We propose a simple method, requiring only minimal data, for bounding demand elasticities in growing, homogeneous-product markets. Since growing demand curves cannot cross, shifts in market equilibrium over time can be used to "funnel" the demand curve into a narrow region, bounding its slope. Our featured application assesses the antitrust remedy in the 1952 DuPont decision, ordering incumbents to license patents for commercial plastics. We bound the demand elasticity significantly below 1 in many post-remedy years, inconsistent with monopoly, supporting the remedy's effectiveness. A second application investigates whether the 1911 dissolution of American Tobacco fostered competition in the cigarette market.
Mullin, Wallace P., and Christopher M. Snyder.
"A Simple Method for Bounding the Elasticity of Growing Demand with Applications to the Analysis of Historic Antitrust Cases."
American Economic Journal: Microeconomics,
Contracting Out; Joint Ventures; Technology Licensing
Chemicals; Plastics; Rubber; Drugs; Biotechnology
Food; Beverages; Cosmetics; Tobacco; Wine and Spirits
Economic History: Government, War, Law, International Relations, and Regulation: U.S.; Canada: Pre-1913
Economic History: Government, War, Law, International Relations, and Regulation: U.S.; Canada: 1913-
Intellectual Property and Intellectual Capital