionary conduct is referred to as "vertical restraints," and the effect of such conduct is called "vertical foreclosure.',259 Because regional sports programming, national sports programming, local broadcast affiliates, and online programming are inputs in the production process of video 256. See Steven C. Salop & David T. Scheffman, Cost-Raising Strategies, 36 J. IND. ECON. 19 (1987). 257. See, e.g., Richard A Posner, Vertical Restraints and Antitrust Policy, 72 U.
[Show full text]