The International Handbook of Competition – Second Edition
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The International Handbook of Competition – Second Edition

Edited by Manfred Neumann and Jürgen Weigand

The book aims to further our understanding of how economic reasoning and legal expertise complement each other in defining the fundamental issues and principles in competition policy. In specially commissioned chapters the book provides a scholarly review of economic theory, empirical evidence and standards of legal evaluation with respect to monopolization of markets, exploitation of market power and mergers, among other issues.
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Chapter 10: Assessing potential competition in antitrust markets

Vivek Ghosal


Antitrust laws and enforcement actions strive to preserve or enhance competition in markets. Relatively competitive markets are expected to result in lower prices for products and services, which promote consumer welfare. More competitive markets may also lead to increases in efficiency. Efficiency of markets can be related to pure production efficiency, as well as organizational and transactional costs efficiencies. Finally, more competitive markets may result in greater process and product innovations, as firms strive to bring new products and more variety and quality to the markets. It is these likely effects on market prices, growth, efficiencies and innovation that have resulted in antitrust occupying an important place in economic policy. There are three broad areas of antitrust activity: evaluation of mergers; assessment of anti-competitive behavior related to monopolization (dominance); and detecting and busting cartels. In evaluation of mergers, the first task is to define the relevant market, then examine entry conditions and actual and potential competition, and assess market power and efficiencies.

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