Essay: Mobility Barriers

Sample Essay

The economic analysis of this case concluded that the low prices were not sufficient proof to declare a violation of the antitrust laws. This decision was viewed in terms of the unlikelihood of the predatory activity, difficulty in distinguishing between sizeable social losses and socially beneficial competition.

However, this decision did not adhere to the existing economic literature and it was felt that this decision was not appropriate given the theoretical and empirical basis for the decision. Certain vital issues which could have been addressed in order to counter the decision of the Commission included mobility barriers, first mover advantages, the effects of retailer behavior on competition at the manufacturing level, the tactical raising of rivals costs and the importance of firm reputations.

An important element of the above mentioned concept; mobility barriers which as defined by Porter (1980) is defined as the “entry barriers depends on the particular strategic group that the entrant seeks to join”. Therefore, price becomes an important entry barrier which has to be considered in these circumstances. In the case of Monfort of Colorado, Inc v Cargill, Inc 107 S. CT 484(1986) , it was noted by the Supreme Court the importance of the barriers to entry and market share to finding the likelihood of predication to be successful . Hence, looking at the aforementioned case scenario that Commission should have allowed the possibility of mobility barriers in evaluating this particular case.

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