Don't Panic: A Guide to Claims of Increasing Concentration
11 Pages Posted: 16 Apr 2018 Last revised: 22 Oct 2018
Date Written: April 5, 2018
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: Suggested Citation