Competition drives prices down to costs, whereas monopolies price above cost. California banks have paid large damages

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Competition drives prices down to costs, whereas monopolies price above cost. California banks have paid large damages for allegedly charging fees greater than the cost of certain services that they provide. Suppose a car manufacturer charges an additional $450 for an automatic transmission in a new car. What inefficiencies would result if the consumer could sue the manufacturer and make the company prove that $450 is not disproportionately above the actual cost of the automatic transmission?

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Law and economics

ISBN: 978-0132540650

6th Edition

Authors: Robert cooter, Thomas ulen

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