Don't Panic: A Guide to Claims of Increasing Concentration

11 Pages Posted: 16 Apr 2018  

Gregory J. Werden

U.S. Department of Justice - Antitrust Division

Luke Froeb

Vanderbilt University - Strategy and Business Economics

Date Written: April 5, 2018

Abstract

The Obama Administration’s Council of Economic Advisers expressed concern that competition was threatened by increasing industry concentration. Academics, commentators, and journalists have joined the chorus. But none demonstrated increasing concentration of meaningful markets, as are used in antitrust to assess the impact of mergers and trade restraints. The claims of increasing concentration are based on data that are far too aggregated. Market concentration can remain the same or decline despite increasing concentration for broad aggregates. Mergers have not increased concentration in airline and banking markets. Moreover, where market concentration has increased, that does not demonstrate a failure of antitrust law or its enforcement; market concentration naturally increases when the most innovative and efficient firms grow.

Keywords: concentration, competition, antitrust, mergers

JEL Classification: K21, L16, L40, L41, L52

Suggested Citation

Werden, Gregory J. and Froeb, Luke, Don't Panic: A Guide to Claims of Increasing Concentration (April 5, 2018). Available at SSRN: https://ssrn.com/abstract=3156912 or http://dx.doi.org/10.2139/ssrn.3156912

Gregory J. Werden (Contact Author)

U.S. Department of Justice - Antitrust Division ( email )

450 Fifth Street, NW
9th Floor
Washington, DC 20530
United States
202-307-6366 (Phone)

Luke M. Froeb

Vanderbilt University - Strategy and Business Economics ( email )

Nashville, TN 37203
United States
615-322-9057 (Phone)
615-343-7177 (Fax)

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