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7 Antitrust L. & Econ. Rev. 49 (1974-1975)
Patents and Vertical Integration as a Source of Monopoly Power: The Photographic Industry

handle is hein.journals/antlervi7 and id is 51 raw text is: PATENTS AND VERTICAL INTEGRATION AS A SOURCE OF MONOPOLY POWER: THE PHOTOGRAPHIC INDUSTRY DR. MICHAEL L. BROOKSHIRE* DR. SIDNEY L. CARROLL* Nation's Highest 'Monopoly Margin'? A single firm dominates the country's photographic equipment-and- supplies industry in much the same fashion that General Motors domi- nates the automobile industry-and with much the same results. Eastman Kodak, with 1970 sales of nearly $2.5 billion, accounts for 43% of the free-world market in this industry, some 50% or more of the more than $3 billion annual U.S. market here. It has a cozy arrangement with its nearest competitor, Polaroid (12% of the na- tional market), one that gives the latter more or less exclusive rights to one-step photography in the country, everything else to Kodak. The result is that Kodak's earnings for the 10-year period 1962 through 1971 averaged 20% after taxes on stockholders' equity, slightly more than General Motors' earnings for the same period (18%). A recent FTC report ranks the photographic equipment-and- supplies industry as the nation's No. 1 monopoly overcharger in per- centage terms, crediting it with maintaining a monopoly margin- the difference between the prevailing price and the estimated competi- tive price level-of 11.01%.' On the industry's current sales of $3.7 billion, the FTC estimates that the industry is overcharging the public by some $403.5 million per year.' We conclude that the industry is * Drs. Brookshire and Carroll teach economics at the University of Ten- nessee, Knoxville. 1 See Paul D. Scanlon, FTC and Phase II: The 'McGovern Papers', Antitrust Law & Economics Review, Vol. 5, No. 3 (1972), at p. 33. 2 Ibid.

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