Since Judge Hand's pivotal opinion in United States v. Aluminum Company of America (Alcoa), the possession of monopoly power has been treated as presumptively legal. The focus of the antitrust laws since then has been on defining when that power is abused. This approach to market power cannot be squared with the prevailing view that antitrust law is grounded in economic theory. To understand why, one must see market power for what it is: the ability of a firm to raise prices above competitive levels and to profitably keep them there. Seen in this light, market power is indistinguishable from any other income generating asset. It can be bought and sold. Its ownership may be the result of an extended period of risk-taking and investment, or it can be the result of a windfall.
The allocation of market power has far-reaching implications from the standpoint of social welfare and economic efficiency. For example, the development and maintenance of market power is sometimes a side-effect of productive efforts making buyers or third parties better off. In fact, monopoly power can be viewed as an instrument for increasing social welfare. When it is not, there is little in the way of social welfare regarding reasons for monopoly power to exist, other than the possibility that the cost of the administrative and judicial process for eliminating monopoly exceeds the social gains of that effort. An "instrumental approach" to market power would reflect these possibilities. The result would be that market power would be allocated only to those who make others better off as they improve their own positions.
Jeffrey L. Harrison, An Instrumental Theory of Market Power and Antitrust Policy, 59 SMU L. Rev. 1673 (2006), available at http://scholarship.law.ufl.edu/facultypub/124