Injury and damages

• Recall Section 2 of the Sherman Act requires a plaintiff to show that injury occurred as a result of an antitrust violation (Pueblo Bowl-O-Mat case)

• Damages are calculated in a very specific way \[D = (P_m - P_c)q_m\]

• Observe the actual quantity (\(q_m\)) and price (\(P_m\)) charged by the monopoly

• Determine the quantity (\(q_c\)) and price (\(P_c\)) that firms would have charged in a perfectly competitive market

• Calculate damages based on the actual quantity sold (qm) and the difference between the actual price (\(P_m\)) and the perfectly competitive price (\(P_c\))

• Example: \[ \begin{aligned} P&=100-0.01Q \\ MC&=4 \\ TR&=100Q-0.01Q^2\\ MR&=100-0.02Q \\ MR&=MC \\ 100-0.02Q&=4 \\ 96-0.02Q&=0\\ Q^*&=4800\\ P^{*}&=100-0.01Q^{*}=52\\ \text{Damage}&=(52-4)4800 \end{aligned} \]