Under what circumstances would Mom's Tools & Hardware, a small store in the middle of Nowhere, a small, isolated town, be considered a monopoly? If Mom's is a monopoly, is it in violation of antitrust law?

Question

What will be an ideal response?

Answer 1

The elements of the offense of monopolization under the Sherman Act include monopoly power and its willful acquisition. Market domination that results from legitimate competitive behavior (such as foresight, innovation, skill, good management, or, as in this problem, isolation) is not a violation. Also, size alone does not determine whether a firm is a monopoly¾size in relation to the market is what matters. A small store like Mom's in a small, isolated town like Nowhere has a monopoly if it is the only store serving that market. Monopoly involves the power to affect prices and output. If a firm has sufficient market power to control prices and exclude competition, that firm has monopoly power. Monopoly power in itself is not a violation of the Sherman Act. The offense also requires an intent to acquire or maintain that power through anticompetitive means.