Page 71 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE

be common. It refers in general to products bought infrequently, and where

exploitation would not appreciably affect future demand for the firm's product.
In general, consumers learn from experience. If they are exploited with a tie-in

contract and there is competition in the primary market, then their ability to

easily switch suppliers may deter the abuse.
Refusal to deal. Competition law does not generally impose on firms a

duty to cooperate with competitors. When a firm (even a dominant one)
refuses to deal with another firm with which it has a vertical relationship, the

result may not be anticompetitive. For example, a dominant pipeline
company's refusal to deal with an oil producer could reflect various

procompetitive rationales: poor reputation of the oil producer, efficient

management issues, or peak load concerns. In this example, there are
circumstances, however, in which a refusal to deal with an additional customer

would be anticompetitive. This would be the case if a powerful group of exist-

ing customers were to threaten the pipeline owner that they would build
another pipeline, should it grant access to some other firms.

Refusal by a dominant firm to grant access to a firm producing a scarce
input necessary to operate in a downstream market in which the dominant

firm also operates may be an abuse. This may occur when the price of the
scarce input is regulated and the firm tries to extend its dominant position in

a vertically related (but unregulated) market. The monopolist finds it

profitable not to deal with a downstream competitor because it can overcome
regulatory constraints on profits by keeping the competitor out and supplying

the service itself. Profits would be earned not on the regulated market but on
the competitive (unregulated) one. This behavior is particularly common in

recently deregulated industries in which some markets are open to
competition but others are still legal monopolies.

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