ECO 350 Lecture Notes - Lecture 2: George Stigler, Aaron Director, Market Concentration
25 Sep 2017
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Document Summary
Over the past 30-40yrs industrial org economics has become more prominent in antitrust policy making. The profitability, efficiency and technical progress (performance) of the firms in the industry depends on the. Pricing, advertising and r&d behavior (conduct) of those firms which depends on. Market concentration, barriers to entry and the amount of product differentiation (structure) Not theoretically sound as an explanation but they still help to organize ideas. Antitrust policy can influence structure (blocking a merger) and the conduct (prohibiting price fixing) Mergers will be analyzed in terms of both the likely price effects and the plausible cost savings achieved by the merged company. Price increases are not easy for firms to achieve; tacit collusion is difficult. Market share and industry concentration are not good measures of competition. Chicago school might oversimplify and is too close to repealing antitrust laws. More moderate view than either of the previous 2. Avoid prohibition of practices and mergers that will not cause harm.
