Thursday, April 11, 2019

Don't Panic: A Guide to Claims of Increasing Concentration

Don't Panic: A Guide to Claims of Increasing Concentration 

Vanderbilt Owen Graduate School of Management Research Paper No. 3156912

 Gregory J. Werden U.S. Department of Justice - Antitrust Division

 Luke M. Froeb Vanderbilt University - Owen Graduate School of Management

 Abstract: The Obama Administration’s Council of Economic Advisers expressed concern that competition was threatened by increasing industry concentration. Academics, commentators, and journalists have joined the chorus. But none demonstrated increasing concentration of meaningful markets, as are used in antitrust to assess the impact of mergers and trade restraints. The claims of increasing concentration are based on data that are far too aggregated. Market concentration can remain the same or decline despite increasing concentration for broad aggregates. Mergers have not increased concentration in airline and banking markets. Moreover, where market concentration has increased, that does not demonstrate a failure of antitrust law or its enforcement; market concentration naturally increases when the most innovative and efficient firms grow.

 Keywords: concentration, competition, antitrust, mergers

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