Should New Merger Guidelines Give UPP Market Definition?

Posted by D. Daniel Sokol

Richard Schmalensee (MIT Sloan School of Management) asks Should New Merger Guidelines Give UPP Market Definition?

ABSTRACT: In an important recent paper, Joseph Farrell and Carl Shapiro propose a new quantitative approach to assessing the competitive impact of horizontal mergers that does not involve defining a relevant market. I believe that FS have made a significant contribution that has the potential to improve merger enforcement. In what follows I describe their approach, propose a slight modification, and note that, like any purely quantitative technique, it must be used with care and common sense.