Before you can conclude that a merger will ‘tend to create a monopoly,’ you need to ask: monopoly of what?
Market definition is the analytical fulcrum that almost everything else in a merger case rests upon. Nathaniel Hipsman of Cornerstone Research and Mike Singer of Kirkland & Ellis joined the ABA’s Trust and Trade podcast to explain how economists use the hypothetical monopolist test to define markets. The episode covers the strengths and shortcomings of certain implementations of the test, as well as the famous ‘cellophane fallacy’ where the prevailing price may actually be the monopoly price in disguise.
Washington
