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STUDYING OF SPECIAL PRACTICAL ISSUES OF ABUSE OF DOMINANCE
compete more efficiently (by, for instance, improving the quality of service
to consumers). A dominant firm may compete aggressively, say, as a
reaction to a threat from its competitors not simply to exclude others from a
market. Such behavior should not necessarily be considered abusive since it
may provide substantial advantages for consumers.
In industrial economies it is important to assess possible efficiency
rationales for potentially abusive behavior because competition authorities
should not discourage firms to compete aggressively nor punish those that are
successful through legitimate means. This concern may not be as great in
transition economies, in which dominant positions may be the result of recent
privatizations and restructurings, not superior performance over an extended
period. Nevertheless, competition agencies should always be aware that
potentially abusive acts can in some circumstances yield efficiencies, even for
firms with large market shares. Thus efficiency considerations should always
be taken into account in analyzing the competitive effects of business
practices.
Excessive prices. Prices may be high for many reasons, including
surges in demand, high unit costs, and exercise of market power. To prevent
a dominant firm from abusing its position and charging excessive prices,
antitrust enforcers should be more concerned with the reasons that lead to
high prices and profits than with the prices themselves. This is partly because
it can be difficult and time consuming for a government agency to determine
a firm's costs, which must be known to judge whether prices charged are
excessive and to set the “right” price. It can be difficult to determine costs
when a firm makes only one or a few products; it can be impossible for a
firm that produces lots of products. Moreover, price differences among firms
can often be explained, at least in part, by quality differences among
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