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.
Consumer Sovereignty: Rationally Choosing the Least Unappealing Set of Available Goods?
The Goals of Antitrust and Economic Policy: Consumer Welfare? Efficiency? Perfect Competition?
What are the Goals of Competition?
Collusive and Exclusionary Effects, Conduct, Overcharges, and Lost Profits
An Attempt at Defining the Core Concepts of Antitrust
Conceptual Foundations of Antitrust Law
Conceptual Foundations of Antitrust Law; Follow-up
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.