While we’re on the topic of antitrust, I thought I would take this opportunity to draw our readers’ attention to a nice series of posts over at Antitrust Review. Collectively these posts make up the beginnings of an excellent primer on antitrust economics, told in Hanno Kaiser’s inimitable manner. I don’t agree with all of it, but all of it is thoughtful and well-taken. Well worth a read in your spare time.
If I had to pick one graf to highlight, it would be this (from the last post linked above):
Against this backdrop, it is apparent that much of the traditional merger analysis involves the least direct evidence of anticompetitive effects. Delineating markets, identifying market participants, and computing market shares all contribute to establishing a market concentration measure. That measure, in turn, permits the inference of market power (Step 1). Market power permits the inference of anticompetitive effects (Step 2). The diminution of competition, finally, permits the inference of a consumer welfare loss (Step 3).
Unlike Hanno (I think), however, I find this quite problematic. Each required inference is far weaker than it might seem, and the underlying evidence — of market definition, participants and shares — weaker still. See my article, Hot Docs vs. Cold Economics, 47 Ariz. L. Rev 609 (2005) for more.