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Products Liability and Monopoly in a Contestable Market

Daniel F. Spulber
Economica
New Series, Vol. 55, No. 219 (Aug., 1988), pp. 333-341
DOI: 10.2307/2554011
Stable URL: http://www.jstor.org/stable/2554011
Page Count: 9
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Products Liability and Monopoly in a Contestable Market
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Abstract

Sustainable monopoly prices, outputs and producer care are examined in a contestable market setting under alternative liability rules. The market attains a second-best optimum under strict liability, negligence and no liability. The threat of entry is thus sufficient for a monopoly to supply second-best optimal product quality.

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