Assessing Market Power: The Trade-off Between Market Concentration and Multi-Market Participation

Dennis L. Weisman

Journal of Competition Law and Economics, 2005, vol. 1, issue 2, 339-354

Abstract: This analysis reveals that traditional market power measures are biased under the conditions of multi-market participation and demand interdependence. Specifically, when complementary (substitutable) demands dominate, traditional market power measures are biased upward (downward). A similar bias carries over to the evaluation of mergers. To wit, mergers that simultaneously increase market concentration and multi-market participation can result in lower prices even in the absence of merger economies. It follows that merger guidelines that place undue emphasis on market concentration can lead policymakers to block (approve) mergers that enhance (diminish) consumer welfare.

Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:oup:jcomle:v:1:y:2005:i:2:p:339-354.

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Journal of Competition Law and Economics is currently edited by Nicholas Economides, Amelia Fletcher, Michal Gal, Damien Geradin, Ioannis Lianos and Tommaso Valletti

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