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The Abuse Theory of Monopoly was the standard by which most monopolies were tried in the early days of enforcing the Sherman Act.
a) Explain what the abuse theory of monopoly is.
b) Briefly summarize one court case that used the abuse theory of monopoly, and how the abuse theory was used as either an offensive or defensive argument. As a reminder, the three court cases we discussed in class are:
i. Standard Oil Company v. United States (1911)
ii. United States v. American Tobacco Company (1911)
iii. United States v. US Steel (1920)
c) Eventually, the abuse theory of monopoly was no longer used as the standard in antitrust cases.
Discuss any potential welfare effects of moving away from the abuse theory of monopoly.
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