NETWORKS, NATURAL MONOPOLY, AND POLICY

John Kwoka, Northeastern University, Boston, Massachusetts

A monopoly is said to be "natural" when the most efficient structure of an industry consists of a single seller. Recently, demand-side economies-"network effects"-are seen as a possible source of natural monopoly. This lecture will (a) discuss whether and when network effects may be a source of natural monopoly; (b) evaluate what kinds of remedies are appropriate for monopoly from demand-side effects; and (3) show how this framework can be applied to some recent antitrust and regulatory issues