Causation, correlation, and market concentration: a philosophical intervention
Jennifer S. Jhun
Journal of Economic Methodology, 2025, vol. 32, issue 1, 33-46
Abstract:
Though the Herfindahl-Hirschman Index (HHI) (a measure of market concentration) is often used as an indicator of market competitiveness, and while it is not uncommon to find regressions of HHI on price in the economic literature, [Miller, N., Berry, S., Scott Morton, F., Baker, J., Bresnahan, T., Gaynor, M., … Wosinska, M. (2022). On the misuse of regressions of price on the HHI in merger review. Journal of Antitrust Enforcement, 10(2), 248–259. https://doi.org/10.1093/jaenfo/jnac009] claim that there is no causal relationship to be found on the basis of such a regression. This paper concurs; I also suggest that this is a juncture where philosophical analysis could be called upon to offer a diagnosis as to why. I argue that there are metaphysical reasons why such a regression cannot, in general, be interpreted causally, but this does not rule out the regression’s being useful and for HHI to serve as such an indicator.
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:taf:jecmet:v:32:y:2025:i:1:p:33-46
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DOI: 10.1080/1350178X.2025.2486977
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