Research and analysis

Bilateral monopoly revisited: price formation, efficiency and countervailing powers

This discussion paper explores how input market power affects prices, quantities and consumer welfare across a range of common bargaining protocols.

• From: Competition and Markets Authority
• Published: 4 June 2025

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Bilateral monopoly revisited: price formation, efficiency and countervailing powers

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Details

This discussion paper is the outcome of Professor Flavio Toxvaerd’s UK Research and Innovation (UKRI) Policy Fellowship at the Competition and Markets Authority (CMA). During his 18 months at the CMA, Professor Toxvaerd studied the role of input market power in shaping prices, quantities and consumer outcomes.

The paper nests several common bargaining protocols in a single bilateral monopoly model, allowing policymakers to better understand how changes in input market power affect consumer outcomes.

Apply for the next UKRI Policy Fellowship at the CMA.

Published 4 June 2025