Say for example Ticketmaster. Lots of people say that they're a monopoly and even the FTC is investigating them right now. How does the FTC prove that Ticketmaster is selling tickets way above what it costs to make and provide them? I doubt Ticketmaster would be enthusiastic to provide those figures because they know they'd get fined/lose profits. How does the government obtain these figures in order to regulate monopolies and actually prove that a company is in fact a monopoly?
How do governments figure out what price to set for a given product in order to increase consumer surplus and reduce the market power of a monopoly if sellers aren't willing to provide their numbers for production costs and profits? Are companies legally obligated to provide these figures?
byu/descarado44 inAskEconomics
Posted by descarado44
2 Comments
Yes, the FTC (and DOJ, with which the FTC has partially-overlapping jurisdiction for anti-trust laws) can compel firms to turn over data and documents, and to provide company officials to provide sworn testimony, as part of its investigative powers. In addition to the large number of lawyers, the FTC employs dozens of economists that specialize in the analysis of mergers and monopolies.
They guess.
In the absence of market prices, government doesn’t know what price is optimal. The lack of price discovery is why you don’t want centrally set prices. Monopolies are also obviously undesirable.
I suspect in Ticketmaster’s case it’ll likely come down to scalping. They have long been accused of actively participating in scalping tickets, creating a faux “market” to practice price discrimination. If that gets conclusively demonstrated, that will support the monopolistic accusations.
That said, you don’t need to know the exact market price to determine if something is a monopoly. The lack of competitors is sufficient to meet the definition. Ticketmaster holds some 70-80% of the market in major venues, and likes exclusivity contracts. That certainly appears to be monopolistic behavior.