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CPI Talks on Measuring Market Concentration - Interview with Kobayashi by Gaynor

Competition Policy International + CCIA

Friday, November 9, 2018 from 8:30 AM to 6:30 PM (EST)

CPI Talks on Measuring Market Concentration -...

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 CPI TALKS ON 

MEASURING MARKET CONCENTRATION

 

An Interview with  Bruce H. Kobayashi* (US FTC)

by Martin Gaynor (Carnegie Mellon University)




Ahead of the upcoming conference on Challenges to Antitrust in a Changing Economy, at Harvard Law School on November 9th, CPI reached out to Martin Gaynor (Professor of Economics and Public Policy, Carnegie Mellon University) and Bruce H. Kobayashi (Director, Bureau of Economics, US Federal Trade Commission). They will participate in the “Measuring Market Concentration” panel, together with Henri Piffaut (Adviser to the Deputy Director General for Mergers EC), Nancy Rose (Professor of Applied Economics, MIT) and Lawrence White (Professor, NYU Stern Business School).

  

This conference is co-organized by CPI and CCIA. To see the full program and register free, please click here. 


 

Gaynor: It’s been widely reported that concentration is rising in the US economy. Do you think this is indeed the case? If so, do you think it is a cause for concern?

Kobayashi: It certainly has been widely reported that measures of aggregate nationwide concentration based on census NAICS data have increased. However, it is difficult to make strong inferences about antitrust policy from this data. In my opinion, basing concentration numbers on relevant antitrust markets would be a necessary condition for drawing inferences from trends in concentration. The NAICS based concentration measures are not based on relevant antitrust markets.  Concentration measures based on the narrowest NAICS 6 digit classifications are likely to be much broader than antitrust relevant markets, both in terms of the products and firms included and in terms of geographic scope. See e.g., Market Concentration, Note by the United states, OECD Hearing on Market Concentration, June 7, 2018, available here.

 

Gaynor: A number of recent research papers have looked at the relationship between aggregate concentration and economic outcomes (including some looking at labor market outcomes), and infer that there's declining competition. Do you think these papers provide evidence that competition is in decline? What do you think we've learned from these studies, if anything? What sorts of research do you think should be done to learn more about what's happening to competition? 

Kobayashi: As an alternative approach, the Bureau of Economics has continued to evaluate the efficacy of merger enforcement by conducting retrospective studies of consummated mergers. It is a priority of mine to conduct such studies whenever the conditions required to produce a credible study are present (the existence of a credible control group, and the availability of data). Such studies allow us to evaluate agencies’ and courts’ decisions by observing the price and or output effects of a consummated merger. In addition, such studies can be used to assess the validity of the tools used by the enforcement agencies, including concentration measures such as the HHI, as well a market definition and first order upward price pressure tools, and merger simulation. 

 

Gaynor: What do you think are useful ways that concentration measures can be employed in antitrust? What are some ways that you think concentration measures should not be employed?

Kobayashi: Irrespective of the recent trends in concentration, the question of whether competition is in decline, and the related question regarding the efficacy of recent antitrust enforcement is in my view an interesting and unresolved question. Many have pointed out the limitations and reasons to be cautious about making strong causal inferences from the studies linking aggregate concentration and economic outcomes, and the significant methodological challenges faced in addressing these limitations going forward. An excellent and detailed summary of these issues are contained in Steve Berry’s keynote address from last year’s FTC microeconomics conference, Market Structure and Competition, Redux, presentation at the FTC Micro Conference, November 2017, available here.

 

Gaynor: You were at the FTC a number of years ago. How has the use of concentration measures changed at the agency? How, if at all, would you like to see the FTC use measures of concentration differently than it does now? 

Kobayashi: Concentration numbers seem to have less influence in the post-2010 guidelines period, especially when there is a credible way to measure or predict effects.  I think that this has been a positive change. Concentration measures based on well-defined antitrust markets still provide useful predictive information, especially when data necessary to estimate effects is costly or otherwise unavailable.

 

*Disclaimer: Please note that the views expressed are mine and are not necessarily those of the Federal Trade Commission or any of its individual Commissioners.

Have questions about CPI Talks on Measuring Market Concentration - Interview with Kobayashi by Gaynor? Contact Competition Policy International + CCIA

When & Where


Harvard Law School
1585 Massachusetts Avenue
Cambridge, MA 02138

Friday, November 9, 2018 from 8:30 AM to 6:30 PM (EST)


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Organizer

Competition Policy International + CCIA

This inaugural conference, co-organized by CPI and CCIA, aims to generate an open and cutting-edge debate on competition law and economics in the tech industry. Doubtless, the last decade has seen a growing thirst for innovation in many industries worldwide. Innovation certainly makes economies more dynamic and competitive, but it can pose challenges for legislative and regulatory bodies trying to keep pace with rapidly evolving businesses. This conference will address key issues affecting the tech industry in this climate of constant changes. Measuring market concentration, the consumer welfare standard, competition on/via the internet, is monopoly power rising?, are some of the topics that will be discussed by leading antitrust academics, enforcers, and private practitioners.

Registration includes continental breakfast, coffee, lunch and closing cocktails.

 


 

CPI is a leading platform that promotes antitrust debates via publications and live events worldwide.

CCIA is an international not-for-profit organization dedicated to innovation. It promotes open markets, systems, networks and full, fair and open competition in the computer, telecommunications and Internet industries.

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