Data, Innovation, and Potential Competition in Digital Markets – Looking Beyond Short-term Price Effects in Merger Analysis

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Often, it is possible to analyze the competitive effects of a merger by focusing on price and quantity. If a particular merger is likely to raise prices or reduce quantity, we can generally be reasonably confident that the merger is anticompetitive. The virtues of price and quantity are that they tend to be readily observable and to lend themselves to empirical analysis. Antitrust practitioners have a variety of tools to model price and quantity effects based on sales and diversion data. For many digital markets, however, relying solely on traditional price-based modeling in merger analysis is likely to be ineffective.