Program Description: Traditional merger analysis focuses on the degree to which a combination of producers is likely to lessen competition on price, output, and quality. The relationship between short-run market performance and innovation, however, is uncertain. In “Schumpeterian” competition, markets may be characterized by high degrees of concentration, but competition is still vibrant as firms jockey to displace the market leader through innovation. Thus, placing too much emphasis on short-run indicia of competition in dynamic industries may harm consumers in the long run. Recent high-profile mergers in rapidly evolving industries have brought the potential conflicts between the goals of promoting short-run competition and innovation into relief.
This program will examine topics such as:
- What do we know about the relationship between short-run competition and innovation?
- To what extent do agencies account for dynamic considerations in merger analysis?
- Do the 2010 Merger Guidelines mark an improvement in incorporating dynamic considerations?
- What should the agencies count as efficiencies?
- What weight should dynamic efficiencies be given in merger analysis?