Title: Measuring market power in antitrust: a new hybrid approach

Authors: Walid Gani

Addresses: Tunisian Competition Council, Rue du Lac Biwa, les Berges du Lac, 1053 Tunis, Tunisia

Abstract: This paper proposes a new hybrid approach for measuring market power in antitrust using a mixture of market share calculation, price comparison, and mark-up assessment. The proposed approach is termed 'hybrid' because it combines elements from structural and non-structural approaches. These elements are directly observable and measurable, making our proposed approach more practical and realistic for the antitrust analysis requirements. Through an empirical study involving the use of real industrial data, we show that our hybrid approach provides a more reliable estimation of market power in comparison with existing methods. Also, we empirically prove that classical approaches are myopic regarding the pricing behaviour of firms with market power. This drawback may increase the type I error in the assessment of market power and lead to the over-enforcement of competition law.

Keywords: algorithm; competition law; computational antitrust; market power; market share; mark-up.

DOI: 10.1504/IJCEE.2023.132155

International Journal of Computational Economics and Econometrics, 2023 Vol.13 No.3, pp.332 - 351

Received: 25 Jan 2021
Accepted: 04 Apr 2022
Published online: 12 Jul 2023 *

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