Market Concentration, Multi-Market Participation and Antitrust

Abstract

This article explores the trade-offs between market concentration and multi-market participation in evaluating proposed mergers. For complementary demands, the price-decreasing effect of multi-market participation provides a countervailing influence on the price-increasing effect of higher concentration. The larger the footprint of the multi-market provider, the greater the likelihood the price-decreasing effect dominates. Higher concentration may be consistent with non-increasing prices despite the absence of merger economies. In the case of substitutes, multi-market participation compounds the price-increasing effect of higher concentration. Merger guidelines that place undue emphasis on market concentration can lead policymakers to block mergers that enhance consumer welfare and vice versa.

Citation

Weisman, D.L. (2007), "Market Concentration, Multi-Market Participation and Antitrust", Zerbe, R.O. and Kirkwood, J.B. (Ed.) Research in Law and Economics (Research in Law and Economics, Vol. 22), Emerald Group Publishing Limited, Leeds, pp. 233-257. https://doi.org/10.1016/S0193-5895(06)22008-6