This paper puts forward the thesis that monopoly is not a situation of high market share; nor is it simply characterized by high profits or prices above marginal cost. The monopoly of concern should be those circumstances where profits are high, there is an absence of innovation and dynamic competition, and the focal company is shielded from new entry, i.e. insulated from competition from other innovators. Such a monopolist could stay ahead without innovating or lowering prices and ought to be investigated.
A short-run orientation with respect to theories of harm must also be avoided, as it necessarily squeezes out consideration of innovation. Unwillingness to take a longer run-view quickly morphs into an unwillingness to consider innovation, which often takes longer than the cost-cutting associated with the efficiency paradigm.
The next section lays out two contrasting paradigms of competition, the static and the dynamic, and claims that the static paradigm has been dominant for far too long. A dynamic competition paradigm is long overdue and may now be partially accepted, albeit in emasculated form. Hence, the need for additional research and a reaffirmation of basic principles.
