Structural Screens in Stochastic Markets
Posted: 25 Jul 1998
Traditional theory may suggest that stochastic effects could undermine the validity of a structure-based antitrust policy, but this issue has not been formally addressed. We do so here, finding that either stochastic costs or stochastic demand can indeed undermine the validity of such a policy in a variety of cases, but can reinforce it in others. The overall effect depends on the composition of typical shocks as well as on parameter values. The views expressed here are those of the author and do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.
JEL Classification: L4, D4
Suggested Citation: Suggested Citation